The name of Tether’s “Big Four” auditor has been revealed, Circle (NASDAQ: CRCL) set a new record for stablecoin transactions, and euro-backed tokens are cool with being used for purposes beyond speculative trading.
Last week, Tether was curiously unwilling to specify which of the “Big Four” accounting firms it had “entered a formal engagement with” to conduct the “first full independent financial statement audit” of the $184 billion in fiat reserves (allegedly) backing Tether’s USDT stablecoin.
It’s unclear why Tether was so reticent about revealing the identity of its new auditor, but the Financial Times was less shy, reporting that Tether’s new auditing beau was none other than KPMG. The FT also reported that Tether has enlisted the help of a second Big Four firm (PwC) to “help ready its internal systems for the audit.” Neither Tether nor KPMG (ditto PwC) has responded publicly to the FT report.
Like many big-name auditors, KPMG’s history of spotting financial irregularities is spotty. KPMG was the auditor for three U.S. banks—Silicon Valley Bank, Signature Bank, and First Republic Bank, all of which had ties to the crypto sector—that failed in rapid succession in early 2023 following the collapse of numerous crypto operators that led to the onset of “crypto winter.”
A U.S. Senate report released last year found that KPMG “had years-long awareness of the problems at the banks that precipitated each bank’s eventual failure, but either ignored or justified these concerns, leaving the depositors and investors unaware of the banks’ deficient recordkeeping, troubled risk management, and other concerning practices.” Sen. Richard Blumenthal (D-CT) said the report exposed “KPMG’s willful blindness” and urged “significant reforms to the auditing industry” as a whole.
After endlessly criticizing Tether’s unwillingness to submit itself to outside scrutiny, some might say we’re moving the goalposts now that Tether has belatedly embarked on a path that suggests an audit is forthcoming. We’ll reserve final judgment until that audit is actually released, and we see if it covers more than a single-day’s snapshot of Tether’s accounts that may or may not represent what those accounts look like the day before or after.
Bloomberg reported that Tether’s abrupt embrace of transparency after a decade of broken audit promises was spurred by the tepid response to its much-publicized bid to raise $20 billion from outside investors. That $20 billion target, which valued the company at an eyebrow-raising $500 billion, was later downgraded to $5 billion to more accurately reflect investor interest.
Last Thursday (26), Tether reportedly held an invitation-only “intimate evening with the Tether management team” in Miami Beach, Florida. The event was billed as promoting Tether’s “first-ever primary investment round,” led by Arcadian Capital, an L.A.-based investment firm that doesn’t appear to have done a deal since 2022.
It’s unknown who might have attended this soirée to “hear the story firsthand, ask your questions, and meet the people behind the world’s most widely used digital dollar.” Presumably those people included Tether CEO Paolo Ardoino and Tether US CEO Bo Hines, as those are the only Tether execs known to have set foot on U.S. soil.
It’s equally unclear why Tether—described in the invitation as “one of the most profitable … financial businesses ever built”—needs to raise outside money. If you’re making $10 billion in annual profits just doing what you’re doing, why would you seek to dilute those profits and invite outside scrutiny simply to obtain some upfront cash?
Perhaps the claimed presence of massive amounts of gold ($24 billion worth as of December 31, 2025) and BTC tokens ($8.4 billion) among USDT’s fiat reserves could explain Tether’s need for quick cash (particularly ahead of its first audit). While gold’s price has risen about 7% since the year began, it’s fallen 14.5% in the past 30 days. Meanwhile, BTC’s current price of ~$68,000 is about $19,000 below where it was on January 1.
Late last week, FT Alphaville calculated that “a decline in the value of Tether’s gold and bitcoin holdings by a weighted average of 20.8% would push Tether to the point of insolvency. That is, if gold falls to $3,521 an ounce [from its current $4,664] and bitcoin drops to $55,966.”
On March 31, Bloomberg reported that Tether had fired two senior precious metals traders that had only just been lured away from HSBC (NASDAQ: HSBC) several months prior. Tether didn’t offer any reason for the duo’s departure, saying only that the company “strives to operate with a lean team.”
Tether previously suggested the USAT stablecoin it launched last year would be its U.S.-focused token, leaving USDT to focus on emerging markets. But Ardoino has also suggested Tether would make USDT compliant with America’s GENIUS Act, which prohibits assets like gold and BTC in stablecoin reserves.
USDC: the ‘u’ stands for ‘use’
USDC-issuer Circle’s share price still hasn’t recovered from the nosedive it suffered following news of Tether’s audit plans, coupled with hints that U.S. digital asset market structure legislation might limit crypto platforms’ ability to offer customers ‘rewards’ for holding stablecoins like USDC.
In mid-March, Circle was trading over $130 but slipped to ~$100 after last week’s news. The shares took a further hit this week, dipping below $90 on Monday before staging a minor rally on Tuesday to close at $95.41 (+6.1%). For the year-to-date, Circle is still up 20.3%.
Analysts suggested Circle’s selloff was overblown, noting that the real impact of a limit on stablecoin rewards would be tougher on Circle’s former USDC partner, Coinbase (NASDAQ: COIN), which derives one-fifth of its revenue from these rewards.
USDC may have a smaller market cap ($77.2 billion) than USDT, but USDC is the undisputed leader when it comes to stablecoin usage on decentralized finance (DeFi) platforms. In February, USDC transfer volume on the Ethereum network (where most DeFi operates) rose 250% year-on-year to $1.7 trillion, while other stats showed USDC accounting for ~70% of all stablecoin transaction volume that month.
Then there’s agentic AI payments. Circle claims USDC holds a near-monopoly (98.6%) on these payments, and analysts appear to agree. Bernstein’s Gautam Chhugani wrote last week that agentic machine payments—transactions entirely initiated, authorized, and settled by non-humans—are “an upside optionality for stablecoins.”
Bernstein believes Coinbase’s role in building the x402 agentic payments protocol, coupled with the company’s ties to Circle, bode well for USDC, which also benefits from its reputation as a more regulatory-friendly, less controversial stablecoin than USDT. Bernstein called Coinbase and Circle the “best proxies for stablecoin upside.”
On Monday, Circle’s global marketing chief Peter Schroeder claimed that USDC had processed “over a billion unique transactions” in March, marking a new all-time monthly high for any stablecoin. Impressive, but could there be a downside to this rapid growth in stablecoin activity?
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Stablecoin velocity: velocirapturous?
A new report by Geoff Kendrick, digital assets analyst at UK bankers Standard Chartered (NASDAQ: SCBFF), credits USDC’s agentic AI use cases with contributing to a surge in stablecoin “velocity,” aka the rate at which stablecoins change hands. Stablecoins are now being turned over an average of six times per month, twice the rate from two years ago.
Kendrick said USDC’s velocity shot up last October on both the Solana and Base networks, in part due to agentic AI payments. This growth has slowed somewhat since that surge, suggesting something of a novelty factor as individuals/entities rushed to test the possibilities of what autonomous agents could do if handed control of a digital wallet.
On the plus side, Kendrick said the growing adoption of AI use cases wasn’t negatively impacting stablecoins’ role as a means of preserving value in emerging markets where local currencies are unreliable.
Standard Chartered previously forecast that stablecoin market cap growth would be premised on velocity remaining low, as individuals sitting on their tokens as a form of savings would require the minting of additional tokens to fuel existing transaction demand.
But the bank now believes the new agentic use cases are “additive” and is therefore maintaining its forecast that the overall stablecoin market will be worth $2 trillion by 2028, a sixfold-plus increase from its current ~$315 billion cap. The bank suggests this growth could lead to $1 trillion in additional sales of U.S. Treasury bills, which make up the largest chunk of stablecoin issuers’ reserve assets.
Echoing other analysts, Kendrick said there appeared to be a clear distinction in the roles played by both USDC and USDT, with the latter used largely as a means of value preservation in emerging markets, while USDC acts as the primary digital dollar for financial transactions in developed markets.
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Dollar, schmollar
The stablecoin market is dominated by dollar-denominated tokens, a fact that annoys central bankers in non-U.S. markets, who fear the loss of financial autonomy if residents get too comfortable trading in greenback proxies rather than the local currency.
But a new report from Visa (NASDAQ: V) and Dune Analytics offers some comfort to these dollar-drama queens, noting that stablecoins denominated in local currencies are being used more for payments than facilitating token trades or being parked in protocols as a source of “yield.”
The market cap of all non-U.S. stablecoins was $1.2 billion in February, up from just $700 million in January 2023. The bulk (80%) of this is represented by euro-denominated tokens like Circle’s EURC, with Brazilian real-backed tokens well back in second place with ~10%, and the Singapore dollar and the Japanese yen each accounting for ~1.5%.
The euro-token share is all the more impressive since it doesn’t include EURT, Tether’s euro-backed token, which the company scrapped last year due to Tether’s unwillingness to conform to the European Union’s Markets in Crypto-Assets (MiCA) regulations. At its peak in mid-2023, EURT’s cap was over $231 million.
The number of unique wallets holding non-U.S. stablecoins rose from just 40,000 in January 2023 to over 1.2 million this February. The report cautions that wallets don’t necessarily indicate individual users, but the 2,900% growth nonetheless reflects a significant increase in users.
Around one-quarter of non-U.S. stablecoins reside on digital asset exchanges, while another 7.5% are earning yield via DeFi lending protocols. Nearly half (46%) remain in individual wallets, suggesting people are actually using these tokens for purposes other than speculative trading.
From January 2023 to February 2026, the number of non-U.S. unique sending addresses rose from 6,000 to 135,000. Over the same span, non-U.S. transfer volume grew from $600 million to $10 billion. Euro-backed tokens accounted for 85% of this volume, and EURC accounted for an astonishing 90% of the euro-backed transfer volume.
However, USDC’s reputation as the DeFi mainstay appears to extend to EURC. While the largest category of non-U.S. transfer volume is represented by unidentified transfers (38%), this rises to 79% when EURC is excluded.
The report credits MiCA with spurring the euro-backed transfer volume growth, adding that Brazilian real-, Japanese yen- and Singapore dollar-backed tokens all saw significant user growth following the introduction of formal regulatory schemes in those markets.
“By contrast, jurisdictions without a dedicated issuer regime … saw flatter or declining participation … sustained adoption is increasingly driven by regulatory maturity and payment integration, rather than macro volatility alone.”
In terms of ‘velocity,’ the report says the fact that transfer volume dramatically exceeded supply growth implies that “local currency stablecoins are being used more frequently as settlement instruments, not simply issued.”
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Oh no, it isn’t
A contrary take was voiced in a new report from Kaiko Research that claimed euro-backed stablecoins “have collectively failed to generate meaningful trading activity despite MiCA’s regulatory framework intended to give an advantage to compliant European issuers.”
Kaiko said monthly euro-backed stablecoin spot trading volume is a pittance compared to dollar-backed tokens, averaging only around $100 million per month this year, roughly half of what they were doing in early 2024. However, that earlier date precedes Tether killing off EURT, which like USDT was a mainstay of token trading on centralized exchanges.
In fact, Kaiko’s figures actually support the Visa/Dune interpretation that euro-backed stables are being used for reasons other than speculative token trades. The view that this is a failure rather than a success is perhaps indicative of why it’s taking the digital asset sector so long to make inroads into traditional finance.
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