Tether Receives Fourth Audit, but Transparency Concerns Regarding USDT Remain Unresolved

Article Title: "Tether Finally Completes Big Four Audits, But USDT Transparency Concerns Are Far From Over"
Article Author: Xiaobing, DeepTech TechFlow

A Decade of Questions, Answered at Last.

On August 13, Tether announced that KPMG US has completed the first independent audit of Tether International, S.A. de C.V.'s financial statements as of December 31, 2025, issuing an unqualified opinion. This is the highest opinion an auditor can give, indicating that KPMG believes Tether's financial statements fairly represent the company's financial position, results of operations, and cash flows in all material respects in accordance with US Generally Accepted Accounting Principles (US GAAP).

The audit covered the balance sheet, income statement, statement of changes in equity, and statement of cash flows. The auditors physically counted and inspected each gold bar held by Tether, verified underlying evidence of transaction records, systems, valuations, counterparties, and asset ownership. The audit found that as of the end of 2025, Tether's reserve assets exceeded liabilities by $6.814 billion.

When CEO Paolo Ardoino announced this result on Twitter, his tone was unusually confident. He referred to it as the "largest inaugural financial audit in history" and directly pushed back against years of criticism from Tether skeptics.

The significance of this audit should not be underestimated, but it is not the end. By carefully dissecting the contents and boundaries of this audit, one can see the most subtle and crucial part of the USDT transparency issue.

Audit and Attestation are Two Completely Different Things

Let's first clarify a basic concept.

Over the past few years, Tether has released quarterly reserve attestation reports from BDO Italy. These reports verify whether Tether's reserve assets cover the issued token liabilities at a specific point in time. It's like taking a snapshot of a safe: is the money there, and is it enough?

What KPMG did this time is something entirely different. A full financial statement audit goes beyond just counting how much money is in the safe; it examines the source of this money, the flow paths, ownership records, valuation methods, and the integrity of the entire financial reporting system. Auditors need to sample verify transactions, assess internal controls, judge the adequacy of accounting policies, and check if related party transactions are adequately disclosed.

This is also why Tether took ten years to reach this point. In 2017, Friedman LLP was terminated, MHA Cayman was engaged in 2021 (later merged into the BDO network) for attestation, SOC 2 Type 1 information security audit was completed in 2024, in March 2026 it was announced that one of the Big Four would be engaged for a full audit, and PwC was involved in preparing the internal systems for compliance. Every step on this path was laying the groundwork for the ultimate audit.

From attestation to audit, this leap is a substantial advancement for Tether. However, from the perspectives of investors and regulators, several questions still need to be asked.

Five Remaining Questions

Where is the audit report itself?

As of the time of writing, Tether has announced the completion of the audit and KPMG's unqualified opinion but has not provided the full KPMG audit report to the public or media. CoinDesk has inquired with Tether about whether they will make the complete KPMG audit document public but has not received a response. The value of an audit report lies not only in the conclusion page but also in the footnotes, accounting policy explanations, key audit matters, breakdown of reserve asset classifications, and related-party transaction disclosures. By only disclosing the conclusion and not the complete report, external analysts cannot independently verify those critical details.

What is the scope of the audited entity? KPMG audited the entity "Tether International, S.A. de C.V." Ardoino told The Block that this is the issuer of USDT, and the audit covered all financial data. However, Tether's corporate structure is much more complex than a single entity. The parent company Tether Holdings Limited (registered in BVI), Tether Operations Limited, Tether Investments Limited, Tether Gold-related entities, etc., form a multi-layered holding structure. In a previous attestation report by BDO, the assets of Tether Investments Limited were explicitly excluded from the definition of "reserves." Whether KPMG's audit scope aligns with BDO's attestation coverage, whether intra-group related-party transactions were thoroughly examined within the audit scope, these are questions that can only be assessed by seeing the full report.

An $68 Billion Reserve Buffer is Rapidly Shrinking. At the end of 2025, the reserve exceeded liabilities by $68.14 billion according to KPMG's audit. By the first quarter of 2026, BDO attestation showed this number had risen to around $71-82 billion (different data sources vary). However, by the second quarter of 2026, BDO attestation revealed the reserve buffer had decreased to $41.1 billion, a reduction of approximately 40% from the KPMG audit point.

Credit and Concentration Risks of the Reserve Assets Have Not Disappeared Post-Audit. An unqualified opinion means the financial statements are fairly presented, not that the reserve assets are risk-free. As of the first quarter of 2026, Tether's reserves consist of approximately 80-83% U.S. Treasury bonds, 5-7% overnight repos, 3-5% commercial paper, as well as gold (over 146 tons), Bitcoin, and secured loans. Secured loans have long been a focus of external scrutiny. Tether had pledged to eliminate this asset class by the end of 2023, but as of mid-2024, $5.5 billion remained. Questions about who the loans are extended to, the collateral involved, and the concentration levels have always had limited disclosure in attestations. A full audit report, if made public, should provide a more detailed breakdown in the footnotes.

Audit Timing and Going Concern. This audit corresponds to financial data from 8 months ago. In these 8 months, USDT's circulation has grown from around $1.44 trillion to over $1.84 trillion, an increase of about $400 billion. For a financial institution whose balance sheet has inflated at such a pace, the timeliness of an annual audit is inherently discounted. Will Tether commit to KPMG conducting the 2026 annual audit? Will the audit frequency increase to bi-annual or quarterly? These questions remain unanswered by Tether.

A Key Move in the Regulatory Chessboard

Understanding the strategic significance of this audit requires consideration within the broader regulatory landscape.

In July 2025, the U.S. President signed the GENIUS Act, establishing a federal stablecoin regulatory framework. The law mandates compliant issuers to hold a 1:1 cash or short-term Treasury bond reserve, publish monthly reserve attestations, and undergo an annual audit. However, crucially, the audit requirements of the GENIUS Act do not automatically extend to foreign issuers. Tether, headquartered in El Salvador, is not a U.S.-registered entity.

The bill has established a path for overseas issuers: the U.S. Treasury Department needs to make a "reciprocity determination," assessing whether the issuer's home country regulatory framework is "comparable" to that of the United States. As of mid-2026, this determination is still pending approval. Senator Jack Reed has even proposed the Foreign Stablecoin Transparency Act, aiming to close the regulatory gap for overseas issuers left by the GENIUS Act.

Against this backdrop, Tether receiving an unqualified opinion from KPMG is undeniably a strong move. The signal it has sent to U.S. regulatory authorities is that even without a legal requirement, Tether is proactively raising transparency standards, aligning itself with the most rigorous audits. Additionally, in January 2026, Tether launched the USAT token specifically for the U.S. market through Anchorage Digital Bank as a compliance Plan B.

However, there is still a gap between completing the audit and regulatory compliance. The GENIUS Act has given digital asset service providers a three-year transition period (until July 2028), after which non-compliant stablecoins will be prohibited from trading on U.S. platforms. The clock is ticking, and Tether's audit is just one of the necessary clearance conditions.

Amidst all the noise, this audit indeed proved several key points.

At least by the end of 2025, Tether demonstrated the ability to present its financial statements to the world's most rigorous audit standards and received the highest praise. This was no easy feat. KPMG would not risk its reputation to issue a false opinion to a $180 billion financial entity. After all, Andersen fell due to the Enron audit scandal, and the Big Four cherish their reputations more than anything.

The audit also confirmed that Tether has a substantial reserve exceeding its liabilities, with the reserve structure primarily consisting of U.S. Treasury bonds and physically verified gold holdings. For a company long questioned about the adequacy of its reserves, this is the most compelling answer to date.

Ardoino said this is not the end but the "beginning of the next journey," and indeed, the real test starts from the moment the full audit report is publicly available.

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