Tether’s Central Bank Role: $6.8B Excess Reserves & $10B Yield
Tether now operates like a private, dollar-denominated central bank. It holds $181.2 billion in reserves against $174.5 billion in USDT liabilities, leaving $6.8 billion in excess reserves. High interest rates generated over $10 billion in interest income in 2025. Tether allocates assets to short-term US Treasuries, reverse repos, gold and Bitcoin. It mints and redeems USDT on demand, freezes sanctioned addresses, chooses supported blockchains and allocates up to 15% of profits to BTC—actions that mirror open market operations and reserve management. However, Tether lacks a public mandate, sovereign backstop and full audits, relying on quarterly attestations. Traders should monitor reserve composition, interest income, redemption flows, audit progress and the planned USAT token to assess future impacts on USDT liquidity, stablecoin market stability and broader demand for Treasuries and risk assets.
Bullish
Tether’s robust reserves and significant interest income strengthen confidence in USDT’s stability, likely supporting its liquidity and demand. In the short term, rising yields and transparent attestations could attract inflows, while policy tools like profit allocation to BTC may boost broader market stability. Over the long term, planned onshore USAT token and professional reserve management mirror central bank operations, enhancing trust and potentially increasing USDT’s market share. Although audit and backstop gaps remain, the overall balance sheet strength and central bank–style measures suggest a bullish outlook for USDT.