Tether's Golden Empire: The Ambition and Cracks of a "Borderless Central Bank"
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Tether's Golden Empire: The Ambition and Cracks of a "Borderless Central Bank"
It is emulating the strategic reserve logic of a sovereign nation, attempting to control the entire gold industry chain from mining to trading.
Navigating Web3 tides with focused insightsAuthor: Frank, PANews
Tether, the issuer of the world's largest stablecoin USDT, is accumulating physical gold at an unprecedented pace.
According to Tether's third-quarter 2025 report, its gold reserves have surged to $12.9 billion, up from approximately $5.3 billion at the end of 2024. In just nine months, its gold holdings increased by over $7.6 billion. Market analysis suggests that over the past year, Tether has been adding more than one ton of gold per week—a rate exceeding that of most sovereign central banks.
Beyond this, Tether has begun acquiring controlling stakes in gold mines and poaching top global precious metals traders. These moves suggest Tether is building a "borderless central bank" with U.S. Treasuries as its profit engine and gold and Bitcoin as its value "hard core." Yet behind this seemingly perfect commercial empire, is such a vision truly viable?
$12.9 Billion Gold Reserves Generate $4 Billion Unrealized Gains
Tether’s financial performance in 2025 has been remarkable. Its net profit exceeded $10 billion in the first nine months alone. This high profitability has pushed Tether's valuation to $500 billion, rivaling that of OPENAI.
The source of these tens of billions in profits reveals Tether’s "alchemy," composed primarily of two elements:
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Operating profit: Stable interest income generated from its holdings of approximately $135 billion in U.S. Treasury bonds.
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Unrealized gains: Massive paper profits from its gold and Bitcoin reserves during the 2025 bull market.
While Tether has not disclosed the exact breakdown of its profits, some analysis can still be made.
The returns from U.S. Treasuries are estimated at around $4 billion (based on a 4% annual yield).
Gold’s contribution stands out significantly. At the start of 2025, gold was priced at approximately $2,624 per ounce; by September 30, it had risen to $3,859—an increase of 47%. Based on Tether’s $5.3 billion gold holdings at the end of 2024, this existing "old gold" alone generated about $2.5 billion in unrealized gains. Extrapolating further, including newly purchased gold in 2025, gold appreciation likely contributed between $3 billion and $4 billion to Tether’s $10 billion profit. Bitcoin’s unrealized gains were approximately $2 billion.
This makes gold a critical component of Tether’s revenue structure. But Tether is doing more than simply profiting from gold—it is emulating the strategic reserve logic of sovereign nations, seeking control over the entire gold supply chain from mining to trading.
In June 2025, Tether Investments announced the acquisition of a strategic 37.8% stake in Canadian-listed gold royalty company Elemental Altus Royalties Corp., with rights to increase its holding to 51.8%, effectively allowing Tether to take control. Through this royalty model, Tether secures long-term production shares without bearing operational risks, ensuring stable future supply for its gold reserves.
In November, Tether poached two top-tier precious metals traders from HSBC. One of them, Vincent Domien, was not only HSBC’s global head of metals trading but also a current board member of the London Bullion Market Association (LBMA).
In addition, Tether Gold (XAUT), Tether’s independent gold tokenization product in the crypto market, now has a market cap exceeding $2.1 billion. Tether, together with Singapore-based financial services firm Antalpha, plans to raise at least $200 million for a project called the "Digital Asset Vault" (DAT), aiming to accumulate XAUT tokens and establish an "institution-grade gold-backed lending solution."
The “Treasuries-Gold” Loop: Forging a “Borderless Central Bank”
Through these coordinated moves, Tether has built what appears to be a flawless business model:
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Capturing USD: Tether issues USDT, absorbing nearly $180 billion in capital from global markets.
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Investing in Treasuries: The majority of these funds are invested in highly liquid and secure U.S. Treasury bonds.
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Earning Interest: During the Fed’s high-interest cycle, Tether easily earns billions annually in "risk-free" interest income.
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Purchasing Gold: A portion of profits is used to stockpile gold and invest in the gold industry, hedging against Treasury depreciation or rate cuts.
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Excess Reserves: By accumulating gold and Bitcoin, Tether achieves excess reserve ratios, strengthening the stability and brand value of its stablecoin, which in turn enables further issuance.
Behind this integrated strategy, Tether is no longer merely a cryptocurrency company. It resembles a "shadow bank," or even a non-sovereign central bank. Its holdings of U.S. Treasuries and gold exceed those of many countries.
Within this loop, Tether has become one of the most profitable companies globally. It is expanding into AI, education, energy, agriculture, and other sectors, broadening its commercial footprint. Most importantly, as the dominant player in the rapidly growing stablecoin industry—possessing "minting power"—Tether is gaining unprecedented influence across industries and regions worldwide, a level of impact no existing corporation has yet achieved.
Three Cracks in the Perfect Empire
Yet perfection often masks the beginning of another cycle. Tether’s "flawless logic" now faces triple threats from regulation, markets, and competition. Any one of these could derail its vision of a "borderless central bank."
Threat One: Regulatory Walls
Gold reserves have brought Tether massive profits, but they’ve also become its biggest compliance hurdle. In July 2025, the U.S. passed the GENIUS Act, mandating that stablecoin issuers operating in the U.S. must back their reserves 100% with "high-quality liquid assets"—i.e., cash or short-term U.S. Treasuries.
This strikes directly at Tether’s weak point. According to Tether’s Q3 report, its total reserves stand at $181.2 billion, while outstanding USDT is $174.4 billion. Of this, $12.9 billion in gold and $9.9 billion in Bitcoin, along with other investments and loans, are all classified as "non-compliant assets" under the GENIUS Act.
A 2025 Morgan Stanley report bluntly stated that if Tether wishes to operate compliantly in the U.S., it may be forced to sell off its "non-compliant assets," including Bitcoin and precious metals.
This scenario has already played out in Europe. Due to non-compliance with the EU’s MiCA regulations, nearly all major exchanges—including Coinbase and Crypto.com—delisted USDT from the European Economic Area (EEA) between late 2024 and March 2025.
As the details of the GENIUS Act roll out over the next 18 months, all U.S.-compliant exchanges (such as Coinbase and Kraken) will likely make the same move. Although Tether claims not to serve U.S. customers, being collectively blocked by U.S. exchanges would severely damage its global liquidity—effectively forcing it out of the world’s largest regulated market.
Tether’s response confirms the seriousness of this threat. In September 2025, Tether announced the creation of Tether America, appointing former White House advisor Bo Hines as CEO (see: "Bo Hines: From White House Crypto Liaison to Fast-Tracked Leader of Tether’s U.S. Stablecoin"), planning to launch a new stablecoin called USAT in December. This USAT will be 100% compliant (holding only Treasuries) and targeted exclusively at the U.S. market. This appears to be a "firewall" strategy—sacrificing USDT’s future in the U.S. to protect the global USDT’s gold and Bitcoin reserve strategy. However, USAT seems more like a tactical maneuver than a fundamental transformation.
Threat Two: Bear Market Erosion
As previously noted, Tether’s profits come mainly from two sources: Treasury yields and appreciation in gold and Bitcoin. Tether’s exceptional performance in 2025 was largely due to record highs in both gold and Bitcoin prices.
However, this profit structure carries significant risk. If market conditions shift in 2026, Tether’s profit growth could slow—or even turn into losses.
First, multiple major financial institutions predict the Fed will enter a rate-cutting cycle in 2026. Estimates suggest each 25-basis-point cut would reduce Tether’s annual income by $325 million.
Second, after a frenzied bull run in 2025, gold and Bitcoin markets remain optimistic in 2026 amid rate-cut expectations. But markets always bring surprises. If either or both enter a bear market (though they may not do so simultaneously—this diversification being the core of Tether’s hedge strategy), Tether’s gains from these assets could sharply decline, potentially wiping out profits in the new cycle.
Moreover, during crypto bear markets, stablecoin issuance growth slows or even contracts, directly impacting Tether’s revenue.
Threat Three: Rising Competitors
Tightening regulations are reshaping the stablecoin landscape. The U.S. GENIUS Act and EU MiCA regulations are clearing the path for "natively compliant" stablecoins from the outset.
The biggest beneficiary is Circle’s USDC. As a compliance leader, USDC is welcomed by regulators. Circle’s Q3 2025 earnings revealed that USDC’s circulating supply reached $73.7 billion at quarter-end, reflecting a year-on-year growth of 108%.
In contrast, while Tether remains dominant, signs of slowing growth are emerging. Data from September 2025 shows that although USDT’s scale grew to $172 billion, its growth rate has clearly decelerated compared to USDC. According to PANews’ earlier "2025 Global Stablecoin Industry Development Report," at current issuance growth rates, USDC is projected to surpass USDT around 2030. In summary, the "gold strategy" is both Tether’s moat and a potential vulnerability eroding its commercial fortress. That said, objectively speaking, this business model—designed from the outset for risk hedging—remains the most impressive architecture built in the crypto world to date. After all, institutions including JPMorgan and Goldman Sachs believe the Fed’s 2026 rate-cut cycle won’t trigger a bear market, but instead could fuel new highs in gold and Bitcoin prices. If this scenario unfolds, Tether’s "gold strategy" will propel it to even greater heights.
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