Key takeaways
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Tether operates a Treasury- and repo-heavy balance sheet, with $181.2 billion in reserves versus $174.5 billion in liabilities, leaving an excess of $6.8 billion.
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High interest rates have turned those reserves into profits, generating more than $10 billion in interest income so far in 2025, which is rare for a typical cryptocurrency issuer.
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It exercises political-style levers by freezing authorized wallets, changing supported blockchains, and allocating up to 15% of profits to Bitcoin.
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The comparison between central banks has limits. Tether has no public mandate or endorsement, relies on certifications rather than full audits, and relies on private counterparties.
Tether no longer looks like a simple stablecoin company. It manages a balance sheet full of short-term US Treasuries, reverse repos, gold and even Bitcoin (BTC). It mints and redeems dollars on a large scale and can freeze addresses at the request of authorities.
Its latest report shows $181.2 billion in reserves against $174.5 billion in liabilities, leaving an excess of $6.8 billion and more than $174 billion in USDt (USDT) in circulation. With high interest rates, that portfolio full of Treasury bonds has generated more than $10 billion in profits 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 central bank pegged to the dollar for parts of the crypto economy, albeit without a sovereign mandate or safety net.
Acting like a central bank: what does that mean?
In practice, Tether does four things that resemble the behavior of a central bank.
First, it issues and redeems money on demand. Verified customers mint new USDT by transferring it into fiat currency and redeeming it by returning USDT for dollars. This primary market expands or contracts supply, while trading in the secondary market occurs on exchanges. The actual changes in balance take place within that minting and redemption process.
Second, it manages reserves like a fixed income desk, putting most assets in Treasury bonds and short-duration US repos, with some gold and Bitcoin. A Treasury-heavy portfolio preserves liquidity and adds steady demand for Treasury bills, which bond desks now actively track when identifying top buyers of U.S. debt.
Third, it gains what resembles seigniorage in a high interest rate environment. Users hold a non-interest-bearing token, while Tether collects interest on Treasury bills, generating more than $10 billion in profits and $6.8 billion in excess reserves as of the third quarter of 2025. That revenue stream is why the “private central bank” comparison resonates.
Finally, it uses political tools, such as contractual functions that can freeze addresses at the request of law enforcement or sanctions authorities. It also has the ability to add or remove blockchains, for example liquidating Omni, BCH-SLP, Kusama, EOS and Algorand, to manage operational risk.
While this is not sovereign monetary policy, it still represents active intervention in a dollar-like asset 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 actively used today.
Expand policy levers that resemble central bank tools
Tether now intervenes in its own dollar system in ways that resemble political tools.
As for compliance, you can freeze addresses linked to sanctions or police actions. It first introduced a proactive wallet freezing policy in December 2023 and has since used it in specific cases, such as wallets linked to the sanctioned Russian exchange Garantex. These are issuer-level interventions that immediately affect who can move dollar liquidity up the chain.
On the market operations side, Tether reserves are managed as a short-term fixed income portfolio, heavily weighted towards US Treasuries and reverse repos. This structure allows minting and redemption activity to be aligned with highly liquid, interest-bearing assets while maintaining flexibility.
According to Tether’s latest statement, that combination helped generate multibillion-dollar profits and considerable excess reserves. These mechanisms resemble open market management, although Tether remains a private issuer and not a central bank.
Tether also defines its own operating perimeter. It has added and retired blockchains to focus activity where usage and infrastructure are strongest, ceasing minting and subsequent support on legacy networks such as Omni, BCH-SLP, Kusama, EOS and Algorand, while continuing swaps during a transition period.
Furthermore, it diversifies reserves by allocating up to 15% of realized operating profits to Bitcoin, a policy introduced in 2023 that represents another issuer-level decision with system-wide effects.
From stablecoin issuer to infrastructure player
Over the past 18 months, Tether has grown from a single token company to a broader financial infrastructure group.
In April 2024, it was reorganized into four operating divisions: Tether Finance, Tether Data, Tether Power, and Tether Edu. These divisions manage Tether’s digital asset services, data and artificial intelligence companies (such as Holepunch and Northern Data), energy initiatives, and educational programs. The restructuring formalized a strategy that extends far beyond the issuance of USDT.
On the energy side, Tether has committed capital and expertise to Volcano Energy in El Salvador, a 241-megawatt wind and solar farm designed to power one of the largest Bitcoin mining operations in the world. The project directly supports payment and settlement uptime. The company also ended support for several legacy blockchains to concentrate liquidity where tools and demand are strongest, a network operations decision with ecosystem-wide effects.
To directly target the US market, Tether announced USAT (USAT), a US-regulated dollar token that Anchorage Digital Bank will issue under domestic rules, alongside its existing offshore USDT. If launched as described, USAT would provide Tether with a compatible land platform, while USDT would continue to serve global markets.
Why is the analogy broken?
It is important to note that Tether is not a sovereign monetary authority.
It does not set interest rates, act as a lender of last resort, or operate under a public mandate. Its transparency still relies on quarterly certifications rather than a full financial audit, even though the company says it has been in talks with one of the Big Four about auditing its reserves.
That gap between certification and audit is one of the reasons critics reject the “central bank” label.
There are also concerns about the balance sheet. At times, Tether has maintained a collateralized loan portfolio after previously stating that it would reduce such exposure. This asset category attracts scrutiny because the terms and counterparties matter. More broadly, the company relies on private banking, custodial and repo counterparties rather than sovereign backing, meaning market trust and infrastructure remains outside its direct control.
Finally, some of Tether’s more political actions are primarily enforcement measures, such as proactively freezing addresses listed by sanctions authorities.
Did you know? In December 2023, Tether said it had assisted More than 140 law enforcement agencies in 45 jurisdictions froze $835 million related to scams and illicit activities.
Where Tether fits into the bigger picture
Ultimately, Tether is 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 Treasuries and short-term repos, earns multibillion-dollar interest income, and can intervene with enforcement measures when necessary.
However, the analogy only goes so far. There is no public mandate or support, transparency still depends on certifications, and their political actions largely focus on compliance rather than macro management.
Keep an eye on the makeup of reserves, earnings, refunds, progress on audits and, in the US, how USAT’s plan with Anchorage plays out, because that’s where the story will either continue to look like central banking or start to diverge.
