Tether’s European exit and the transparency gap

Tether’s June 30, 2026, reserves exceed liabilities by $4.11 billion. Total assets reached $187.75 billion against $183.64 billion in total liabilities, according to the most recent transparency report. This cushion follows an unqualified opinion from KPMG US on Tether International’s 2025 financial statements. The July 1, 2026, MiCA deadline forced many major European exchanges to remove USDT from their order books because Tether did not seek the specific e-money-token authorization required for them to operate under the new regulatory framework. This regulatory reality removes Tether from regulated European venues. While USDT holds $190.00 billion in adjusted onchain supply, its market share in the eurozone is shrinking. Tether’s historical stability includes maintaining a $1 peg for over ten years across $189 billion in supply. However, the company previously faced a $41 million fine from the US Commodity Futures Trading Commission for misleading statements about its reserves. It also reached an $18.5 million settlement with the New York Attorney General in 2021. Tether’s total assets include $139 billion in cash and cash equivalents, including $112 billion in direct US Treasury bills. BDO Italia provides quarterly attestations that confirm reserve balances at a single point in time, though these do not test internal controls or custody arrangements. You should check if your exchange has already delisted USDT before the transition is complete.

Circle holds a distinct advantage in Europe because it secured an Electronic Money Institution license in France. This license allows Circle to provide USDC and EURC as compliant e-money tokens across the EU. These tokens avoid the daily transaction caps that apply to non-euro stablecoins. A non-euro e-money token faces a limit of 1,000,000 transactions and EUR 200,000,000 in value when used for payments. This regulation creates a soft ceiling on how far a foreign-currency stablecoin can penetrate everyday eurozone payments, aiming to limit the usage of non-euro assets. Tether chose not to pursue this authorization because it wants to manage reserves through diverse instruments. Under MiCA, issuers of e-money tokens must be an authorised credit institution or an electronic money institution. They must also hold reserves 1:1 and guarantee redemption at par at any time. This regulation creates a distinction between e-money tokens and asset-referenced tokens. Asset-referenced tokens face a more demanding regime with explicit authorisation and supervision by the European Banking Authority. While Tether provides quarterly attestations, it did not pursue the MiCA license that would allow it to remain on European exchanges. Will Tether eventually seek MiCA authorization to regain its European position?

The composition of reserves defines the risk profiles of the two largest issuers. Tether holds 7.13% in gold and 5.44% in Bitcoin. It also maintains 8.06% in secured loans and approximately $135 billion to $138 billion in US Treasury exposure. In contrast, the Circle Reserve Fund, managed by BlackRock and custodied at BNY Mellon, holds short-dated US Treasuries and cash. This simplicity allows USDC to remain liquid and permits full liquidation within one business day. The US GENIUS Act of 2025 mandates that payment stablecoins use assets with a maturity under 93 days. The Act also requires 1:1 reserve backing with permitted assets like US Treasury bills or demand deposits at FDIC-insured banks. It prohibits the rehypothecation of reserves and imposes criminal penalties of up to five years for false statements. The Act also requires the segregation of assets from corporate funds. Tether’s reserve mix includes Bitcoin and gold, which do not meet this specific US federal standard.