Tether Plans U.S. Stablecoin Amid GENIUS Act Progress

Tether, the issuer of the largest stablecoin USDT, has announced plans to issue a separate stablecoin for the U.S. market. This decision comes despite the company expressing comfort with the proposed Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), which aims to regulate stablecoins in the U.S. Tether CEO Paolo Ardoino stated that the company is open to creating a domestic stablecoin to meet the specific needs of the U.S. market, while also ensuring compliance with the GENIUS Act.

Ardoino emphasized that Tether's primary market for USDT remains in emerging economies, where the stablecoin is widely used for foreign remittances and preserving savings amidst local currency depreciations. He noted that 37% of USDT's user base uses the stablecoin for savings, with over 420 million users across developing countries. Ardoino highlighted the importance of USDT as a stable digital dollar in these regions, stating that it provides a stable financial tool for unbanked adults.

However, the U.S. market presents different needs. Ardoino explained that while stablecoins are important in the U.S., they serve different purposes compared to emerging markets. In the U.S., stablecoins are not primarily used for payments to improve money efficiency but rather to serve the unbanked population. Therefore, Tether is looking to launch a domestically issued stablecoin with a different feature set to be competitive in the U.S. economy.

Tether is closely monitoring the progress of the GENIUS Act, which requires stablecoin issuers to hold 100% of their reserves in cash equivalents, preferably U.S. treasuries. Ardoino praised this requirement, contrasting it with Europe's MiCA regulation, which mandates 60% of reserves to be held as cash deposits in European banks—a policy he deemed a "bad idea." Tether plans to ensure USDT complies with the GENIUS Act, viewing it as a better regulatory framework.

Ardoino expressed Tether's interest in seeing the GENIUS Act passed, as it would provide regulatory clarity for the company's domestic stablecoin. He noted that the Senate has made progress on the bill, with a final floor vote expected after Congress's Memorial Day recess. Tether's plans for the U.S. domestically issued stablecoin are anticipated to materialize in the second half of the year, aligning with the company's strategic timeline.