Key conclusions

• Tether has a balance sheet weighed down by high treasury and repo costs, holding $181.2 billion in reserves against $174.5 billion in liabilities, leaving a surplus of $6.8 billion.

• High interest rates have turned these reserves into profit, generating over $10 billion in interest income so far in 2025, which is occasional for a typical cryptocurrency issuer.

• It uses policy-style leverage by freezing sanctioned wallets, shifting supported blockchains, and allocating up to 15% of profits to Bitcoin.

• Comparing central banks has its limitations. Tether has no public mandate or protection mechanism, relies on approvals rather than full audits, and is dependent on private contractors.

Tether no longer looks like a regular stablecoin company. It maintains a balance sheet filled with short-term US Treasuries, repos, gold, and even Bitcoin (BTC). It mints and exchanges dollars on a vast scale and can block addresses at the request of law enforcement.

His latest certificate can be seen Reserves stand at $181.2 billion compared to liabilities of $174.5 billion, leaving a surplus of $6.8 billion and over $174 billion in tonnes of dollars (USDT) in circulation. With interest rates high, this treasury-heavy portfolio has generated more than $10 billion in profit so far in 2025, a figure more typical of a financial institution than a crypto startup.

That’s why critics and supporters alike say Tether is behaving like a private dollar-pegged central bank for a portion of the cryptocurrency, though without a sovereign mandate or safety net.

Acting like a central bank: what does it mean?

In practice, Tether does four things that resemble central bank behavior.

First, it issues and exchanges money on demand. Verified customers mint modern USDT by plugging it into fiat and exchange it by sending USDT back to dollars. This primary market increases or decreases supply while the secondary market trades on exchanges. The actual balance sheet changes occur within this mint and redemption pipeline.

Second, it manages its reserves like a fixed-income office, holding most of its assets in short-term U.S. Treasuries and repos, with some gold and Bitcoin. A portfolio affluent in Treasuries preserves liquidity and increases steady demand for Treasury bills, which bond bureaus are now actively tracking as they identify major buyers of U.S. debt.

Third, he earns what amounts to a seniority in a high-stakes environment. Users have an interest-free token, while Tether collects interest on treasury bills, resulting over $10 billion in profit and $6.8 billion in excess reserves in the third quarter of 2025. It is this revenue stream that makes the “private central bank” comparison resonate.

Finally, it uses policy-like tools such as contract features that can block addresses at the request of law enforcement or sanctioning authorities. It also has the ability to add or remove blockchains, such as liquidating Omni, BCH-SLP, Kusama, EOS and Algorand, to manage operational risk.

While this is not sovereign monetary policy, it is still an vigorous intervention in dollar-like assets used by hundreds of millions of people.

Did you know? Tether was originally launched as Realcoin in July 2014 and was renamed Tether in November of the same year. It remains one of the oldest stablecoins still in vigorous operate.

Developing policy levers that resemble central bank tools

Tether is now intervening in its own dollar system in a way that resembles a political tool.

For compliance purposes, it can block addresses associated with sanctions or law enforcement actions. This first introduced introduced a proactive wallet freezing policy in December 2023 and has since applied it to specific cases, such as wallets linked to the sanctioned Russian exchange Garantex. These are issuer-level interventions that immediately impact who can move dollar liquidity on-chain.

On the market operations side, Tether reserves are managed like a short-term fixed income portfolio, with a bulky emphasis on US Treasuries and repos. This structure allows minting and redemption activities to be aligned with highly liquid, interest-bearing assets while maintaining flexibility.

In the latest release of Tether certificatethe combination helped generate multi-billion-dollar profits and a significant buffer of excess reserves. These mechanisms resemble open market-style governance, although Tether remains a private issuer rather than a central bank.

Tether also defines its own scope of operation. Added and decommissioned blockchains to concentrate activity where usage and infrastructure are greatest, ceasing minting and later support on legacy networks such as Omni, BCH-SLP, Kusama, EOS and Algorand, while continuing buyouts during the transition period.

It diversifies reserves separately, allocating up to 15% of realized operating profits to Bitcoin. The policy introduced in 2023 represents another issuer-level decision with system-wide implications.

From stablecoin issuer to infrastructure player

Over the past 18 months, Tether has evolved from a single-token company into a broader financial infrastructure group.

In April 2024, it was reorganized into four operational divisions: Tether Finance, Tether Data, Tether Power and Tether Edu. These divisions manage Tether’s digital asset services, data and artificial intelligence ventures (such as Holepunch and Northern Data), energy initiatives, and educational programs. The restructuring formalized a strategy that goes far beyond USDT issuance.

On the energy side, Tether has committed capital and expertise to Volcano Energy in El Salvador, a 241 MW wind and solar park designed to power one of the world’s largest Bitcoin mining operations. The project directly supports payment and settlement times. The company also ended support for several legacy blockchains to concentrate liquidity where utilities and demand are greatest, a decision for network operations with implications for the entire ecosystem.

To directly address the US market, Tether announced USAT (USAT), a planned US-regulated dollar token that will be issued by Anchorage Digital Bank on a domestic basis, alongside its existing overseas USDT. If launched as described, USAT will provide Tether with a regulatory-compliant land platform while USDT will continue to serve global markets.

Why the analogy breaks down

Importantly, Tether is not a sovereign monetary authority.

It does not set interest rates, act as lender of last resort, or act under a public mandate. Its transparency is still based on quarterly certifications rather than a full financial audit, although the company says it has been in talks with a Substantial Four firm about an audit of its reserves.

This gap between attestation and audit is one reason critics reject the “central bank” label.

There are also questions about the balance sheet. Tether has at times maintained a portfolio of collateralized loans, although it has previously stated that it would do so reduce such exposure. This asset class requires analysis because conditions and counterparties matter. More broadly, the company is reliant on private banking, depository counterparties and repo transactions, rather than a sovereign backstop, which means that trust and market infrastructure remain outside its direct control.

Finally, some of Tether’s most policy-like actions are primarily regulatory compliance measures, such as proactively freezing addresses listed by sanctions authorities.

Did you know? In December 2023, Tether stated that it would assisted more than 140 law enforcement agencies in 45 jurisdictions to freeze $835 million related to fraud and illegal activity.

Where Tether fits into the bigger picture

Ultimately, Tether looks less like a typical stablecoin issuer and more like a private, dollar-denominated cryptocurrency central bank. It expands and contracts supply through large-scale minting and redemptions, holds short-term Treasuries and repo transactions, generates multi-billions of dollars in interest income, and can step into compliance activities when necessary.

However, the analogy only goes so far. There is no public mandate or backstop, transparency still depends on credentials, and policy responses largely focus on compliance rather than macro management.

Attention should be paid to the composition of reserves, profits, write-offs, audit progress and, in the US, to the development of the USAT Anchorage plan, because in this case the situation will either continue to resemble central banking or will begin to differ.