Circle came under pressure on after Tether said it had formally engaged a Big Four accounting firm to complete its first full independent financial statement audit for USDT. Tether announced the development on Tuesday which highlighted the need for stablecoin firms to keep their reserve transparency in check. Tether’s announcement hit the shares Circle hard.
At press time, Circle shares traded at around $100, down 19 percent from the previous close, while Coinbase shares traded at $180, down almost 10 percent (per Yahoo Finance data). CNBC reported that the selloff placed Circle on pace for its worst trading day since listing in 2021, as investors reacted to the idea that Tether could now narrow down one of USDC’s long-standing trust advantages.
Tether puts reserve transparency back at the center of the market
As we reported, Tether said on Tuesday that it had entered a formal engagement with a Big Four audit firm to complete a full audit of its financial statements. The company did not name the auditor in its public release, but it said the review would cover USDT reserves and marked a new step in its reporting process. Tether’s website also showed USDT market capitalization at $184 billion on the same day, keeping it well ahead of other dollar-backed stablecoins by size.
The audit news matters because Tether has faced years of questions about reserve reporting. In February, Tether remained under scrutiny over transparency and reserve quality, while recent coverage of Tuesday’s announcement said the company had relied on attestations rather than a full audit for USDT.
In its new statement, Tether said the Big Four engagement would provide ”deep assurance” around backing and liquidity, while Chief Executive Paolo Ardoino said the move was about ”accountability” for users and businesses that rely on USDT.
Circle still leans on audit history and policy engagement
Circle has built much of USDC’s position around reserve disclosure and regulatory alignment. Deloitte & Touche LLP has served as its independent auditor since fiscal year 2022. USDC reserve information is published regularly, and its transparency page listed reserve composition data. In February, USDC circulation rose 72 percent year over year to $75.3 billion in the fourth quarter, showing that the stablecoin kept growing even before this week’s market shock.
Circle also released other updates in the days before Tuesday’s selloff. On March 23, the company published its response to the European Commission’s proposed Market Integration Package, saying it had submitted feedback on March 20. The company asked for changes to the EU’s DLT Pilot Regime, broader use of MiCA-compliant e-money tokens for settlement, and clearer rules for tokenized collateral.
A week earlier, on March 17, Circle appointed Microsoft executive Kirk Koenigsbauer to its board, where he joined the compensation and risk committees.
The selloff also drew attention to stablecoin policy debate
The sharp move in Circle shares suggests the market is treating Tether’s audit step as more than a routine compliance update. USDC has often benefited from the view that it offers a more controlled and more transparent model than USDT. If Tether completes a full audit with a Big Four firm, that gap may narrow in the eyes of some investors, even though the two issuers still operate under different structures and in different regulatory settings.
At the same time, some market watchers pointed to the wider stablecoin policy debate. In a post on X, journalist Eleanor Terrett said the drop was notable because passive yield on stablecoin balances had already been widely viewed as unlikely to appear in the final legislative deal. She said that point had been public for months through reporting and statements from lawmakers involved in drafting the text, including Senator Thom Tillis and Senator Angela Alsobrooks.
Terrett also said Tether’s audit update may be contributing to the stock move. Her remarks suggest the market reaction may not be tied to one issue alone. Instead, investors appear to be weighing both the audit development at Tether and the broader policy backdrop around how stablecoins may be treated under future rules.
That reaction also landed at a time when Circle had been riding strong momentum.
On February 25, Circle topped Wall Street estimates for fourth-quarter revenue, and reserve income climbed to $733 million as USDC circulation expanded. Tuesday’s decline therefore reversed part of a run that had been supported by rising stablecoin use, favorable U.S. rules, and broader institutional interest in blockchain-based dollar products.
Meanwhile, the broader stablecoin market now appears to be moving into a phase where disclosure standards matter as much as circulation growth.
Tether still leads by size, with more than $184 billion in USDT on its website, while Circle remains the second large player and continues to push for closer links with regulated markets and payment networks.