Tether, whose USDT reserves drew US regulatory penalties in the past, has become a major holder of US government debt—and a significant force in discussions about expanding dollar stablecoins overseas. The company reported direct holdings of $114.96 billion in US Treasury bills as of June 30, 2026. The US government is reportedly considering ways to promote dollar stablecoins abroad through cooperation between public agencies and private companies. No formal operating program has been announced, and there is no evidence of an agreement with Tether. But USDT’s scale and distribution network help explain policymakers’ interest in such proposals.
USDT lets people hold and transfer dollar-denominated value through digital wallets and crypto markets without first opening a US bank account. Tether says the token accounted for more than 60% of the stablecoin market at the end of June. For the US, that makes the company not only a large Treasury buyer but also a route for dollars to reach users and merchants beyond the reach of some traditional financial services.
Tether shifts reserves toward short-term Treasuries
Questions about Tether’s reserves are not new. In October 2021, the US Commodity Futures Trading Commission (CFTC) ordered the company to pay a $41 million penalty over statements made from 2016 to 2019 that USDT was fully backed by fiat currency held in bank accounts. The regulator found that Tether held other assets and that its actual arrangements did not match those statements.
Tether has since changed its reserve mix. In October 2022, it said it had eliminated its commercial paper holdings and replaced them with US Treasury bills. Short-term government debt is relatively liquid, helping the company meet redemption requests. The shift has also made Tether a sizable participant in the US government debt market.
As of June 30, 2026, Tether reported $187.75 billion in reserve assets against $183.64 billion in liabilities, leaving assets $4.11 billion above liabilities. Its direct Treasury bill holdings had a weighted average maturity of less than 90 days. The company also reported $18.63 billion in overnight reverse repurchase agreements, in which it lends cash against collateral. These agreements are distinct from direct Treasury holdings, but both reflect the central role of short-term dollar markets in its reserve management.
Treasury bills do not make up all of Tether’s reserves. Its report also listed $18.84 billion in precious metals, $5.8 billion in bitcoin and $13.45 billion in secured loans. It is accurate to describe Tether as a major Treasury bill holder, but not to equate its entire reserve portfolio with government debt.
The company’s disclosures have also changed. Tether said KPMG US completed an audit of its 2025 financial statements on August 13, 2026, and issued an unqualified opinion. That means the auditor concluded the statements fairly presented the company’s financial position under the accounting framework used. Neither the audit nor Tether’s reserve reports make USDT US government debt or imply a government guarantee, but they provide additional information about the company as a financial counterparty.
Treasury income does not accrue to USDT holders
Under USDT’s model, users provide dollars in exchange for newly issued tokens, and Tether takes on the obligation to redeem them while holding corresponding assets. Treasury bills and repurchase agreements can generate income, but USDT holders have no contractual right to the returns on those reserves. Tether reported about $1.5 billion in net operating profit for the second quarter of 2026, mainly from Treasury and repurchase agreement income.
The arrangement connects different interests. Users get dollar-denominated balances that can circulate in digital markets; Tether holds reserve assets and earns related income; and the US government has a private buyer with the potential to make recurring, large-scale purchases of short-term debt. Those purchases do not reduce US debt or amount to a commitment to finance the government over the long term. Tether’s investment decisions remain subject to its business needs and redemption obligations.
The user and merchant network Tether has built may be harder for other institutions to replicate. For people who cannot easily open an overseas bank account, USDT may be more accessible than holding dollar cash or using conventional dollar financial products. Merchant acceptance, exchange support and channels for conversion into local currencies can make the token easier to use. Government policy may attract new issuers, but it cannot quickly reproduce an established network of trading venues and users.
New issuance, not trading volume, drives reserve demand
USDT trading activity should not be confused with new demand for US Treasuries. When one user buys existing USDT from another, the token usually changes hands without bringing new funds to Tether or automatically prompting a Treasury purchase. New reserve assets are needed only when demand leads to net new issuance. Payment volume and incremental financing for the US government are different measures.
Where stablecoin demand comes from also matters. If someone moves money from a dollar fund into USDT, that is largely a reallocation of existing dollar assets. If a user who previously lacked access to dollars acquires them through a stablecoin for the first time, the result is new demand for dollar exposure. Federal Reserve Governor Stephen Miran drew a similar distinction in November 2025, discussing overseas stablecoin use by existing dollar holders versus savers with limited access to dollars. He said the latter group offered greater room for expansion.
Treasury Secretary Scott Bessent also linked stablecoins to broader dollar access and demand for US government debt when discussing the GENIUS Act in July 2025. A policy concept disclosed on September 23, 2026, reportedly concerns an overseas stablecoin initiative that could involve the Treasury Department, State Department and US International Development Finance Corporation (DFC), with possible private-sector partnerships. No operating program, partner company or specific financing structure has been announced.
The DFC already uses financial tools including loans, guarantees and equity investments. Each would carry a different level and type of public-sector risk, but there is no information yet about which, if any, would be used for a stablecoin initiative. Government involvement could lower barriers to overseas expansion through financing or partnerships. At the same time, dollar stablecoins may displace local currencies in savings and payments. The International Monetary Fund has noted that foreign-currency stablecoins can replace domestic currencies where inflation is high, exchange rates are volatile or confidence in institutions is weak. For households, seeking a more stable store of value may be a practical choice; for governments, wider use can weaken influence over domestic finance.
USDT’s reach comes with regulatory obligations
Tether’s ties to the US financial system extend beyond its reserve assets to its dealings with law enforcement. In December 2023, the company adopted a voluntary policy to freeze tokens at addresses linked to people or entities on US sanctions lists. Even when users control their own wallet keys, the issuer can freeze tokens at a specified address; self-custody does not remove the issuer’s ability to intervene.
On September 9, 2026, the US Department of Justice announced an asset-restriction action involving suspected fraud proceeds. It said $52 million in assets had been restricted and thanked Tether for its assistance. Such cooperation can help authorities pursue suspected fraud proceeds, while also showing that a digital dollar used across borders is issued and managed by a company able to respond to law enforcement requests. The US government may seek to widen access to these products while requiring issuers to continue cooperating with regulators and law enforcement.
The GENIUS Act sets conditions for foreign stablecoin issuers seeking access to the US market. They include a determination that overseas rules are comparable, registration requirements and compliance with lawful orders. Rules proposed by the US Treasury on August 17, 2026, identified January 18, 2027, as the expected effective date of the act and referred to further restrictions from July 18, 2028, on offers and sales to US users. Implementation is still underway, but the direction is clear: foreign issuers operating in the US will need to meet US requirements.
Tether is also preparing a separate product for the US market. In January 2026, it announced USA₮, to be issued by Anchorage Digital Bank, with Cantor Fitzgerald serving as designated reserve custodian and preferred primary dealer. USA₮ is a different token from USDT, which is aimed at overseas markets, and has a different issuer. Tether has said USA₮ is not backed by the US government and is not covered by federal deposit insurance.
The relationship between Tether and US policy is therefore not one-sided. The company depends on dollar assets, market channels and financial counterparties to run its business. The US could use Tether’s existing network to broaden access to digital dollars, while retaining regulatory and enforcement requirements for the issuer. For users, USDT provides a dollar-denominated balance that can move across platforms; the reserves remain with Tether, and redemption depends on the company’s ability to meet its obligations.