Fresh Spin
XAU₮ Soured: The Controversial Rise of Tether Gold
Gold reserves of 7.7 metric tons now support Tether's gold-backed digital token, as per the latest report.
Tether's controversial stablecoin, Tether Gold (XAUT), witnessed a market surge, reaching a staggering $825 million, as investors seek refuge in safe-haven assets against the backdrop of increasing inflation fears and trade war concerns. Yet, concerns around Tether's financial reporting practices and the choice of auditor linger.
With over 7.7 tons of physical gold backing the token, as confirmed by auditor BDO Italia, Tether's stockpile of gold reflects thesoaring value of XAUT. As of March 31st, the gold-backed currency boasted a $770 million market capitalization and an exchange rate of around $3,123 per token, a significant 9.6% increase from the last quarter, as per Tether's statement.
In a social media post, Tether's CEO, Paolo Ardoino, celebrated the token's potential as the standard gold product for all, mirroring the gold rush among central banks given the rising economic tensions.
The recent price surge of XAUT comes as investors flock to assets like gold, sparked by economists' warnings about potentially inflated consumer prices due to President Trump's trade policies. Since early April, the price of gold has risen by 7%, with gold setting new highs in recent weeks due to broader market volatility.
Some financial institutions have greatly increased their gold reserves in the past few years. In fact, 29% of central banks plan to bolster their gold reserves in the coming year, according to the World Gold Council's 2024 Central Bank Gold Reserves report.
However, Tether Gold's meteoric rise has reignited criticisms of Tether's financial reporting practices, particularly regarding their market-leading USDT stablecoin. The report from BDO Italia, while revealing the quantity of gold backing the token, does not adhere to International Financial Reporting Standards (IFRS), as it lacks primary statements and disclosures from the stablecoin issuer.
Tether's critics have expressed the need for an independent audit, and reports suggest that the firm was planning to hire a "Big 4" auditing firm earlier this year. When Decrypt reached out to Tether for comment regarding their potential continued collaboration with BDO Italia, they did not respond.
BDO Italia has been the subject of several allegations concerning auditing standards, with Italy's main securities regulator, CONSOB, slapping the firm with a $250 million fine earlier this year, as reported by Italian newspaper La Repubblica. Furthermore, in 2015, the U.S. Securities and Exchange Commission charged BDO Italia with putting out "false and misleading" audit opinions, as shown in a press release from the agency.
To better understand the current state of Tether's financial reporting practices, here's a brief overview:
- Audit Scope Limitations: The Q1 2025 attestation by BDO Italia verified physical gold holdings only as of March 31, 2025, without assessing ongoing operational controls or price volatility risks. The report stated that it did not provide any assurance at any other date or time, leaving gaps in continuous oversight.
- Valuation vs. Quantity Emphasis: Tether's latest report emphasizes the physical quantity of gold (246,523.33 ounces) over market valuation, acknowledging the latter as volatile. This approach assures a 1:1 ratio per token but leaves potential liquidity concerns in the face of extreme price fluctuations.
- Regulatory Milestones vs. Transparency: The product's recent regulation in El Salvador and the use of Switzerland-based vaults address some jurisdictional concerns, yet questions remain unanswered about counterparty risks and reserve management practices due to the audit's narrow focus on inventory verification.
- Historical Context: Though not directly cited in recent reports, Tether's broader track record—including past settlements over reserve misrepresentations—fosters ongoing skepticism. However, the improved transparency around physical holdings represents procedural advancements compared to the company's past practices.
In conclusion, the current BDO Italia collaboration appears focused on specific attestations rather than full-scope audits. This limited scope continues to be a focal point for critics despite improved transparency around physical holdings. Stay tuned for updates regarding Tether's financial transparency journey.
- Critics of Tether's financial reporting practices have expressed a need for an independent audit, as the Firm's market-leading USDT stablecoin remains under scrutiny.
- Tether's Tether Gold (XAUT) recently touched a market cap of $825 million, reflecting the soaring value of XAUT and investors' interest in safe-haven assets amid inflation fears and trade war concerns.
- To better evaluate Tether's financial reporting practices, it's essential to consider the audit scope limitations in BDO Italia's Q1 2025 attestation, which only verified physical gold holdings as of March 31, 2025.
- Despite the improved transparency around physical holdings, the BDO Italia collaboration still appears focused on specific attestations rather than full-scope audits, leaving critiques about the limited oversight.
- While Tether Gold's meteoric rise has reignited debates on the stablecoin issuer's reporting practices, the choice of auditor, BDO Italia, has drawn attention due to past allegations concerning auditing standards in Italy and the US.
- In an attempt to address concerns, Tether was reportedly planning to hire a "Big 4" auditing firm earlier this year. However, when asked for comment, Tether did not respond despite questions regarding their potential continued collaboration with BDO Italia.
- The Q1 2025 report from BDO Italia, while revealing the quantity of gold backing the token, does not adhere to International Financial Reporting Standards (IFRS), lacking primary statements and disclosures from the stablecoin issuer.
- The recent rise in gold prices, driven by economists' warnings about potentially inflated consumer prices due to President Trump's trade policies, has investors flocking to assets like gold, with gold setting new highs in recent weeks amid broader market volatility.
