Tether reveals $1 billion Q1 operating profit with $98.5B in US Treasury holdings, exceeding Japan’s official reserves, while facing regulatory scrutiny over its growing influence in traditional finance markets.
The controversial stablecoin issuer now controls more US debt than Japan’s national reserves, according to IMF data, while its $2B AI investments position it as an unexpected player in tech infrastructure – even as regulators warn of systemic risks.
Record Profits Amid Crypto Resurgence
Tether Holdings Limited reported $1 billion in operating profits for Q1 2025, according to its June 28 financial disclosure. The USDT issuer’s direct holdings of US Treasury bonds reached $98.5 billion – surpassing Japan’s $947 billion in total foreign reserves reported by the IMF in June 2025.
The Treasury Dominance Debate
SEC Chair Gary Gensler warned on 28 June 2025 that Tether’s $98.5 billion Treasury position represents 2.3% of all outstanding 3-month bills, telling reporters: ‘When private money forms this large a slice of short-term debt markets, it creates new systemic considerations.’ The EU’s imminent MiCA regulations now require 60% liquid reserve coverage for stablecoins, making Tether’s $5.6 billion excess reserves a focal point for analysts.
AI and Energy Bets
Tether’s $2 billion investment spree includes a 23 June partnership with German cloud provider Northern Data Group to develop AI training clusters in Norway. The company also acquired 18% of Uruguayan wind farm developer Ventus on 25 June, marking its first major renewable energy play. Bloomberg reported on 29 June that Tether’s AI subsidiary Damoon processed 2.4 billion API calls in May – comparable to Anthropic’s public metrics.
Emerging Market Adoption Surge
Chainalysis data shows USDT usage in Brazil and Nigeria jumped 47% year-over-year, accounting for 33% of non-exchange transactions. This growth comes as competitor Circle’s USDC market cap fell 18% quarterly to $24 billion, per CoinGecko metrics.
Historical Precedents and Systemic Risks
The scale of Tether’s Treasury accumulation recalls Japan’s 1990s ‘carry trade’ phenomenon, where investors borrowed cheap yen to buy higher-yielding US assets. This created $300 billion in cross-border flows that distorted bond markets for a decade, according to BIS archives. Like those flows, Tether’s Treasury stockpile now represents a private-sector force comparable to national central banks in short-term debt markets. The Federal Reserve’s June 2025 Financial Stability Report explicitly linked stablecoins to potential liquidity shocks, drawing parallels to 2008’s mortgage-backed security crisis. Then as now, concentrated holdings in seemingly safe assets created hidden correlations across financial systems – though unlike 2008’s opaque CDOs, Tether’s reserves are publicly disclosed. Market analysts note that while Tether provides crucial dollar liquidity to crypto markets, its Treasury dominance creates new interconnections between DeFi and traditional finance that regulators are scrambling to map.
