Tether Secret Swiss Vault: The $8 Billion Gold Reserve Behind The Stablecoin

Tether Holdings, the issuer of the market’s largest stablecoin, USDT, has revealed that it maintains a vault in Switzerland to safeguard an impressive $8 billion stockpile of gold. 

According to Bloomberg, the firm’s significant reserve of nearly 80 tons positions Tether as one of the largest gold holders globally, surpassed only by central banks and sovereign nations with the company based in El Salvador expressing intentions to expand its gold reserves further.

In a recent interview, Tether’s CEO, Paolo Ardoino, emphasized the security of their vault, claiming it to be among the most secure facilities worldwide. While he confirmed the vault’s location in Switzerland, he opted not to disclose its exact whereabouts, citing security concerns.

Tether is best known for its stablecoin, USDT, which aims to maintain a one-to-one value with the US dollar. According to CoinMarketCap data, USDT dominates the stablecoin market with a capitalization of $158 billion. Circle’s USDC follows closely behind with a capitalization of $61 billion.

However, both companies are expected to see a major surge in this metric as the recently approved US Senate stablecoin bill, the GENIUS Act, aims to provide issuers with a new regulatory framework that could further boost adoption and usage of the assets by traditional financial companies.

The company also generates revenue by exchanging dollars for USDT tokens and investing the collateral in various assets, including US Treasuries. According to Tether’s latest financial report, precious metals now account for nearly 5% of the company’s reserves.

In addition to USDT, Tether has introduced a gold-backed token known as XAUT, with each token representing one ounce of gold. Token holders have the option to redeem their XAUT for physical gold, which can be collected directly from the Swiss vault.

Ardoino articulated a growing belief in gold as a safer asset compared to national currencies, particularly in light of rising concerns over the increasing debt levels in the United States. 

He noted that as these concerns grow, investors may seek alternatives, such as gold. The firm’s CEO further highlighted that every central bank within the BRICS nations is actively purchasing gold, which he believes has contributed to the rising price of the precious metal.

Per the report, the decision to establish Tether’s own vault rather than relying on traditional precious metals vault operators was primarily influenced by cost considerations. 

As of press time, Circle’s newly launched stock, CRCL, has closed the trading day at $204, approximately a 31% gap between current valuations and their record price of $298.  

Featured image from DALL-E, chart from TradingView.com