Tether is now the 17th largest holder of US debt
108 comments
·October 29, 2025pjc50
jameskilton
As Matt Levine has said multiple times in "Money Stuff", Tether has found the perfect business plan. They hold billions of actual USD, and get to keep all of the interest for themselves.
glitchc
Cash doesn't earn interest. T-bills and money market funds earn minimal interest compared to equities. Given the size of their holdings, Tether is paying a huge opportunity cost for their position. I don't consider that good business.
eightysixfour
They have guaranteed returns on $185b of other people's money, and they only owe the other people the principal. That's like... the best business in the world? If it was all in 6m 2.8% treasuries they'd still be making $5.2b year for holding people's cash and running a token on the blockchain.
How greedy do you have to be to look at that and say "yeah, well they could be getting bigger returns with an actively managed portfolio?"
I'm pretty sure Tether was holding less cash than they said multiple times, and at multiple points it was just a house of cards where they were inflating the price of BTC on their own, but I'm also guessing by now they've had made enough to cover.
tim333
They can't ethically put the money into equities because they are obliged to redeem the tether tokens for USD on demand. It's the same thing that your bank manage can't take the cash in your account, bet it on nvda and take the profits if it goes up, unless they want to end up like SBF.
They may have somewhat sketchily put money into bitcoin at times though.
pshan
The business is good because of the high amount of leverage they have in those T-bills and money markets since those deposits are liabilities on the balance sheet. The actual return they make on the money the owners put into the business is probably great.
Based on the Q2 2025 attestation [1] it looks like they have about 162B in assets and 157B in liabilities which leaves ~5B in shareholder equity. Even if they hold most of those assets in treasuries, they probably have an egregiously high return on shareholder equity.
(Fun fact: I think this puts their leverage ratio as high as banks during the 2008 GFC. But treasuries should theoretically be safer than subprime mortgage loans).
Equities would give a higher return on average, they don't really work when the liabilities can get called at any time. Tether has to be able to produce money for people exchanging their tether.
If you were in their position and I gave you 150 billion dollars on the condition that I can withdraw that 150 billion dollars at any time. You'd probably also park it in a short-term money market fund. If you put it in equities and it dropped 1%, you'd be on the hook for 1.5 billion.
[1] https://tether.io/news/tether-issues-20b-in-usdt-ytd-becomes...
yborg
I guess banking isn't a good business then.
crote
People are giving them money for free. They pay absolutely zero interest or dividend to "investors". For the crypto people, Tether's job is to accept money and do nothing with it.
US debt is about as stable as the dollar itself, so to their crypto customers buying bonds is a no-op. Any yield is pure profit for Tether itself.
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deadbabe
They can invest all the interest they make into higher risk higher reward investments, like the S&P500.
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airza
People give tether their USD so they can bypass currency controls when buying and selling crypto online. There are a lot of them to put it mildly.
hyghjiyhu
Can people holding tether for a day or two while entering of exiting crypto really explain these large amounts?
rattlesnakedave
There are plenty of people in jurisdictions where it is difficult to get dollars that use them for other things. Normal transactions, gambling, saving in USD. Not uncommon.
sunshine-o
I think the the market for those stablecoins is now broader than criminal and traders.
There is a huge demand for dollars by individuals outside of the US. Countries where people do not really trust their banks and currencies.
Even in the Euro zone, most saving accounts will give you about 1% after taxes. So why not going with USDT, USDC or EURC and get about 5% on a relatively safe lending platform.
gomox
Why for a day or two?
yieldcrv
yes
tim333
I hold some Tether. It's fairly normal if you speculate on crypto.
voidmain0001
NPR Planet Money has a podcast from last week speaking about hedge funds buying US treasuries. They touch on the chaos that can come from hedge funds buying treasuries and suggest that hedge funds might be lumped into the too big to fail group.
https://www.npr.org/2025/10/10/nx-s1-5565181/trilemma-treasu...
actionfromafar
Do they hold it? How would we know?
m00dy
Cantor Fitzgerald
cypherpunks01
Correct, this is the answer. Wasn't really known until this year.
https://fortune.com/crypto/2024/11/25/commerce-nominee-howar...
nikhizzle
Armchair economist here - one implication of this is that a crypto liquidation will cause global interest rates to spike at a time when they will need to be lower to calm the markets.
Selling massive amounts of debt with no additional demand means the required return must be higher.
tim333
I'm not sure I see that, depending what you mean by crypto liquidation. If you mean the prices of dogecoin etc. falling then that mostly just effects the number of Tethers changing hands between one speculator and another and wouldn't really affect the bond market.
If you mean Tether holders redeeming them for US dollars, that would involve selling treasuries but I doubt it would drive the price down that much. That's a very liquid market.
delabay
Stablecoins are now a regulated industry with laws in place to address this very concern. Tether is currently not compliant, but as the largest player in the space, has a great incentive to maintain its dominance.
axus
Regulated industry.. like banking, stocks, and mortgage origination!
SideburnsOfDoom
The USA is going to have a fantastic fiscal reputation if/when that has happened.
wslh
Good point but it seems like Tether is very healthy, it has the double of daily volume than Bitcoin now and doesn't really depend on crypto rails [1].
[1] Stable Coins ⊄ Blockchains: https://www.linkedin.com/pulse/stable-coins-blockchains-seba...
heisgone
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onlyrealcuzzo
The US Treasury market is BY FAR the deepest most liquid market in the world.
kylebenzle
[dead]
kingstnap
Have people basically loaned these guys a free $135B to let them buy bonds with?
chasebank
Yes. IIRC they made over $10B in profit last year. Easily the most successful crypto company ever.
btilly
Given how conveniently Tethers have appeared in the past to prop up key parts of the crypto ecosystem, many are skeptical that they have actually received as much money as they claim.
FireBeyond
Their math has been hilariously unbelievable at times (except to the crypto bros)... at one point they claimed they were banking deposits of about $3B a week.
To put that in perspective, that's what Saudi Aramco or Samsung might get as revenues.
But hey, don't just trust them, trust their bank and it's 33 year old deputy CEO who, when people pointed out that that number didn't match up with international banking numbers, said that was because those people didn't understand the banking licenses being used in The Bahamas, and that there were two, though he couldn't remember their names, or which one they had, or whether they maybe had both.
And when that looked hilariously bad, they removed his info from the bank's website.
And when that looked bad, they added it back.
And when that looked bad, they removed the bank's whole website, and replaced it with a broken WP template with no working links.
Hey, look, several years after that, go to Deltec's website. "Ultra sophisticated private banking" running on a different WordPress site. "Client login"? "This site can’t be reached Check if there is a typo in ebanking.deltecbank.com. DNS_PROBE_FINISHED_NXDOMAIN". Just as has been the case for years.
"Sounds legit to me" say the bros.
throwaway-0001
If they bought bonds would be amazing. 99% chances there is not much left. We’ve been saying this for years so not sure when will crash. But definitively it’s a scam
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delabay
Totally, utterly, completely false. An honest discussion of this matter has no space for tether truthers stuck in the year 2015.
disgruntledphd2
Can you provide their audits then please?
Otherwise I'm not sure how you can be so certain.
tock
Stablecoins are the greatest business model ever. You hold money as treasuries and earn risk free interest. There is literally no tech spend either. All profit no expenses.
pashabitz
17th if comparing to sovereign states. There is way more debt held by private domestic investors as well as government agencies.
somanyphotons
What are the failure modes here? Is the tether company itself a vulnerability?
exasperaited
If I was on the board of Tether or Capital Union I'd be a little scared by this.
Trump squeezed Intel for 10%, bullied Tiktok into a sale, and is ordering extrajudicial killings not that far away from the Bahamas.
What is to stop him saying: Tether is sketchily governed (seems true), is secretive and unaudited (seems true?), and holds far too much debt for the USA to be secure (could well be true) — "this is against our national security interests"?
$135bn that Congress can't touch must be really tempting. What stops him just taking it?
Especially since his sense of "national security interests" includes Canada making fun of the USA with clips of Reagan.
(I'm not sure that it would even be the wrong thing to do in a more structured, legal way at least)
btilly
Presumably the figures for Tether's holdings are based on their attestations. Should we believe those figures to be real?
There is no other source for estimates of their financial holdings than those attestations. For years, Tether has promised that they are working on an audit. No audit has emerged. This is suspicious because audits aren't particularly hard for legitimate organizations.
People have gone looking for evidence that Tether really has as much as it has said. Nobody has succeeded. For example https://www.bloomberg.com/news/features/2021-10-07/crypto-my.... Which, after noting Tether's settlement for past fraud, and prominent executives with suspicious criminal histories, famously said that Tether "is quilted out of red flags."
And yet, many strongly believe that Tether is for real. Given that nobody has produced evidence of their wealth, I regard this belief as a question of psychology.
Said psychological belief has a simple explanation. We humans have a strong tendency towards cognitive dissonance. Meaning that we reject evidence which questions our sense of identity.
If I'm a bitcoin millionaire, my likely identity includes, "I'm a millionaire." But the financial system does not allow us to directly trade bitcoin. What I can actually trade bitcoin for is Tether. And therefore my belief in my own wealth relies on trusting that Tether is equivalent to money.
How can I support that trust? I can point to someone smart and say, "They believe in Tether, so it must be real!" I can point to someone rich and say, "They believe in Tether, so it must be real!" I can get angry at anyone who doubts Tether. It is easy to observe all three behaviors from people into Crypto.
That Bloomberg article offers an ironic example. Back in 2021, many crypto enthusiasts pointed at Sam Bankman-Fried. Who was both rich and smart, and publicly believed in Tether. Therefore he was quoted on the topic. Today, of course, he is in federal prison for having run a Ponzi scheme. If we behaved logically, any crypto enthusiast who used to look up to him, should be saying, "Wait, am I sure I'm placing my trust in the right place?" But, predictably, few do that. Instead they dismiss this past mistake, and place their trust today in someone else.
Now everyone knows that crypto is full of Ponzi schemes on top of Ponzi schemes. People are often OK with trying to take advantage of the greater fool, because they don't believe that they will be the greater fool. Others see people apparently making money and get in, driven by FOMO. But statistically, most people in a Ponzi scheme will lose money. And yet they will look like really smart people - right until the scheme collapses.
So here is the real question. Does Tether really have the money? Or does the entire infrastructure of crypto Ponzi schemes rest on yet another Ponzi scheme?
FireBeyond
> For years, Tether has promised that they are working on an audit. No audit has emerged. This is suspicious because audits aren't particularly hard for legitimate organizations.
Hey, that's not true! They had several audits in progress over time, but had to fire multiple auditors for ... reasons, I guess.
And then they got one completed, but they can't let you see it! Why not? Because uhh, checks notes it's in Mandarin! (I shit you not. Straight out of their own mouths: https://tether.io/news/tether-update/ )
wartywhoa23
This bubble will inevitably burst louder than Krakatoa.
glitchc
Why is Tether a bubble?
iso1631
Isn't it linked to the value of the US Dollar, which itself is linked to the value of the US Economy?
tock
It isn't linked to the value of a US dollar. It is the US dollar. The value of 1 token will always be 1 USD. If the US economy collapses the USD will be less valuable but again: 1 token is still 1 USD.
btilly
Tether is a bubble because it is an organization run by criminals, that has in the past been convicted of fraud, and is unable to pass a basic financial audit.
The most reasonable explanation is that it is a Ponzi scheme. Which will appear to work right until it doesn't. And if it stops working, the entire crypto universe will implode.
That said, the current President and many who are close to him have significant portions of money invested in crypto. That depend on Tether. There is therefore a reasonable expectation that the US government will covertly back Tether for the next several years if there is any prospect of a collapse.
This expectation is supported by Trump's declaration last March of creating a "strategic crypto reserve" for the USA. See https://www.whitehouse.gov/presidential-actions/2025/03/esta.... On the face of it, this executive order only helps crypto by taking some of it out of circulation. But the provision in 3C of creating "budget neutral" strategies for acquiring more bitcoin, could easily cover converting actual USD to Tether. Particularly if the Tether was available at a discount to the USD.
wslh
There are even countries run by criminals, the issue is more about power than the law.
wslh
Again, this is not exactly crypto: https://news.ycombinator.com/item?id=45747958
dboreham
Curious: why? Aren't bubbles about people buying some instrument (stock, bond, bitcoin...) with borrowed real money that is not eventually worth as much as they think it is? People buying stablecoins are exchanging presumably not-borrowed real money for something that amounts to a zero-interest money market fund. Presumably not borrowed because the stablecoin explicitly pays no yield.
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throwaway-0001
Someone just deleted a comment so I’ll put it again here “ Tether is backed by nothing, so it can presumably print without end. If it's suspected they've done this, it could lose its peg. If that happens, it could have consequences.”
There is no reason not to do an audit except when it’s a scam/all money gone. No accounting company wants to do their audit - guess why.
delabay
As of 2025, USD stablecoins are a regulated industry. The frequency of uninformed comments like these will asymptotically go to zero.
wslh
> Tether is backed by nothing...
If you look at their yearly profits and liquid cash, clearly Tether is backed by something. This is not the same as saying that they have full transparency but you cannot have those profits in dollars out of thin air.
buyucu
The bigger news here is that China is rapidly winding down its holdings of US debt. This is very bad for America. We'll see American standards of living decline without the Chinese financing American extravagance.
strictnein
Japan holds more US debt than China. The UK has also surpassed China.
China had $776.5B a year ago and has $730.7B now, a roughly 5% drop. They don't seem to "rapidly winding down", unless there's some additional data I'm missing.
Look at the other holders. Belgium and Luxembourg combined have more US debt than China.
If the goal was to crash the US economy by selling their small amount of debt (which likely isn't possible for them to do, despite the rhetoric, they have less than 2% of the total debt), they would also significantly impact of all the countries listed here, which would make them very unpopular indeed:
https://ticdata.treasury.gov/resource-center/data-chart-cent...
kolanos
China currently only holds about 2% of U.S. debt. What is the risk exactly?
pixl97
Which will cause great unrest in the US and further allow authoritarian takeover. Fun times.
delabay
Stablecoins offer a relentless price insensitive buyer of US debt. This is good for America, good for democracy, and good for property rights globally.
However, stablecoins WILL cause unrest in Nigeria, Venezuela, Lebanon, and Turkey as their corrupt local currency completely erodes and the ruling class can no longer extract from their citizens.
vlovich123
That sounds like a perpetual motion machine that the US can get addicted to and then come apart once stable coins suddenly become price sensitive.
Hmm. Who do they hold it through? USDC are using Blackrock as an intermediary, but Tether have always been very opaque about their actual structure. And who are all these people who have swapped cash for a non-cash token which does NOT bear interest, unlike the bonds?