Tether's KPMG Audit: What It Means for Stablecoin Accounting
KPMG has issued an audit opinion on Tether's full-year 2025 financial statements, marking the first time the world's largest stablecoin issuer has submitted to a formal Big Four audit rather than a periodic attestation. Tether is describing the engagement as the largest inaugural financial audit ever conducted for a stablecoin issuer. For accounting firms, auditors, and CFOs who hold or service clients holding stablecoins, the event is not just a headline about one company. It recalibrates what sufficient audit evidence looks like for stablecoin-related balances and accelerates a standard-setting conversation that is still unresolved under both IFRS and US GAAP.
From Attestation to Full Audit: What Changed
Tether has published quarterly reserve attestations for several years, each prepared by an independent accounting firm confirming that reported reserves equalled or exceeded token liabilities at a specific point in time. An attestation is a limited-scope engagement. The auditor applies agreed-upon procedures to a snapshot and issues a report confined to those procedures. It does not constitute an audit opinion, and it carries a narrower set of assurance obligations.
Why the Distinction Matters to Auditors
A full financial statement audit conducted under International Standards on Auditing or US GAAS requires the auditor to obtain reasonable assurance that the statements as a whole are free from material misstatement, whether due to error or fraud. That scope covers the income statement, the balance sheet, the cash flow statement, and the notes, not a single reserve schedule at a point in time. KPMG's sign-off means it has formed an opinion across Tether's entire 2025 reporting period, applying a standard of evidence materially higher than what attestations demand.
For practitioners advising clients on stablecoin accounting, this matters for one immediate reason: auditors reviewing a client's stablecoin holdings may now benchmark their evidence requirements against what a Big Four firm determined was sufficient for the issuer itself. That is a de facto elevation of audit standards for the asset class, even before any standard-setter formally mandates it.
Stablecoin Accounting Under IFRS: Where Things Stand
No dedicated IFRS standard yet exists for stablecoins. The IASB's ongoing agenda on crypto assets has clarified the treatment of cryptocurrencies whose fair value can be measured reliably, pointing issuers and holders toward IAS 38 (intangible assets) or, for assets held for trading, IAS 2 (inventories). But neither standard was designed with a reserve-backed stablecoin in mind, and the IASB acknowledged as much in its 2019 agenda decision on holdings of cryptocurrencies.
Classification Choices and Their Audit Footprint
Under current IFRS, a firm holding USDT or a similar reserve-backed stablecoin will typically assess whether the asset meets the definition of a financial asset under IFRS 9, an intangible under IAS 38, or cash and cash equivalents under IAS 7. The classification drives both the measurement basis and the disclosures an auditor will scrutinise.
If the stablecoin is classified as a financial asset measured at fair value through profit or loss, the auditor needs evidence that the fair value hierarchy level assigned is appropriate and that any day-one gains or losses are correctly recognised. If it sits under IAS 38 at cost less impairment, the auditor must assess whether any de-peg event during the year constitutes an impairment indicator. The Tether audit, covering a full year, will have addressed all of these questions internally. The fact that KPMG was able to reach an unqualified opinion tells the market that workable audit approaches exist, even in the absence of explicit IFRS guidance.
Accounting firms advising IFRS reporters should note that the incoming IASB leadership changes announced earlier in 2026 could accelerate formal crypto asset guidance. The evolving direction of IFRS crypto assets standard-setting is worth tracking closely.
Stablecoin Accounting Under US GAAP: ASC 350-60 and Fair Value
US reporters have had a clearer path since the FASB issued ASU 2023-08, codified as ASC 350-60, which requires certain crypto assets to be measured at fair value with changes recognised in net income each period. The standard became mandatory for fiscal years beginning after 15 December 2024, meaning calendar-year public companies applied it for the first time in their 2025 financial statements.
Does ASC 350-60 Cover Stablecoins?
This is where practitioners must be precise. ASC 350-60 applies to crypto assets that meet all of the following: they are fungible, secured through cryptography, reside on a distributed ledger, are not produced or held by the reporting entity, and are not a financial instrument or a contract accounted for under other GAAP. Stablecoins present a nuanced case. A reserve-backed stablecoin that is redeemable on demand for a fixed dollar amount may qualify as a financial instrument and therefore fall outside ASC 350-60 entirely, landing instead under ASC 310 or ASC 825 depending on the nature of the redemption right.
Tether's structure, where USDT is redeemable for US dollars from Tether's reserves, means the issuer's own accounting is almost certainly not governed by ASC 350-60 in the same way a corporate holder's might be. KPMG will have determined the appropriate GAAP framework for Tether's specific facts and circumstances. For US reporters holding USDT on their balance sheet, the classification question remains live: does the redemption right make USDT a financial asset under ASC 310, or does the holder lack a contractual claim that would support financial instrument treatment? The answer drives both measurement and disclosure.
FASB's move to fair value accounting for qualifying crypto assets has already raised the bar for audit evidence around crypto valuations. The Tether audit reinforces that direction, with KPMG having navigated the fair value and reserve evidence questions across a full reporting year for the largest stablecoin issuer in existence.
Implications for Accounting Firms and CFOs
Audit Evidence Packs Need a Rethink
If your firm is auditing a client with material stablecoin balances, the Tether-KPMG engagement is the clearest signal yet that pointing to quarterly attestations is unlikely to be enough. Auditors will need to understand the issuer's reserve composition, assess any concentration risk in those reserves, and evaluate whether the client has adequate controls over stablecoin custody and redemption processes. A Big Four firm has now completed that exercise at scale. Expect peer firms to align their stablecoin audit programmes to this precedent over the coming reporting cycle.
CFO Disclosure Considerations
For CFOs carrying stablecoins as treasury assets, the KPMG sign-off creates an indirect disclosure pressure. If the issuer of a stablecoin you hold can now point to a full audit opinion, investors and audit committees will reasonably ask what your own disclosures say about the nature of those assets, how you have classified them, and what due diligence you have performed on the issuer's reserves. Boilerplate risk-factor language about stablecoins may no longer satisfy an audit committee that has seen a Big Four firm complete a full audit of the underlying issuer.
Internal Controls and Custody Arrangements
The scope of a full financial statement audit necessarily includes the issuer's internal controls over financial reporting, at least to the extent needed to design audit procedures. For clients who custody stablecoins with third-party providers, this highlights the importance of obtaining SOC 1 or SOC 2 reports from those custodians and ensuring those reports cover the control periods relevant to the financial statements being audited. The infrastructure around stablecoin accounting is now subject to the same evidence expectations as any other material balance sheet item.
What This Means for the Broader Stablecoin Market
The practical effect of KPMG completing this audit is competitive and regulatory at the same time. Other major stablecoin issuers operating at scale will face pressure from regulators, institutional counterparties, and their own audit committees to either match the standard or explain why they have not. In jurisdictions where stablecoin legislation is either enacted or pending, regulators may point to the KPMG engagement as evidence that full audits of reserve-backed issuers are feasible, undercutting arguments that the asset class is too operationally complex to audit on a full-year basis.
Within the EU, MiCA's requirements for e-money token issuers already include reserve asset safeguarding and disclosure obligations that go well beyond what attestations provide. A Big Four audit opinion from a non-EU issuer will inform how competent authorities in member states assess the adequacy of their own regulated issuers' reporting arrangements. For firms advising on the stablecoin accounting implications of the HKDAP pilot and similar reserve-backed structures in other jurisdictions, the Tether audit provides a concrete reference point for what full issuer-level assurance looks like in practice.
The legislative picture in the US remains unsettled. Stablecoin-specific legislation has been subject to repeated delays, and how the CLARITY Act delay keeps stablecoin accounting unresolved is a live concern for US-based issuers and holders alike. But the KPMG audit demonstrates that Big Four firms are prepared to engage with stablecoin issuers under existing audit standards, even without bespoke regulatory frameworks in place.
Frequently Asked Questions
What is the difference between an attestation and a financial statement audit for a stablecoin issuer?
An attestation is a limited-scope engagement where an accountant applies specific agreed-upon procedures to a defined data set, typically a reserve schedule at a point in time, and reports only on those procedures. A financial statement audit requires the auditor to obtain reasonable assurance across the full set of financial statements for an entire reporting period, applying ISA or US GAAS standards and issuing an opinion on whether the statements are free from material misstatement. The audit carries a substantially broader scope and a higher standard of evidence.
How should IFRS reporters classify a reserve-backed stablecoin on the balance sheet?
Under current IFRS, the classification depends on the specific contractual rights attached to the stablecoin. If the holder has a contractual right to receive cash from the issuer on demand, IFRS 9 financial asset treatment may apply. If no such contractual right exists, IAS 38 intangible asset treatment is more common. IAS 7 cash equivalent classification is generally not supportable for stablecoins given the absence of a direct banking relationship. Each classification carries different measurement and disclosure requirements, and practitioners should document their analysis carefully given the absence of explicit IFRS guidance.
Does FASB ASC 350-60 apply to stablecoins held by a corporate treasury?
Not automatically. ASC 350-60 excludes assets that meet the definition of a financial instrument under other GAAP. A reserve-backed stablecoin with a contractual redemption right for a fixed dollar amount may qualify as a financial instrument, taking it outside ASC 350-60 and into the scope of ASC 310 or ASC 825. Companies should assess their specific stablecoin arrangements against the full scope criteria of ASC 350-60 and document the basis for their classification before their next audit.
What audit evidence should firms prepare for stablecoin balances?
At a minimum, auditors will typically seek evidence of the issuer's reserve composition and any available assurance reports over those reserves, documentation of the client's own custody arrangements including any third-party custodian SOC reports, evidence supporting the classification and measurement basis applied, and documentation of any de-peg or liquidity events during the period that could indicate impairment. Given the Tether-KPMG precedent, audit committees should expect auditors to ask more searching questions about issuer-level reserve transparency than they may have in prior years.
Does KPMG's audit of Tether affect how regulators will assess other stablecoin issuers?
It is likely to inform regulatory expectations over time. If a Big Four firm has demonstrated that a full audit of the world's largest stablecoin issuer is achievable under existing audit standards, regulators in jurisdictions considering or implementing stablecoin legislation may use that precedent to set minimum assurance requirements for licensed issuers. MiCA in the EU already imposes reserve safeguarding obligations on e-money token issuers, and other regulators may look to the Tether audit as a benchmark for what adequate issuer-level assurance means in practice.
Source: Decrypt