Tether Faces Compliance Challenges with Upcoming U.S. Stablecoin Legislation
Tether's USDT, the leading stablecoin with a market cap of $155 billion, faces compliance challenges as U.S. lawmakers push the GENIUS Act, which aims to regulate stablecoins. Key points include:
- Legislation requires foreign issuers like Tether to comply with U.S. regulatory standards for market access.
- Issuers must maintain reserves in U.S. institutions and follow strict reserve requirements, including monthly audits by registered firms.
- The act grants significant discretion to the Treasury Secretary regarding foreign regulations and potential exemptions.
- Tether may prioritize emerging markets over U.S. compliance due to high investment costs associated with regulation.
- Tether's CEO suggested developing a U.S.-regulated offshoot stablecoin instead of direct issuance.
While the Senate progresses on the bill, it still needs approval from the House, and uncertainties remain regarding final regulations. Competitors like Circle's USDC are poised to capture market share if Tether remains outside the U.S. financial system. Additionally, SEC clarifications indicate that certain assets in Tether's reserves may not meet the upcoming regulatory standards.