World’s top stablecoin to undergo a Big Four audit

Tether (USDT), the world’s top stablecoin with more than $184 billion in market capitalization, announced that an unnamed Big Four accounting firm will “complete its first full independent financial statement audit.”

According to Tether, the audit “is slated to be the biggest ever inaugural audit in the history of financial markets.”

Tether said in the announcement that “the ongoing independent audit will provide full visibility into the strength and positioning of Tether’s reserves” and that engaging a Big Four firm “underscores its commitment to providing deep assurance that USDT is fully backed, highly liquid, and operated with world-class risk management.”

As its stablecoin is pegged to the US dollar, Tether holds dollar-denominated reserves “ensuring capital remains readily available to support the stability of USDT,” it said. Some of those reserves are in the form of US Treasury bills worth $122 billion, according to Bloomberg.

The anonymity the crypto industry allows has long plagued its ability to demonstrate asset ownership, a requirement of traditional auditing and regulatory standards. An audit of this scale therefore has largely been out of reach for cryptocurrencies.

Steven Baum, managing director and blockchain practice co-leader at CPA firm CBIZ, recently argued on blockchain-focused law podcast Block & Order, though, that “[crypto is] the most auditable asset that’s out there.”

Using the example of going to a traditional bank and asking for $5 million in cash, Baum argued that cash is, actually, not auditable, and that “you’re literally just hoping the bank has it. They don’t have it.”

In an article in JD Supra about the podcast episode, lawyers Kyle Lawrence and Moish Peltz of Falcon Rappaport & Berkman noted, “Baum emphasized that auditing crypto companies is not about guessing at values or decoding obscure technology. The core challenge is consistency, comparability, and understanding how assets are actually held and controlled. In his view, auditors benefit from crypto’s transparency, but only if they look past surface-level narratives and examine rights, obligations, and counterparties.”

The cryptocurrency industry, in essence, seems now to be in a Schrödinger’s Cat era, where digital assets can be paradoxically believed to be both auditable or unauditable, depending on if an audit ever occurs.