The largest stablecoin issuer reported third-quarter net operating profit of $1.5 billion and assets of $191.5 billion at Sept. 30. Its buffer over issued tokens has swung widely this year with the value of its riskier holdings.
Tether rebuilt its safety margin in the third quarter, just before the assets that drive it turned lower.
The issuer of USDT reported net operating profit of $1.5 billion for the quarter, matching the second quarter and bringing the year's total to $4.5 billion. Its quarterly attestation, prepared by accounting firm BDO, showed total assets of $191.5 billion at Sept. 30 against liabilities of $183.5 billion, almost all of them tokens in circulation. Direct and indirect holdings of U.S. Treasury bills totaled $132.4 billion.
The excess of assets over liabilities, Tether's capital buffer, was $7.95 billion, nearly double the $4.11 billion at the end of June. USDT issuance was broadly steady at about $184 billion.
A buffer that moves
The cushion has swung this year. It reached a record $8.23 billion at the end of the first quarter, then fell by about half in the second before recovering in the third.
Profit alone does not explain those swings, because Tether earned about $1.5 billion in each of the last two quarters. Tether has not said what drove them; changes in the value of holdings outside Treasury bills are one possible factor. At the end of June, Tether reported holding more than 146 tons of gold.
That matters now. Gold fell about 3.5% on Friday to a 52-week low, and bitcoin is down about 7.8% in October. If Tether's gold and bitcoin holdings remain material, the buffer today could be smaller than the Sept. 30 snapshot shows.
Freezing role
The report landed the day after Tether and Circle froze about $2.4 billion of stablecoins linked to the Binance breach, a reminder that the issuer's control over its token is part of what investors are relying on.
Stronger issuer or volatile cushion?
The bull reading is a steadily profitable issuer with most of its assets in short-term Treasuries and a buffer nearly back to its record.
The cautious reading is that an attestation is a point-in-time check, not a full audit, and that a buffer that fell by half in one quarter can do so again when gold and bitcoin fall.
What to watch
Tether's fourth-quarter attestation, gold and bitcoin prices into year-end, and the size of its gold and bitcoin positions.