Tether CEO Paolo Ardoino proudly posted a chart on X showing that "Tether is the 7th largest buyer of US Treasuries in 2024 compared to other countries", even surpassing Canada and Taiwan.

USDT occupies 60% of the stablecoin market, holding $113 billion in US Treasuries

As the world's largest stablecoin issuer, Tether's USDT currently has a total market cap of $143.5 billion, accounting for 60% of the overall stablecoin market. Most of its reserves are used to buy US Treasuries. According to its Q4 2024 attestation report, Tether's annual net profit exceeded $13 billion, with $113 billion in US Treasuries.

(Tether made $13 billion in 2024, with $5 billion in unrealized gains on gold and Bitcoin)

While China and Japan have significantly sold off US Treasuries to address domestic economic needs and the uncertainty of the US economic outlook, Tether has become a major buyer in 2024. According to Ardoino's post, Tether bought $33.1 billion in US Treasuries last year, ranking 7th, behind the Cayman Islands, France, Luxembourg, Belgium, Singapore, and the UK. China and Japan are the largest sellers.

Short-term Treasuries are only for creating liquidity

Since Tether's purpose in buying US Treasuries is to serve as stablecoin reserves, which must be sellable at any time to create liquidity, it has only purchased US Treasury Bills, or short-term bonds with maturities of less than one year.

Compared to Berkshire Hathaway's $286.5 billion in short-term US Treasuries, Tether's $113 billion does not seem too large.

(Berkshire Hathaway stock price hits a new high, will Buffett buy the dips or hold tight to Treasuries?)

Short-term Treasuries still bring high returns to Tether

Tether's $13 billion in net profit for 2024 included $7 billion from US Treasury income. Although the Federal Reserve has initiated a rate-cutting cycle, the current 4.3% yield on $113 billion in short-term Treasuries can still bring Tether nearly $5 billion in almost risk-free income.

Is Tether too big to fail?

Tether claims that its stablecoin brings US dollars to over 400 million people, especially in emerging markets and developing countries, where financial inclusion is highly dependent on USDT.

Tether is not directly supervised by any specific regulatory authority and has no clear rules for its reserve investments. US and EU regulators have expressed concerns about the systemic risks of stablecoins, such as the potential for rapid redemptions to pose risks to traditional banking institutions. However, after the Silicon Valley Bank run, both Circle and Tether have significantly reduced their bank deposits, shifting primarily to short-term Treasuries and repurchase agreements. Tether's $113 billion in Treasuries accounts for less than 2% of the overall market (estimated to be between $6.6 trillion and $8.3 trillion in outstanding Treasuries by the end of 2024). Considering just the redemption risk of its bond holdings, Tether may not be too big to fail.