Tether Holdings SA, the world's largest stablecoin issuer, has become one of the largest gold holders globally, outside of banks and national institutions, with an $8 billion gold reserve stored in a private vault in Switzerland. This strategic move aims to reduce custodial costs. However, new regulatory frameworks for stablecoins may force Tether to sell its gold reserves to comply with requirements that only allow cash and cash equivalents as backing assets.
The company's gold reserves are comparable to those held by major precious metal trading banks like UBS Group. Tether's stablecoin, USDT, has a circulation of $159 billion, with precious metals comprising nearly 5% of its reserves. This disclosure comes amid growing regulatory scrutiny over the rapid growth of stablecoins, which could potentially bypass traditional banking systems for large fund transfers.
With the regulatory environment posing challenges, Tether might need to divest its gold holdings to meet compliance in the European and U.S. markets. Despite this, CEO Paolo Ardoino remains optimistic about gold's long-term value, citing its safety compared to national currencies and its role as a hedge against geopolitical tensions and trade wars.
