Tether’s EQIBank exposure is under 0.034% as bank faces $89M US seizure

Tether’s EQIBank exposure amounts to less than 0.034% of the stablecoin giant’s total group assets, the company said, after reports surfaced that funds held at the Dominica-licensed offshore lender were caught up in a U.S. asset seizure that could push the bank into liquidation. The disclosure, first detailed by CoinDesk following reporting from the Financial Times and The Information, offers a rare glimpse into how Tether manages counterparty risk across its sprawling network of banking partners.

Key takeaways

• Tether says its exposure at EQIBank is below 0.034% of group assets, which would translate to roughly $63.8 million based on the $187.75 billion reported in Tether International’s June 30 attestation.
• EQIBank faces possible liquidation after U.S. authorities seized about $89 million, or roughly 80% of its monetary holdings, tied to its payment processor Capstone Limited.
• A Sept. According to a federal court order, 14 accounts held under Capstone’s name at Wells Fargo and JPMorgan Chase were seized, among them roughly $79.1 million sitting at Wells Fargo Securities.
• Tether says it had no knowledge of the conduct alleged by the Department of Justice against Capstone.
• Europe’s MiCA framework and the U.S. GENIUS Act both set custody rules for stablecoin reserves, and Tether CEO Paolo Ardoino has publicly criticized MiCA’s mandatory deposit clause.

Tether’s Exposure to EQIBank and Related Risks

Tether‘s stake in EQIBank is small relative to its overall balance sheet, but the episode still puts a spotlight on how much stablecoin issuers rely on smaller, offshore banking partners to move customer money. The company confirmed the exposure figure directly to CoinDesk, without revealing an exact dollar amount tied to it.

Minimal Asset Holdings at EQIBank

A Tether spokesperson told CoinDesk that assets held at EQIBank represent less than 0.034% of the company’s group assets. Applying that percentage to the $187.75 billion in total assets Tether International reported as of June 30 produces an estimated exposure of roughly $63.8 million — though Tether itself has not confirmed that specific figure. It’s also worth noting that Tether’s statement does not specify whether the affected funds were tied directly to USDT reserves, or held at EQIBank for other operational purposes tied to the stablecoin issuer’s banking relationships.

U.S. Asset Seizure Impact on EQIBank

EQIBank, which says it is licensed and regulated by Dominica’s Financial Services Unit, is now facing potential liquidation after U.S. authorities seized roughly $89 million connected to its payment processor, Capstone Limited. According to reporting cited by CoinDesk, that seized sum represents about 80% of EQIBank’s monetary holdings — a scale of loss that would strain almost any mid-sized offshore lender.

A Sept. 14 federal court order tied to the related civil forfeiture proceeding lists seized accounts held in Capstone Limited’s name at Wells Fargo and JPMorgan Chase. Among those, approximately $79.1 million was seized at Wells Fargo Securities alone. The order directs notice to potential claimants and does not decide liability or establish the extent of Tether’s own exposure. Court filings indicate Capstone used those accounts to hold funds and route customer payments for EQIBank, and U.S. prosecutors allege Capstone misrepresented its business to the banks involved.

Tether’s Position and Official Statements

Tether has moved quickly to distance itself from the allegations at the center of the seizure, framing the situation as a limited banking-partner issue rather than a threat to its reserves.

Tether’s Denial of Knowledge Regarding DOJ Allegations

“Tether had no knowledge of the conduct by Capstone alleged by the Department of Justice,” a company spokesperson told CoinDesk. According to reporting from The Information, EQIBank had offered banking services to Tether, which included handling wire transfers tied to USDT purchases and redemptions. That relationship is what put Tether in the frame once the seizure became public, even though the company says its financial stake there is minimal.

The Information’s Yueqi Yang, who first reported the story on Sept. 24, described “some funds stuck” at EQIBank — a framing that underscores the practical concern for users and partners: access to money moving through the bank, rather than a direct hit to USDT’s backing. Tether’s exposure disclosure does not suggest an immediate threat to the stablecoin’s reserves or its dollar peg, but it does illustrate the layered counterparty risk built into the banking rails that support large-scale stablecoin issuance.

Stablecoin Reserve Custody Regulations and Their Implications

Whether tighter regulatory rules would have prevented this specific episode is far from settled — it depends on whether the affected money counted as reserve backing and how those accounts were structured in the first place. Still, the case arrives at a moment when both sides of the Atlantic are actively rewriting the rulebook for where stablecoin reserves can sit.

Europe’s MiCA Reserve Requirements

Under MiCA’s Article 54, e-money token issuers subject to safeguarding rules must keep at least 30% of funds received in separate accounts at credit institutions authorized within the European Union. That definition matters here: a Dominica banking license, on its own, would not satisfy MiCA’s requirement. The regulation goes further under Articles 58 and 37, imposing custody safeguards on electronic money institutions issuing significant e-money tokens — including due diligence on custodians, ongoing monitoring of their financial condition, and keeping reserve funds in identifiable, segregated accounts held in the issuer’s own name.

U.S. GENIUS Act Reserve and Custody Standards

The GENIUS Act takes a different route. Its approved reserve menu for permitted U.S. issuers includes withdrawable deposits at insured depository institutions alongside short-dated Treasuries. Section 10 limits reserve-custody services to providers under specified federal or state supervision and generally requires that customer assets be separately accounted for and segregated from the custodian’s own assets.

There’s a notable carve-out, though: the law exempts cash held as a bank deposit liability from that segregation requirement, meaning a deposit isn’t treated the same as a segregated custody holding. Foreign issuers hoping to use the law’s market-access exception also face extra conditions — comparable home-country regulation, registration with the Office of the Comptroller of the Currency, and enough reserves at a U.S. financial institution to cover American customers’ liquidity needs, unless a reciprocal arrangement says otherwise.

Tether CEO Paolo Ardoino has been vocal about the European rule in particular. On Sept. 22, he amplified reporting that European central banks wanted the mandatory-deposit clause dropped, sharing the line: “Tether refused an EU license over the same clause.” That criticism isn’t abstract — Coinbase delisted USDT in Europe in December 2024 over MiCA compliance concerns, a real-world consequence tied directly to the same rules Ardoino has pushed back against.

Notably, the European System of Central Banks’ September consultation response recommends replacing the minimum bank-deposit requirement with minimum holdings of assets maturing within one to five working days, alongside stronger safeguards against contagion between stablecoins, banks, and reserve-asset markets. That’s a proposed adjustment to MiCA, not a rollback of its custody rules altogether.

FAQ

How much of Tether’s assets are held at EQIBank?

Tether holds less than 0.034% of its group assets at EQIBank, according to the company.

What regulatory risks is EQIBank facing in the current situation?

EQIBank is facing liquidation risks following a U.S. asset seizure, including funds held at accounts linked to Capstone Limited.

What do Europe’s MiCA and the U.S. GENIUS Act require for stablecoin reserve custody?

MiCA requires at least 30% of funds in segregated accounts at EU-authorized credit institutions, while the GENIUS Act requires reserve custody at insured institutions but exempts cash deposits from segregation.

Why has Tether criticized MiCA’s deposit requirements?

Tether CEO Paolo Ardoino criticized MiCA’s deposit clause and stated that Tether refused an EU license due to that same clause, which is linked to USDT’s delisting in Europe by Coinbase.

Article produced with the assistance of artificial intelligence and reviewed by the editorial team.