Tether Signs Big Four Audit, Circle's Stock Drops 20%

Original | Odaily Planet Daily (@OdailyChina)

Author | Qin Xiaofeng (@QinXiaofeng 888 )

On March 24, Tether, the world’s largest stablecoin issuer, announced it has officially engaged one of the Big Four accounting firms to conduct its first-ever comprehensive independent financial statement audit. In the announcement, Tether positioned this self-audit as “the largest first-time audit in financial market history.”

Previously, Tether faced persistent skepticism regarding the transparency of its reserves, while its competitor Circle (issuer of USDC) had long embraced annual audits by Deloitte, leaving Tether under constant public scrutiny. Now, Tether has finally signed with one of the Big Four, seemingly bringing a definitive end to this years-long competition for transparency—yesterday, Circle’s stock price plunged as much as 20%.

When USDT, with a market capitalization exceeding $184 billion, begins to undergo the strictest financial scrutiny, its impact is destined to extend beyond the narrow confines of cryptocurrency and reach deeper into the operating logic of the global financial system. This is not just about the reputation of Tether alone, but a pivotal turning point for the entire stablecoin industry as it moves from partial compliance to comprehensive auditing.

Looking back at Tether's growth trajectory, 2021 marked a true turning point. That year, Tether faced two major regulatory penalties, paying nearly $60 million in fines altogether. These lessons became the foundation for its subsequent systematic compliance efforts.

In February 2021, an investigation by the New York Attorney General’s Office (NYAG) uncovered Tether’s greatest transgression: for a period, the company did not hold sufficient reserves to back all circulating USDT, and even diverted $900 million in reserves to cover losses at its affiliated exchange, Bitfinex. Tether ultimately settled for an $18.5 million fine and committed to submitting quarterly reports disclosing the composition of its reserve assets.

In the same year, in October, the U.S. Commodity Futures Trading Commission (CFTC) took action again, accusing Tether of misleading investors between 2016 and 2019—the claim that “each USDT is backed by one U.S. dollar” was found to be inaccurate. As a result, Tether paid a $41 million fine.

Although these two penalties came at a high cost, they pushed Tether to begin building a compliant institutional framework. Even so, skepticism about its reserves has never faded, and labels like “paper tiger” and “time bomb” continue to follow it closely.

Under regulatory pressure, Tether began releasing quarterly attestation reports in an attempt to regain trust. However, these reports, issued by entities such as Moore Cayman in the Cayman Islands, are merely snapshots of reserves and fall far short of a full, independent audit, limiting their credibility.

This semi-transparent status puts Tether in an awkward position: on one hand, it does disclose the composition of its reserves, demonstrating that assets exceed liabilities; on the other hand, the market remains skeptical about the depth and reliability of such reports.

Tether's decision to engage the Big Four for a comprehensive audit goes far beyond a routine financial review. This audit must cover an extremely complex combination of digital assets, traditional reserves, and tokenized liabilities—a scale so vast that it is exceptionally rare worldwide, outside of a few sovereign institutions.

For Tether, long plagued by skepticism, this is a true rite of passage. With the backing of the Big Four, USDT’s legitimacy as a digital dollar is no longer just words on paper. For institutional players like Wall Street firms, large pension funds, and sovereign wealth funds waiting to enter the market, the audit reports from the Big Four will instill greater confidence in including USDT in their asset allocations. This will not only bring more capital inflows to Tether but also accelerate the further maturation of the digital assets market.

As Tether CEO Paolo Ardoino said: “Trust is built when institutions are willing to undergo comprehensive scrutiny. This audit is part of our ongoing efforts over the years to strengthen our systems and enable Tether to meet the highest global financial standards.”

In the past, Circle held the moral high ground in the stablecoin market with its image of “compliance and transparency.” By emphasizing U.S. regulatory compliance and the advantage of Deloitte audits, it often put Tether on the defensive in competition.

But this time, Tether’s partnership with the Big Four amounts to a direct frontal assault on its rival’s strongest domain, undermining USDC’s long-standing core advantage. Once the audit is complete, USDT will no longer have a transparency deficit—and may instead leverage its massive scale to further widen the gap with its competitor.

Data shows that the market capitalization of USDT has exceeded $184 billion, with over 550 million users worldwide. This scale advantage, following four audits, is likely to translate into stronger compliance advantages, reinforcing a dominant position. In comparison, USDC has a market capitalization of approximately $78.7 billion; although it began compliance efforts earlier, it has been significantly outpaced in scale.

Perhaps influenced by Tether’s acceptance of four audits, Circle’s stock price dropped from $126 on March 24 to briefly fall below $100, and is currently trading at $101, with a 20% intraday maximum decline.

Tether's ambitions clearly extend beyond the cryptocurrency space. In fact, Tether is already one of the largest holders of U.S. Treasury bonds, ranking among the top 20, and its influence has long reached the sovereign debt market, making its role in the traditional financial system increasingly significant.

From a geopolitical perspective, for emerging market countries experiencing hyperinflation or financial sanctions—such as Turkey, Argentina, and Nigeria—a USDT audited by four major firms may be even more trustworthy than the local banking system, serving as a de facto digital dollarization tool.

This expansion of influence has transformed Tether from a simple digital currency issuer into a critical infrastructure within the global financial system. As the company states, Tether is “setting the standard for responsible, large-scale digital asset infrastructure.”

To prepare for the Big Four audit, Tether made key personnel changes in early 2025, appointing Simon McWilliams as Chief Financial Officer (CFO). His addition helped Tether establish an internal financial framework meeting the standards of top audit firms, ensuring the company had the institutional foundation required to undergo a comprehensive audit.

McWilliams, speaking about the audit, said: "We selected this Big Four accounting firm through a competitive process, as the company has already been operating in accordance with Big Four audit standards, and the audit will proceed smoothly." This statement reveals Tether's confidence in passing the audit and indicates that internal preparations were already in place.

The most strategic step in Tether’s compliance strategy is the launch of USAT, a compliance-focused stablecoin specifically designed for the U.S. market, achieving full alignment with the U.S. regulatory framework.

In September 2025, Tether officially launched USAT, its first fully U.S.-regulated, dollar-backed stablecoin. USAT was designed specifically to meet the stringent requirements of the GENIUS Act, which was signed into law by the U.S. President in 2025, establishing a federal regulatory framework for stablecoin issuers.

The Genius Act sets strict standards for stablecoin issuers: 100% reserve backing, annual independent audits, AML compliance, and layered regulatory requirements. USAT was built from its inception to meet these standards—appointing Bo Hines, former Executive Director of the White House Crypto Committee, as CEO, issuing through Anchorage Digital, the first federally chartered crypto bank in the U.S., and entrusting Cantor Fitzgerald, a Wall Street giant, as reserve custodian.

Notably, just one month after its launch, USAT successfully passed an audit by Deloitte. With a current market cap of approximately $27 million, USAT is far smaller than USDT’s $184 billion, but it represents Tether’s highest standard of compliance.

This two-track arrangement reflects Tether’s strategic deployment: USDT continues to serve the global market, particularly emerging markets and regions with relatively relaxed regulation, while USAT serves as a compliant digital dollar designed for U.S. institutions and regulated entities. This allows Tether to adapt flexibly to different regulatory environments, maintaining its global reach while meeting the stringent requirements of the U.S. market.

Beyond financial compliance, Tether has also undergone a transformation in its law enforcement cooperation. According to Tether’s disclosures, it has assisted law enforcement agencies in 62 countries and regions worldwide with over 1,800 cases, freezing USDT valued at $3.4 billion linked to illicit activities. According to a report by blockchain analytics firm Elliptic, as of the end of 2025, Tether and Circle had collectively frozen approximately 5,700 wallets containing assets worth around $2.5 billion, three-quarters of which were USDT.

Tether CEO Paolo Ardoino said: “Law enforcement agencies reached out to us with relevant information; after verification, we take action in accordance with the laws of the respective countries. We follow this process when cooperating with agencies such as the U.S. Department of Justice and the FBI.”

This law enforcement collaboration has not only improved Tether’s regulatory image but also provided strong support for its compliant operations worldwide. By transitioning from a passive “regulatory target” to an active “law enforcement partner,” Tether has successfully repositioned itself as a responsible participant in the global financial system.

Tether's signing with the Big Four is not just a self-rescue, but the true beginning of an industry reset.

With the Big Four accounting firms deeply involved, the transparency and institutionalization of stablecoins are aligning with traditional finance. As comprehensive audits become an industry standard, competition in the stablecoin market will no longer focus solely on who is more transparent, but rather on who can deliver more value within a compliant framework.

For Tether, this long-overdue rite of passage is both an end and a beginning. It marks the completion of Tether’s journey from controversy to recognition, and the start of its new chapter as a global digital financial infrastructure. For the entire digital assets industry, a more mature, transparent, and institutionalized era has already begun.