Tether engages KPMG for USDT examination, enlists PwC as it prepares for expansion in the U.S.

FT identifies KPMG as auditor as stablecoin giant eyes fundraising and expansion under new U.S. rules

What to know:

• Tether has appointed KPMG to perform a complete audit of its $185 billion USDT stablecoin reserves and has engaged PwC to assist in updating its internal systems, according to FT.
• This initiative towards a thorough financial statement audit aligns with Tether’s plans for expansion in the U.S. and aims to secure up to $20 billion amid investor concerns regarding pricing and regulatory risks.
• A Big Four audit represents a significant change for Tether, which has faced longstanding scrutiny regarding its reserves and transparency, and follows the introduction of new U.S. stablecoin regulations under the GENIUS Act, under which Tether has issued the USAT token.

The unnamed “Big Four” firm chosen by Tether to audit its $185 billion dollar-pegged USDT stablecoin is KPMG, as reported by the Financial Times on Thursday, citing sources familiar with the situation.

Tether has also retained PwC to enhance its internal systems in preparation for the audit, marking a substantial step towards comprehensive financial oversight for the largest stablecoin issuer globally. CoinDesk has reached out to Tether for remarks regarding this development.

CoinDesk previously reported that Tether had announced a formal engagement with a Big Four auditor, but did not disclose the firm’s identity. CFO Simon McWilliams stated at that time that Tether was “already operating at Big Four audit standard” and that “the audit will be delivered.”

All of this occurs as the El Salvador-based entity gears up for a U.S. expansion and a potential fundraising effort. The Financial Times had earlier mentioned that Tether faced investor reluctance in attempts to raise between $15 billion and $20 billion at a valuation of $500 billion, with concerns focused on pricing and regulatory challenges.

The audit initiative arrives at a crucial juncture. USDT, with approximately $185 billion in circulation, serves as the reserve currency within crypto markets and is a significant purchaser of U.S. Treasury bills, linking digital assets with traditional financial systems on a large scale.

A comprehensive financial statement audit would extend far beyond the monthly attestations currently released by BDO Italia, necessitating an in-depth examination of assets, liabilities, internal controls, and reporting mechanisms.

This level of disclosure has long been a contentious issue for critics, as Tether has encountered ongoing inquiries about its reserves since its inception in 2014 and has historically resisted transparency.

In 2021, CoinDesk submitted a FOIL request to the New York Attorney General’s office for documents related to USDT’s reserve composition. Tether contested the release in court and was unsuccessful on two occasions.

The documents obtained after a two-year legal struggle in 2023 indicated that Tether held the majority of its $40.6 billion in reserves at Deltec Bank in the Bahamas as of March 2021, with substantial exposure to commercial paper issued by Chinese and international banks, including Agricultural Bank of China, Bank of China Hong Kong, and ICBC.

Tether’s shift towards increased transparency aligns with a changing regulatory landscape in the United States as cryptocurrency becomes a mainstream asset class embraced by Wall Street.

The GENIUS Act, enacted last July, established the first federal framework for stablecoins in the U.S., under which Tether has already introduced a compliant dollar-pegged token, USAT.