Tether is the issuer of USDT, the largest stablecoin in circulation and the de facto dollar rail of the offshore and emerging-market crypto economy, with total token-related liabilities of approximately USD 183 billion as of 31 March 2026. The company relocated its headquarters to El Salvador in January 2025 and sits outside every major-market stablecoin licensing regime, which is exactly the tension bank readers need to hold: USDT is the shadow-dollar rail their clients and counterparties already touch, and simultaneously the largest single sanctions and AML (anti-money-laundering) surface in the digital-asset market. Understanding Tether is a prerequisite for stablecoin strategy work, even for institutions that will never transact in USDT.
Scale and reserves
Tether's reserves are concentrated in short-dated US government debt: direct and indirect exposure to US Treasury bills stood at approximately USD 141 billion as of 31 March 2026, a position the company notes would rank it among the larger sovereign holders, alongside gold and bitcoin holdings and an excess-reserve buffer of USD 8.23 billion as of the same date. The reserve reporting comes as quarterly attestations by the accounting firm BDO. An attestation is not an audit: it confirms stated balances at a point in time and does not examine controls or reserve composition across a period, and Tether has never published a full annual audit. The reserve economics also explain the company's scale as a business, with USD 1.04 billion in net profit reported for the first quarter of 2026 largely from interest on the reserve portfolio.
Regulatory record
Two 2021 US actions frame every diligence conversation about Tether. In February 2021 the New York Attorney General settled with Tether and its affiliated exchange Bitfinex for USD 18.5 million, barring them from trading with New Yorkers, after finding that USDT had at times not been fully backed and that funds had been commingled to cover an USD 850 million shortfall. In October 2021 the CFTC (Commodity Futures Trading Commission) fined Tether USD 41 million for misrepresenting its reserves between 2016 and 2019. Tether admitted no wrongdoing in the NYAG settlement, and its disclosure practices have improved materially since, but the record is why "fully backed" claims are tested rather than taken on trust. The company announced its headquarters move to El Salvador in January 2025, aligning its domicile with its emerging-markets strategy rather than with a major financial-centre supervisor.
Distribution and the MiCA divide
USDT's distribution is the source of both its resilience and its regulatory isolation. Its dominant venue is the Tron blockchain, which carried more than USD 90 billion of circulating USDT as of July 2026, with transfer volume on Tron running at USD 4.2 trillion year-to-date, serving remittance and savings corridors across Southeast Asia, Latin America, and Africa. In the regulated West the direction runs the other way: Tether did not seek authorisation under the EU's MiCA (Markets in Crypto-Assets Regulation), and MiCA-regulated venues delisted USDT for EEA (European Economic Area) users in early 2025, with Binance removing USDT spot pairs by 31 March 2025. The result is a two-tier market: Circle's USDC and regulated issuers such as Paxos serve the licensed perimeter, while USDT dominates everywhere the perimeter does not reach.
What to watch
The open items are whether Tether ever submits to a full audit or a major-market licensing regime (including any US federal stablecoin framework), how US Treasury and law-enforcement pressure on USDT's illicit-finance exposure evolves, and whether the EEA pattern of regulatory exclusion repeats in other jurisdictions. For banks, USDT flows are already in the client perimeter through exchanges and OTC desks; the compliance question is not whether to touch USDT but how to see it.