Tether has completed its first independent audit in over a decade, yet the company plans to keep KPMG's full report private, raising fresh scrutiny even as the broader stablecoin market faces liquidity challenges. Meanwhile, stablecoin reserves held on centralized exchanges have contracted sharply, with Binance now controlling nearly 70% of all exchange-based stablecoin liquidity.

What Did Tether's Audit Actually Reveal?

On August 14, Tether announced that KPMG had completed an audit of Tether International, S.A. de C.V. for the year ending December 31, 2025. According to Tether's statement, KPMG issued an "unqualified audit opinion," meaning the auditor found no material issues with the company's financial statements.

Tether

The audit included physical inspection of Tether's gold reserves. Tether claimed that KPMG "physically counted and inspected every individual gold bar held by Tether, verifying the existence and identifying information of each bar rather than relying solely on reports from custodians or counterparties." Tether's financial statements reported reserves exceeding liabilities by $6.814 billion as of the audit date.

"KPMG did not simply review a set of headline figures. KPMG conducted a full and thorough audit in accordance with AICPA standards, examining the assets, transactions, systems, documentation, and other evidence supporting our financial statements. The result is an unqualified opinion; in other words, it means Tether has a clean audit," said Paolo Ardoino, Tether CEO.

Paolo Ardoino, CEO at Tether

Why Are Critics Still Skeptical Despite the Audit?

Despite Tether's claims of transparency, the company has announced no plans to release KPMG's full audit report to the public. Instead, Tether says it will continue publishing quarterly attestations conducted by BDO Italia, a less rigorous form of financial review.

Several red flags have emerged that concern observers. First, KPMG audited Tether International rather than Tether Holdings, S.A. de C.V., the parent company. While Ardoino stated that International was "the only entity issuing USDT," Tether has previously shifted assets between affiliated entities to cover financial shortfalls, sometimes moving funds the day after publishing reserve verifications.

Tether Holdings, S.A

Second, language changes in Tether's attestations suggest shifting risk characterizations. Tether's Q1 2026 attestation described certain loans as "fully collateralized by liquid assets," but the Q2 report changed this to "over collateralized," with no mention of asset liquidity. Critics interpret this shift as potentially masking the illiquidity of backing assets.

Third, questions persist about Tether's description of its gold holdings. Tether reported $18.8 billion in gold as of Q2 2026, but the language used to describe KPMG's inspection may not confirm actual ownership of the physical bars.

How Is Stablecoin Liquidity Shifting Across Exchanges?

While Tether celebrates its audit milestone, the broader stablecoin market is experiencing significant structural changes. Stablecoin reserves held on centralized exchanges have fallen 20% from their 2025 peak to roughly $64 billion in 2026, according to CryptoQuant data.

More concerning for market health is the concentration of remaining liquidity. Binance now holds 68.5% of all centralized exchange stablecoins, up from the low-60% range in late 2025. Competing exchanges including Coinbase, Bybit, and OKX have experienced sharper declines in their stablecoin reserves, allowing Binance's share to expand even as its own absolute reserves decline.

The contraction in exchange liquidity coincides with weakening trading activity. Spot trading volume across the 10 largest centralized exchanges fell 27.9% quarter-over-quarter to $1.95 trillion in Q2 2026. Despite this downturn, Binance extended its dominance with a 38.7% spot market share, while Bybit reached 10.0%, overtaking MEXC.

What Do These Market Shifts Mean for Stablecoin Users?

The decline in exchange-held stablecoins has been much sharper than the overall contraction in total stablecoin supply. Total stablecoin supply fell from roughly $315 billion in May to $300.86 billion in August, a decline of about 4.5%. This gap suggests that some stablecoins may have migrated away from centralized exchanges to self-custody, decentralized finance (DeFi) platforms, or other on-chain venues rather than leaving the crypto ecosystem entirely.

However, the available data does not establish how much of the decline reflects on-chain migration, self-custody adoption, or capital leaving crypto markets altogether. What is clear is that thinner liquidity on exchanges makes markets more sensitive to large buy or sell orders, potentially increasing price volatility.

How to Understand Stablecoin Market Concentration Risks

• Exchange Dependency: With Binance controlling 68.5% of centralized exchange stablecoin liquidity, the broader crypto market's ability to execute large trades without significant slippage depends heavily on a single venue, increasing systemic risk if Binance experiences operational issues.
• Liquidity Fragmentation: As stablecoins move off centralized exchanges, liquidity becomes fragmented across DeFi protocols, self-custody wallets, and smaller venues, making it harder for traders to find counterparties and potentially widening bid-ask spreads.
• Audit Transparency Gaps: Tether's refusal to release its full KPMG audit report means investors and regulators cannot independently verify the audit's scope or findings, perpetuating questions about reserve quality and asset backing despite the company's claims of a "clean audit."

The combination of Tether's audit opacity and the concentration of stablecoin liquidity on Binance highlights structural vulnerabilities in the stablecoin ecosystem. While Tether's completion of an audit represents a milestone for the industry, the company's decision to withhold the full report from public scrutiny suggests that transparency concerns remain unresolved. Simultaneously, the shift of stablecoin reserves away from exchanges and toward Binance indicates that market participants may be consolidating their positions on the largest venue, a trend that could amplify volatility if market conditions shift.