Important points
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Tether operates a treasury- and repo-heavy balance sheet, with $181.2 billion in reserves against $174.5 billion in debt, leaving a surplus of $6.8 billion.
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High interest rates have turned these reserves into profits, generating more than $10 billion in interest income by 2025, which is unusual for a typical cryptocurrency issuer.
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Exercise policy-style measures by freezing authorized wallets, migrating supported blockchains, and allocating up to 15% of profits to Bitcoin.
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There are limits to comparing central banks. Tether has no public authority or backstop, relies on certificates rather than full audits, and relies on private trading partners.
Tether no longer looks like just a stablecoin company. The company’s balance sheet is stuffed with short-term US Treasuries, reverse repos, gold, and even Bitcoin (BTC). It mints and redeems dollars on a large scale and can also freeze addresses upon request by law enforcement.
According to the latest certification, there are $181.2 billion in reserves against $174.5 billion in debt, $6.8 billion in excess and over $174 billion in USDT (USDT) in circulation. With interest rates high, the Treasury-led portfolio has generated more than $10 billion in profits by 2025, a number more typical of financial institutions than crypto startups.
That’s why critics and supporters alike argue that Tether is acting like a private, dollar-pegged central bank for parts of the crypto economy, albeit without a mandate or safety net.
Acting like a central bank: what does it mean?
In reality, Tether does four things that resemble the actions of a central bank.
First, it issues and redeems money on demand. Verified customers mint new USDT by transferring fiat currency and redeem by sending USDT back to dollars. This primary market expands or contracts supply, while secondary market transactions take place on exchanges. The actual balance sheet changes occur within its minting and redemption pipeline.
Second, it manages its reserves like a fixed income desk, keeping most of its assets in short-term US Treasuries and repos, with some gold and Bitcoin as well. The Treasury-led portfolio maintains liquidity and adds steady demand for Treasury Bills, and the Fixed Income Desk is currently actively tracking Treasury Bills in identifying key buyers of Treasuries.
Third, in a high interest rate environment, you can earn seigniorage-like income. Users hold interest-free tokens while Tether collects interest on Treasury bills, resulting in more than $10 billion in profits and $6.8 billion in excess reserves as of Q3 2025. This revenue stream is precisely why the comparison of “private central banks” resonates.
Finally, use policy-style tools such as contract features that allow you to freeze addresses at the request of law enforcement or sanctioning authorities. It also has the ability to add or remove blockchains such as Omni, BCH-SLP, Kusama, EOS, and Algorand to manage operational risk.
Although this is not sovereign monetary policy, it still represents active intervention in assets like the dollar used by hundreds of millions of people.
Did you know? Tether was first launched as Realcoin in July 2014 and rebranded to Tether in November of the same year. It is one of the oldest stablecoins still in active use.
Expansion of policy tools similar to central bank tools
Tether is currently interfering with its dollar system in ways that resemble policy instruments.
On the compliance side, addresses associated with sanctions or law enforcement actions can be frozen. The company first introduced an aggressive wallet freezing policy in December 2023 and has since used the policy in certain cases, including wallets linked to the sanctioned Russian exchange Garantex. These are issuer-level interventions that immediately impact who can move dollar liquidity on-chain.
In terms of market operations, Tether’s reserves are managed like a short-term bond portfolio, with an emphasis on U.S. Treasuries and reverse repos. This structure allows minting and redemption activities to align with highly liquid assets that earn interest while maintaining flexibility.
That combination helped generate billions of dollars in profits and a significant excess reserve buffer, according to Tether’s latest testimony. These mechanisms resemble open market-style management, although Tether is still a private issuer rather than a central bank.
Tether also defines its own operating boundaries. We added and retired blockchain to focus on activities where usage and infrastructure was strongest, stopping minting and subsequent support on legacy networks such as Omni, BCH-SLP, Kusama, EOS, and Algorand, and continuing redemptions during the transition period.
Separately, it is diversifying its reserves by allocating up to 15% of realized operating profits to Bitcoin, a policy introduced in 2023 that will be an issuer-level decision with system-wide implications.
From stablecoin issuer to infrastructure player
Over the past 18 months, Tether has transformed from a single-token company to a broader financial infrastructure group.
In April 2024, it was reorganized into four business units: Tether Finance, Tether Data, Tether Power, and Tether Edu. These divisions will manage Tether’s digital asset services, data and AI ventures (such as HolePunch and Northern Data), energy initiatives, and education programs. This restructuring formalized a strategy that goes far beyond issuing USDT.
On the power side, Tether has committed capital and expertise to Volcano Energy in El Salvador, a 241-megawatt wind and solar power facility designed to power one of the world’s largest Bitcoin mining operations. This project directly supports payments and settlement uptime. The company has also ended support for several legacy blockchains in order to focus tools and liquidity where demand is strongest. This is a network operations decision that impacts the entire ecosystem.
To directly address the US market, Tether announced USAT (USAT), a US-regulated dollar token that will be issued by Anchorage Digital Bank under domestic regulations, alongside the existing offshore USDT. If launched as described, USAT would provide a tether-compliant land platform, while USDT would continue to serve the global market.
Why does the analogy break down?
Importantly, Tether is not a sovereign monetary authority.
It does not set interest rates, act as a lender of last resort, or operate under public mandate. The company says it is in talks with the Big Four to audit its reserves, but its transparency still relies on quarterly certifications rather than full financial audits.
This gap between certification and auditing is one reason why critics reject the “central bank” label.
There is also the issue of balance sheets. Tether has maintained a portfolio of secured loans from time to time, after previously saying it would reduce such exposure. This asset category is under intense scrutiny due to the importance of terms and counterparties. More broadly, the company relies on private banking, custody and repo counterparties rather than a sovereign backstop, so trust and market infrastructure remain outside of the company’s direct control.
Finally, some of Tether’s most policy actions are primarily compliance measures, such as proactively freezing addresses listed by sanctioning authorities.
Did you know? In December 2023, Tether will I was saved More than 140 law enforcement agencies across 45 jurisdictions have frozen $835 million related to fraud and illegal activities.
Where does tether fit into the big picture?
After all, Tether seems more like a private dollar-denominated central bank for cryptocurrencies than a typical stablecoin issuer. They can expand and contract supply through large-scale minting and redemptions, hold short-term Treasury bills and repos, earn billions of dollars in interest income, and take compliance actions as needed.
However, this analogy only goes so far. There are no public mandates or backstops, transparency remains dependent on certification, and its policy actions are primarily focused on compliance rather than macro-control.
Stay tuned for reserve composition, benefits, redemptions, audit progress, and how the USAT plan with Anchorage plays out in the US. Because that’s where the story either continues to resemble central banks or starts to diverge.