Tether Hires KPMG for First Full Audit as U.S. Stablecoin Rules Take Shape

The world’s largest stablecoin issuer is no longer operating in the regulatory shadows – after years of transparency issues, the company has now turnet to the Big Four for an audit.

As per a report from FT, Tether has formally engaged KPMG to conduct a comprehensive audit of the reserves backing its $185 billion USDT stablecoin – a move that marks a decisive break from how the company has historically managed financial disclosure, and signals that incoming U.S. legislation is beginning to reshape even the most entrenched players in crypto.

Until now, Tether’s disclosures took the form of periodic attestations prepared by smaller firms, falling well short of the scrutiny applied to regulated financial institutions. The KPMG engagement is categorically different: it will examine assets, liabilities, internal controls, and financial reporting systems in full. To prepare its infrastructure for that level of review, Tether has separately retained PwC in an advisory capacity – the first time the company has engaged two Big Four firms simultaneously. As of the most recent disclosures, Tether holds roughly $193 billion in total assets against $186.5 billion in liabilities, with over $6 billion in excess reserves. Around 82% of those reserves sit in short-term U.S. Treasury bills, with smaller allocations in Bitcoin and gold.

The commercial stakes are significant. Tether has been positioning for a fundraising round of $15 to $20 billion at a reported $500 billion valuation, though those plans are on hold pending audit results. A clean opinion from KPMG could also remove a major compliance barrier for corporate treasuries and traditional banks that have kept their distance from USDT. What it cannot easily erase is institutional memory – Tether paid a $41 million CFTC fine in 2021 for misleading statements about its reserves, and some analysts remain cautious regardless of what any single audit finds.

What the GENIUS Act Demands

The audit is driven largely by the GENIUS Act, signed into law in July 2025, which established the first comprehensive federal framework for payment stablecoin issuers in the United States. Under the law, only designated Permitted Payment Stablecoin Issuers are authorized to operate in the U.S. market – a category covering bank subsidiaries, OCC-approved non-bank entities, and state-chartered issuers below $10 billion in outstanding supply. Those exceeding that threshold must transition to federal oversight, a provision that channels large-scale issuers directly toward the OCC.

Reserve requirements are narrow and strict. Issuers must hold assets on at least a 1:1 basis, limited to U.S. currency, Federal Reserve deposits, or Treasury bills maturing within 93 days. Rehypothecation is prohibited. Monthly reserve reports are mandatory, examined by a registered independent accounting firm, and for issuers exceeding $50 billion in outstanding stablecoins – a threshold Tether easily clears – annually audited financial statements under U.S. GAAP become a legal requirement. Both CEO and CFO must personally certify those reports, with criminal liability attached to false certifications. In bankruptcy, stablecoin holders receive priority claims over all other creditors on reserve assets. Issuers are also classified as financial institutions under the Bank Secrecy Act, obligating full AML programs and FinCEN reporting, and are expressly prohibited from paying interest or yield to holders.

Tether’s U.S.-Only Play: USAT

Running parallel to the audit effort, Tether has already built its compliance answer for the domestic market. Launched on January 27, 2026, USAT is a separate stablecoin designed specifically for U.S. institutions and issued by Anchorage Digital Bank – a federally chartered institution regulated directly by the OCC, not an offshore entity. Cantor Fitzgerald serves as reserve custodian. The operation is headquartered in Charlotte, North Carolina, and led by Bo Hines, former Executive Director of the White House Crypto Council.

As of March 2026, USAT’s circulating supply sits at approximately $28 million – a fraction of USDT’s footprint, but the product launched less than two months ago and targets an entirely different segment. It is available on Kraken, OKX, Crypto.com, and Bybit, running as an ERC-20 token on Ethereum. Tether CEO Paolo Ardoino has framed USAT not as a USDT replacement but as a parallel regulated lane – USDT continues serving global retail markets while USAT pursues U.S. broker-dealers, corporate treasuries, and institutions navigating domestic compliance requirements. Analysts view it as a direct challenge to Circle’s USDC, which has long held dominance in the regulated institutional segment.

The CLARITY Act: Still Unresolved

The Digital Asset Market Clarity Act passed the House in July 2025 with 294 votes in favor, establishing a broad framework for digital asset classification and market structure. It has since stalled in the Senate Banking Committee over a single, commercially loaded dispute: whether stablecoin holders can earn yield.

The bill’s passive-yield ban – prohibiting platforms from paying interest simply for holding a stablecoin balance – is designed to prevent capital flight from traditional bank deposits. Activity-based rewards tied to actual platform usage would remain permitted, but anything resembling interest on a deposit account would be prohibited outright. The distinction carries serious commercial weight, and not everyone in the industry is prepared to accept it. According to the latest developments, Coinbase has told Senate offices directly that it cannot support the latest version of the bill as written – specifically over this provision. CEO Brian Armstrong has argued consistently that a bill with overly restrictive yield limitations does more damage to the industry than no legislation at all.

The situation briefly looked as though it might break open. The White House reportedly brokered a tentative agreement in principle with key Senate leaders on compromise language, raising expectations that the months-long standoff between crypto and banking interests was finally approaching resolution. That optimism proved short-lived, as core disagreements over the yield provisions and DeFi oversight remain sufficiently unresolved to keep the bill from advancing to a floor vote. A Senate vote is still projected somewhere in the May to June 2026 window, though that timeline carries little certainty at this stage.

The broader read is that Tether’s simultaneous push toward auditing, USAT, and GENIUS Act compliance represents a company repositioning itself for a regulatory environment that is no longer theoretical. How completely that repositioning succeeds – and whether it is enough to satisfy institutions that have spent years skeptical of the company’s disclosures – remains the defining question heading into the second half of 2026.

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