Tether’s Institutional Stablecoin Plans Amid Regulatory Changes in the US
Tether has announced plans to introduce a new institutional stablecoin specifically for the US market, with further details expected in the coming months. This development follows the recent passage of the GENIUS Act, a regulatory framework aimed at overseeing stablecoins and ensuring compliance among issuers.
Genesis of the GENIUS Act
The GENIUS Act establishes comprehensive guidelines for stablecoins in the US, necessitating that they are fully backed by liquid assets and undergo annual audits for issuers with a market cap exceeding US$50 billion (approximately AU$75.66 billion). It also outlines how foreign issuers can operate within the United States, creating a clear pathway for compliance and oversight.
Paolo Ardoino, Tether’s CEO, highlighted the company’s readiness to collaborate with US regulators and expressed optimism about Tether’s return to the American market. Previously, Tether had withdrawn from the US due to various compliance challenges.
Market Dynamics and Competition
Currently, Tether’s stablecoin, USDT, leads the global market with a notable circulation of US$162 billion (around AU$245.14 billion). However, within the US, Circle’s USDC has gained an upper hand, driven by its adherence to regulatory standards and active issuance totalling US$65 billion (approximately AU$98.36 billion).
This competitive landscape is evolving, as Tether faces increasing pressure from US banks, including Wells Fargo and Bank of America, which are exploring their own stablecoin offerings. Ardoino acknowledged that these institutions may have an initial advantage in the US market, but he remains confident in Tether’s superior technology and extensive global experience.
Commitment to Transparency
Amid ongoing scrutiny regarding its transparency and the absence of a full independent audit, Tether is actively working on enhancing its accountability measures. In a bid to strengthen its financial reporting, Tether appointed Simon McWilliams as Chief Financial Officer in June, tasked with leading the company’s audit initiatives. The firm is also in discussions to engage one of the Big Four accounting firms to conduct a comprehensive audit.
In response to queries about the possibility of Tether adopting a public listing, Ardoino promptly dismissed such speculation, confirming there are currently no plans in that direction.
Conclusion
Tether’s upcoming stablecoin initiative reflects a proactive response to the evolving regulatory environment in the US. With the GENIUS Act fostering a clearer framework for stablecoin operations, Tether is positioning itself to potentially reclaim its market share, leveraging its technical capabilities and global reach. As the competitive landscape intensifies, all eyes will be on how Tether navigates these changes.
