Concerns about stablecoin issuer Tether’s financial stability resurfaced this week after BitMEX founder Arthur Hayes warned the company could face serious trouble if the value of its reserve assets were to fall. But CoinShares’ head of research, James Butterfill, pushed back on those claims.

In a Friday market update, Butterfill said fears over Tether’s solvency “look misplaced.”

He pointed to Tether’s latest attestation, which reports $181 billion in reserves against roughly $174.45 billion in liabilities, leaving a surplus of nearly $6.8 billion.

“Although stablecoin risks should never be dismissed outright, the current data do not indicate systemic vulnerability,” Butterfill wrote.

Tether remains one of the most profitable companies in the sector, generating $10 billion in the first three quarters of the year — an unusually high figure on a per-employee basis.

Related: Arthur Hayes tells Zcash holders to withdraw from CEXs and ‘shield’ assets

The latest source of Tether anxiety

While speculation about Tether’s financial health is hardly new — media outlets have probed its reserves and asset backing for years — the latest round of solvency worries appears to stem from Arthur Hayes. 

The BitMEX co-founder said last week that Tether was “in the early innings of running a massive interest-rate trade,” arguing that a 30% drop in its Bitcoin (BTC) and gold holdings would “wipe out their equity” and leave its USDt (USDT) stablecoin technically “insolvent.”

Both assets make up a substantial portion of Tether’s reserves, with the company increasing its gold exposure in recent years.

Source: Arthur Hayes

Tether is facing criticism from more than just Hayes. CEO Paolo Ardoino recently pushed back on S&P Global’s downgrade of USDt’s ability to defend its US dollar peg, dismissing the move as “Tether FUD” — shorthand for fear, uncertainty, and doubt — and citing the company’s third-quarter attestation report in its defense.

S&P Global downgraded the stablecoin over stability concerns, citing its exposure to “higher-risk” assets such as gold, loans and Bitcoin.

Source: Paolo Ardoino

Tether’s USDt remains the largest stablecoin in the cryptocurrency market, with $185.5 billion in circulation and a market share of nearly 59%, according to CoinMarketCap.

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