From Stablecoin Giant to Treasury Titan: Tether Emerges as a Major Force in U.S. Debt and Gold Markets

In a remarkable financial evolution, Tether Holdings Ltd., best known for issuing the USDT stablecoin, is now operating on a scale that places it among significant players in the world of traditional safe-haven assets. The company has become one of the globe's largest private-sector holders of both U.S. Treasury securities and physical gold, a dual-position that blurs the lines between the crypto ecosystem and institutional finance.

According to its latest attestation report prepared by BDO and published on January 30th, Tether's direct holdings of U.S. Treasuries exceed $122 billion. When including overnight reverse repurchase agreements, its total exposure climbs above $141 billion. This staggering sum positions the firm as a top-tier, non-sovereign buyer of U.S. government debt, a market historically dominated by foreign nations, pension funds, and major banks.

Parallel to its Treasury buildup is a massive accumulation of gold. Through its reserves and its tokenized gold product, XAUT, Tether has assembled an estimated 80 to 116 metric tons of the precious metal. In the fourth quarter of 2025 alone, as investors flocked to hedges against inflation and geopolitical strife, the company added approximately 27 tons. This hoard solidifies its status as the world's largest private gold holder.

The engine behind this expansion is the relentless demand for USDT. During 2025, Tether minted nearly $50 billion in new tokens, pushing total circulation past $186 billion. The model is straightforward: dollars used to create USDT are primarily invested in short-term, highly liquid assets like Treasury bills. The yield generated becomes profit for Tether, while the assets back the stablecoin's peg.

"This isn't just a crypto story anymore; it's a macro story," said David Chen, a portfolio manager at a global asset management firm. "Tether is now a meaningful participant in the funding of the U.S. government and a major factor in gold market liquidity. Its growth trajectory means it could become a systemic piece of financial infrastructure within a few years."

However, this rapid ascent is raising eyebrows in policy circles. A recent research paper from the Federal Reserve Bank of Kansas City highlighted a potential concern: while stablecoins boost demand for Treasuries, they may simultaneously pull deposits away from the traditional banking system. Unlike banks, stablecoin issuers like Tether are not in the business of making loans, potentially reducing credit availability in the broader economy.

"It's outrageous that an opaque, unregulated entity born in the crypto wild west now holds more sway over our debt market than many established nations," argued Maya Rodriguez, a financial policy analyst and vocal critic. "We're outsourcing a core function of our financial system to a company whose primary allegiance is to its own profitability, not public welfare. The GENIUS Act seems to be legitimizing this shift without adequate safeguards."

Emerging U.S. legislation, including the proposed GENIUS Act, is beginning to formalize the role of firms like Tether. The rules effectively channel stablecoin reserves into government-backed assets, cementing their status as private-sector funders of sovereign debt.

"The market is adapting," noted Arjun Kapoor, a fintech consultant. "Regulators are acknowledging stablecoins' permanence and trying to harness their capital for public debt markets. Tether's balance sheet is the leading indicator of this convergence. For investors, it signals that the largest crypto-native firms are graduating into a new, hybrid class of financial institution."

While Tether's holdings remain a fraction of the vast $26 trillion Treasury market, projections from several major banks suggest the total stablecoin market could swell into the trillions of dollars within the next decade. Tether's current footprint offers a preview of that future—one where the lines between digital assets and traditional finance are increasingly indistinct.

This story was originally published by TheStreet on Feb 2, 2026. Add TheStreet as a Preferred Source by clicking here.