Tether: The Unexpected Gold Buyer Challenging Its Crypto Image

Tether has silently emerged as a leading buyer of gold, surpassing even the largest central banks in recent months.

Key Takeaways:

Tether has become a major buyer of gold, surpassing all central banks with 116 tonnes worth approximately $14 billion.
The strong demand for gold is influenced by concerns over fiscal policies, rising debt, and diminishing trust in fiat currencies.
The recent US GENIUS Act prohibits compliant issuers from holding gold, creating a paradox with Tether's gold accumulation strategy.
Tether continues to grow its gold reserves even amidst changing market conditions, raising questions about its strategy.
The relationship between gold and Bitcoin highlights different risk profiles, as both attract investors wary of currency devaluation but behave differently in volatile markets.

Despite Tether's vocal support for the long-term potential of cryptocurrencies, its sudden pivot towards gold has sparked curiosity about the reasons behind this choice.

Tether's Surprising Gold Accumulation

The impressive 56% surge in gold prices in 2025 can usually be linked to worries about fiscal dominance, increasing public debt, relaxed monetary policies, and a declining trust in major currencies.

In response to these concerns, central banks from countries like Kazakhstan, Brazil, and Turkey have significantly increased their gold holdings, further solidifying gold's reputation as the world's most reliable safe-haven asset.

However, a recent analysis from Jefferies uncovered a shocking fact: Tether purchased 26 tonnes of gold in the third quarter, outpacing any central bank. By the end of September, the company's total gold reserves had risen to around 116 tonnes, valued at roughly $14 billion.

Tether's involvement in the gold market goes beyond its tokenized gold product, XAUt, which currently holds less than 12 tonnes despite having a market capitalization of $1.6 billion. According to Jefferies, Tether has been increasing its bullion reserves to support both its USDT and XAUt offerings.

According to Reuters, USDT’s supply grew from $174 billion in the third quarter to $184 billion by mid-November. As supply has increased, gold has become a more significant component of its backing. Precious metals now comprise approximately 7% of Tether’s reserves, valued at around $13 billion.

As of September 2025, Tether's asset distribution shows it holds about 104 tonnes of gold for USDT and 12 tonnes for XAUt. The volume and regularity of these acquisitions emphasize Tether's growing impact on the bullion market.

Nonetheless, this swift accumulation raises further questions.

Contradictions with the GENIUS Act

Tether's expanding gold reserves conflict strongly with the newly introduced US GENIUS Act. This legislation prohibits any compliant issuer from including gold in its reserves, compelling businesses seeking certification to rely solely on cash, Treasury bills, or other easily liquidated, transparent assets.

In response to the GENIUS Act, Tether has announced a compliant token called USAT that will not incorporate gold. However, the company has persisted with its gold acquisitions backing USDT even after the law's introduction.

Despite being a stablecoin issuer typically expected to invest only in U.S. Treasury bills, Tether has aggressively invested in gold recently.

With its 116 tonnes of gold, Tether now ranks as the largest gold holder outside of central banks.

![Tether Investment Figures](attachment link)
Image Credit: Julian Klymochko (@JulianKlymochko)

Understanding why Tether has prioritized gold during such market shifts remains uncertain. Additionally, gold prices have cooled since hitting a high of $4,379 in mid-October, with current trading levels being more than 6% lower than that peak.

Regardless, Tether's focus on physical gold reveals a deeper merging between cryptocurrencies and traditional safe-haven assets.

Evaluating Different Safe Havens and Their Risks

The relationship between gold and Bitcoin, often called "digital gold," is not entirely unexpected. Both appeal to buyers concerned about the weakening of major currencies, with many viewing finite-supply assets as safeguards against long-term inflation.

However, Bitcoin and gold markets behave quite differently.

Although Bitcoin has experienced rapid growth over the past decade, it remains subject to high volatility—a trend underscored by its recent price fluctuations. Over the past two months, Bitcoin's value has sharply declined, resembling a high-risk tech asset rather than a reliable monetary hedge.

Stablecoins, on the other hand, promise instant redemption at par value and are backed by reserves intended to maintain stability. Yet, the cryptocurrency market remains susceptible to sudden stress and rapid changes in sentiment.

If stablecoin demand were to plummet, the ensuing pressure would directly impact the assets backing them, including Tether's growing gold reserves. A sudden reversal in the market could force Tether to liquidate its gold holdings, bringing a traditionally stable asset into the unpredictable realm of cryptocurrency-driven markets.