It is the conviction of Arthur Hayes that Tether, the preeminent digital currency issuer, is aligning itself for forthcoming accommodative shifts by the Federal Reserve. Hayes indicated rising bullion and Bitcoin as corroboration, stating that these resources would foreseeably ascend in an environment characterized by diminished interest remuneration.
Arthur Hayes Says Tether Is Positioning for a Low-Rate Environment
The most recent formal declaration of Tether, one of the most substantial digital asset corporations in the sector, has been addressed by Arthur Hayes, the former Chief Executive Officer of Bitmex.
Consistent with Hayes, the composition of assets on Tether’s balance sheet implies that the corporation is preparing for an imminent accommodative climate from the Federal Reserve, as is being prognosticated by multiple financial analysts for 2026.
It was asserted by Hayes that the expansion of Tether’s Bitcoin and bullion inventories constitutes a segment of a maneuver to preserve profitability as interest remuneration is decreased by the Federal Reserve, thereby impacting the corporation’s cash influxes.
How I read this audit is they think the Fed will cut rates which crushes their interest income. In response, they are buying gold and BTC that should in theory moon as the price of money falls.
He explained:
Nevertheless, detrimental outcomes could also be engendered for USDT’s underlying reserves by this, as Hayes articulated that “a reduction of approximately 30% in the bullion plus Bitcoin position would expunge their capital, and subsequently USDT would theoretically be rendered insolvent.”
If Hayes’s premises are substantiated, a segment of USDT’s collateral is placed in precarity by Tether’s action, permitting it to vacillate as bullion and Bitcoin fluctuate in accordance with market dynamism.
Nonetheless, it was stated by Joseph Ayoubm, the former Lead Cryptocurrency Researcher at Citi, that several key elements had been overlooked by Hayes, contending that this viewpoint was “extremely misleading,” given that this attestation was furnished by Tether with a “precise reconciliation” tenet.
Why It Matters
This signifies that only the resources underwriting the issued USDT are made transparent by Tether, but supplementary holdings and capital commitments that are not publicly itemized are still possessed by the corporation. It was estimated by Ayoubm that this undisclosed statement of condition is constituted of equity participation, cryptocurrency mining initiatives, corporate contingency funds, and potentially additional Bitcoin.
The Tether’s statement of financial position and the absence of formal verification of its resources and reserves engenders skepticism among certain parties, as the fiscal posture of a corporation that has underwritten over $180 billion in stablecoins is deemed ambiguous by some.
