Tether's excess reserves fell to $4.11 billion at the end of June from a record $8.23 billion three months earlier, a 50% decline in a single quarter, according to the company's attestation released this week.
Excess reserves are assets held beyond the amount required to back Tether's stablecoin liabilities. The metric is tracked closely by holders of USDT, the stablecoin, and by regulators assessing the firm's solvency. Tether reported $1.5 billion in net operating profit during the quarter, a figure that does not account for unrealized losses on assets and liabilities the company holds.
The company did not explain the reserve decline in its public announcement. Tether said it expanded its gold holdings to more than 146 tons and maintained a reserve composition heavy in U.S. Treasury securities, but disclosed no new factors that would account for a $4.12 billion swing in excess capital.
The half-year picture clarifies the volatility. In the first quarter, Tether reported $1.04 billion in net profit. The first-half financial result, which includes unrealized gains and losses across the entire balance sheet, totaled approximately negative $3.17 billion. This implies the second quarter's financial loss exceeded $4 billion when derived from the two periods combined.
Excess reserves serve as Tether's buffer against market stress and operational losses. At $8.23 billion in March, the reserve represented a peak in the company's history. The June figure of $4.11 billion, while still substantial in absolute terms, is the first significant drawdown of that accumulated cushion.
Tether holds $120 billion in USDT liabilities, making it the second-largest stablecoin by market capitalization after USDC. Excess reserves of $4.11 billion equal 3.4% of total liabilities, down from 6.8% at quarter-end March. The company has not faced redemption pressure or run events in the current market cycle, and its reserve attestations are conducted quarterly by auditor BDO.
Tether's operating profit remained in the black despite the reserve drop. Whether the company rebuilds reserves at the rate it accumulated them in prior quarters, or whether the Q2 decline marks a new pattern of drawdown, will determine how market participants assess the stablecoin's cushion going forward.
