Tether, the world’s largest stablecoin issuer, has engaged KPMG to conduct a full audit of its financial statements, with PwC separately brought in to prepare its internal systems ahead of the review. The company announced a Big Four audit engagement earlier this week without naming the firm, a gap the Financial Times filled on Friday. The audit comes as Tether pursues an ambitious US expansion, having launched a new GENIUS Act-compliant stablecoin, USAT, via a collaboration with Anchorage Digital as issuer, and is reportedly seeking to raise $15-20 billion at a $500 billion valuation.
The timing is not coincidental. A clean audit opinion from a Big Four firm would significantly strengthen Tether’s hand in conversations with US institutional investors who have so far shown apprehension about the valuation and the company’s regulatory history, according to the FT. The GENIUS Act, signed into law last July, created the first federal framework for stablecoin issuers, and USAT is Tether’s vehicle for competing in that regulated market alongside Circle and others.
Tether’s announcement characterized the engagement in sweeping terms, describing it as potentially “the biggest ever inaugural audit in the history of financial markets” and promising a new standard of institutional accountability. The company’s actual transparency record, however, is more complicated, and we examine what its most recent attestation report reveals about reserve quality below.
The decision to announce a Big Four engagement without identifying the firm was unusual, and arguably self defeating. The credibility benefit of hiring KPMG comes precisely from naming KPMG. An anonymous Big Four firm is a meaningfully weaker signal, which suggests the omission was not Tether’s preference. The audit firm, which has significant market share in financial services auditing, may have faced an internally contentious approval process given Tether’s regulatory history, and being publicly named before fieldwork is complete or an opinion issued creates reputational risk. If KPMG’s identity had remained undisclosed, and the firm became uncomfortable with what it found, walking away would have carried no public consequence. That is harder now that its name has been revealed by the Financial Times through people familiar with the matter.
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