Tether's Gold Strategy: Building a Borderless Shadow Bank?

Tether: From Stablecoin Issuer to Gold Market Powerhouse

Tether, the issuer of the world's largest stablecoin USDT, is accumulating gold reserves at an unprecedented pace. Tether's Q3 2025 reports show its gold reserves have surged to $12.9 billion, up from approximately $5.3 billion at the end of 2024. This signifies a net increase of over $7.6 billion in just nine months. Market analysis indicates that Tether was adding over one ton of gold weekly over the past year, a rate exceeding even the central banks of most sovereign nations.

Furthermore, Tether has begun acquiring controlling stakes in gold mines and poaching top global precious metals traders. These moves suggest that Tether is building a "borderless central bank" relying on US Treasuries as a profit engine and gold and Bitcoin as the value "hard core". However, is this vision truly achievable?

Record Profits Fueled by Gold

Tether's financial performance in 2025 has been astonishing, with net profits exceeding $10 billion in the first nine months. This surge in profits has propelled Tether's valuation to $500 billion, making it comparable to companies like OpenAI. These profits originate from two primary sources:

• Operating Profit: From the stable interest income generated by its approximately $135 billion US Treasury holdings.
• "Unrealized" Gains: From the appreciation of its gold and Bitcoin reserves during the 2025 bull market.

Estimates suggest that gold contributed between $3 and $4 billion to Tether's profits, while Bitcoin contributed around $2 billion. This makes gold a critical component of Tether's revenue structure.

Controlling the Gold Supply Chain

Tether is not only profiting handsomely from gold but is also seeking to control the entire supply chain, from mining to trading. In June 2025, Tether Investments announced the acquisition of 37.8% of Canadian-listed gold mining royalty company Elemental Altus Royalties Corp., retaining the right to increase its stake to 51.8%. This allows Tether to secure a steady stream of gold production over decades to come without the risks of operating mines.

In November, Tether poached two top precious metals traders from HSBC. One of them is Vincent Domien, the global head of metals trading at HSBC and a board member of the London Bullion Market Association (LBMA). Additionally, there's the independent gold tokenized product Tether Gold (XAUT), with a market capitalization exceeding $2.1 billion.

Tether is partnering with Singaporean financial services firm Antalpha to raise at least $200 million for a project called "Digital Asset Vault" (DAT). This fund aims to accumulate XAUT tokens and establish an "institutional-grade gold-backed lending solution".

"US Treasuries - Gold": Building a Borderless Central Bank

Through a series of strategic moves, Tether is building an idealized business model:

• Absorbing Dollars: Tether issues USDT, absorbing nearly $180 billion in funds from the global market.
• Investing in US Treasuries: It invests the majority of these funds in highly liquid and secure US Treasuries.
• Earning Interest: In the high-interest rate cycle imposed by the Federal Reserve, Tether can easily earn billions of dollars annually from "risk-free" interest.
• Buying Gold: It uses a portion of the profits to hoard gold and develop the gold industry, hedging against the risks of US Treasury devaluation or interest rate cuts.
• Excess Reserves: By hoarding gold and Bitcoin, Tether achieves an excess reserve ratio, further bolstering the stability of the stablecoin market and brand value, ultimately leading to the issuance of more stablecoins.

Tether has already become one of the most profitable companies in the world, and it is expanding into other areas such as AI, education, energy, and agriculture. More importantly, in the context of the rapid growth of the stablecoin industry, Tether, as a giant with the "right to mint money", will exert a strong influence on more industries and regions globally.

Threats Facing Tether's Empire

However, Tether's idealized business model faces three major threats:

1. Regulation: New laws like the GENIUS Act in the US and MiCA in the EU are placing restrictions on the assets that can form the reserves of stablecoins.
2. Market Conditions: Tether's profits are heavily reliant on rising gold and Bitcoin prices, which could reverse in the event of a market downturn.
3. Competition: Compliant stablecoins like Circle's USDC are gaining traction, fueled by regulatory support.

Despite these challenges, Tether's gold strategy remains a fascinating design in the crypto world, especially as some financial institutions anticipate that interest rate cuts by the Federal Reserve in 2026 will fuel even higher gold and Bitcoin prices.