Today, Tether is no longer just a company that issues a stable cryptocurrency. It has short U.S. government bonds, repo transactions, gold, and even bitcoin on its balance sheet. The company mass produces and redeems dollars, and at the request of law enforcement, it can freeze addresses.
According to the latest reporting, Tether has $181.2 billion in reserves against $174.5 billion in liabilities. This leaves $6.8 billion in net reserves, with over $174 billion in tokens in circulation.
Due to high rates, the portfolio's yield, dominated by treasury securities, has already brought the company over $10 billion in profits since the beginning of 2025. For a crypto startup, these are abnormal figures, more akin to a full-fledged financial institution.
Therefore, both critics and supporters of Tether agree on one point: the company behaves like a private central bank pegged to the dollar but operates within the crypto economy.
Tether as a private central bank — what does that even mean?
In practice, Tether has four key features that truly resemble the operations of a central bank.
Firstly, the company issues and redeems money on demand. Verified users can create new USDT by sending fiat dollars and redeem them in reverse, returning USDT and receiving dollars back. It is on this 'primary market' that the total supply of the stablecoin changes. Meanwhile, on exchanges, secondary volume is already being traded. All balance changes occur within this issuance and redemption system.
Secondly, Tether manages reserves like a full-fledged debt desk, in the spirit of institutional investors. Most assets are allocated in short-term US government bonds and repo transactions, with some in gold and bitcoin. This portfolio supports liquidity while simultaneously creating stable demand for T-bills. The largest dealers in the bond market are already monitoring Tether's actions as an important buyer of US debt.
Thirdly, the company earns profits that essentially resemble seigniorage — especially in high-rate environments. USDT holders hold an asset that does not accrue interest, while Tether earns on treasury bonds. This has brought the company over $10 billion in profits and $6.8 billion in free reserves by the end of the third quarter of 2025. It is this cash flow that makes the comparison to a private central bank particularly relevant.
Finally, Tether uses tools similar to monetary policy measures. For example, through functions in smart contracts, the company can freeze addresses at the request of law enforcement or sanctioning authorities. It also has the ability to add or disable blockchains, as was already done with Omni, BCH-SLP, Kusama, EOS, and Algorand, in managing operational risks.
This is certainly not a full-fledged state monetary policy. However, it still involves active intervention in the circulation of an asset pegged to the dollar, used by hundreds of millions of people.
How Tether manages the system
Today, Tether intervenes in its own dollar ecosystem in ways that increasingly resemble monetary policy levers.
From a compliance perspective, the company can freeze addresses associated with sanctions or criminal investigations. In December 2023, Tether implemented a proactive wallet freezing policy for the first time and has since used it in several cases. For example, against addresses linked to the Russian exchange Garantex. These are interventions at the issuer level that instantly restrict access to dollar liquidity in the network.
At the market management level, Tether operates like a full portfolio of short-term debt instruments. The basis of its reserves is US government bonds and repo transactions. This structure allows for flexible servicing of USDT issuance and redemption operations, maintaining high liquidity while generating income.
The latest reserve report shows how this strategy has brought the company multi-billion profits and allowed for the formation of a significant cushion in the form of free reserves. This already resembles open market operations, although Tether remains a private issuer and not a central bank.
The company also independently defines the boundaries of its ecosystem. Tether adds and disables support for blockchains depending on demand and infrastructure. Thus, the creation of new tokens on Omni, BCH-SLP, Kusama, EOS, and Algorand has been discontinued, but users have been allowed to redeem USDT on these networks during the transition period.
Additionally, Tether diversifies its reserves: starting in 2023, up to 15% of operating profits may be directed to bitcoin. This strategy is another decision at the issuer level that affects the entire system as a whole.
From stablecoin to infrastructure: how Tether is restructuring the crypto economy
In the last 18 months, Tether has transformed from a single token issuer into a full-fledged financial technology ecosystem.
In April 2024, the company underwent a large-scale restructuring, dividing its business into four key areas:
Tether Finance — digital assets and payment services
Tether Data — AI projects and decentralized application development (including Holepunch and Northern Data)
Tether Power — energy infrastructure
Tether Edu — educational initiatives
This structure has solidified a strategy that goes far beyond simple issuance of USDT.
In the energy sector, Tether invested in Volcano Energy in El Salvador — a wind-solar park with a capacity of 241 MW, intended to support one of the largest bitcoin mining farms in the world. The project aims to ensure the stability of the payment infrastructure. At the same time, the company has ceased support for several outdated blockchains to focus liquidity where demand and tools are maximally developed. This decision has impacted the entire ecosystem.
To enter the US market, Tether announced a new token USAT, which will be issued under internal rules in partnership with Anchorage Digital Bank. Meanwhile, USDT will retain its role as an international instrument, while USAT will become a 'regulated equivalent' within the country.
Why the comparison with a central bank is not entirely correct
Despite its similarities, Tether is still not a sovereign monetary authority.
The company does not set interest rates, does not act as a lender of last resort, and does not operate within a public mandate. Its transparency still relies on quarterly assurances rather than a full financial audit. While the company has stated that it is negotiating with one of the Big Four for an audit of its reserves, this is still in the discussion phase.
This gap between assurance and audit is one of the main reasons critics do not recognize Tether's status as a 'central bank'.
There are also questions about the balance: in the past, Tether promised to reduce its portfolio of secured loans but continued to hold it. These assets always attract close attention. It is important who the counterparties are and under what conditions the transactions are made.
Furthermore, unlike central banks, Tether relies on private banks, custodians, and repo counterparties rather than state support. This means that both reliability and market infrastructure are outside the company's direct control.
Finally, many of Tether's actions are primarily compliance measures. For example, freezing addresses listed on sanction lists is a legal obligation, not a monetary strategy element.
Where Tether is actually located in the crypto economy
When viewed broadly, Tether increasingly resembles a private dollar central bank within the crypto market rather than a classic stablecoin issuer. The company regulates supply through large-scale issuance and redemption of tokens, holds short-term government bonds and repo transactions in reserves, earns multi-billion profits from interest, and intervenes as necessary through compliance measures.
But the comparison with a central bank does not work 100%. Tether has neither a state mandate nor insurance, and transparency is still based on assurances rather than a full audit. Most of the 'political' levers that the company operates with are compliance mechanisms rather than macroeconomic regulation.
What really needs to be kept in focus is the structure of reserves, the level of profits, the volumes of redemptions, progress in audits, and how the story with USAT and Anchorage will develop in the US market. It is here that it will be determined whether Tether will continue to converge with the central bank model or, on the contrary, begin to move away from it.
