- The GENIUS Act forces Tether to comply, exit the U.S., or launch a new stablecoin.
- USDC may benefit, but market dominance won’t shift overnight, despite Circle’s regulatory advantage.
U.S. lawmakers are drawing a hard line as far as the GENIUS Act goes.
Tether [USDT], the world’s largest and most controversial stablecoin issuer, now faces a big choice: comply with rigorous new standards, launch a fully transparent alternative, or exit the U.S. market altogether.
Given an 18-36 month window to meet the requirements or face a potential ban, the next chapter in Tether’s high-stakes story could redefine the stablecoin landscape as we know it.
Is the GENIUS Act finally cornering Tether?
With the GENIUS Act moving closer to becoming law, the world’s most widely used stablecoin is staring down a U.S. compliance clock it may not be able to beat.
Rhode Island Senator Jack Reed didn’t sugarcoat the target. During remarks in support of the bill, he named Tether directly and added,
“This stablecoin is called ‘Tether,’ and it is the biggest beneficiary of this bill… Tether has never undergone an audit and this bill would not require one.”
He added,
“North Korea, Russian arms dealers, human traffickers, terrorists, and more.”
For context, the bill demands full audits, transparent reserves, capital cushions, and strict oversight. Tether, which has long dodged these responsibilities, must now choose: to adapt, exit, or launch a fully compliant product.
Source: X
The company has had a troubled relationship with U.S. regulators. In 2021, it settled with the New York Attorney General.
The case involved claims that USDT was not fully backed. Tether paid an $18.5 million fine and was banned from operating in New York. Since then, it has released quarterly attestations of its reserves.
However, Tether has never completed a full, independent audit. This remains a major red flag. The GENIUS Act now brings that issue back into the spotlight.
The question now isn’t whether the U.S. wants transparency – it’s whether Tether can survive it.
Three doors and a ticking clock
The GENIUS Act leaves Tether with three options.
First, comply: embrace full audits, implement strict AML/KYC programs, and build the tech to freeze tokens on command.
Second, exit the U.S. entirely – a playbook it followed in Europe after MiCA forced strict licensing and transparency. But walking away from America’s deep liquidity and institutional capital comes at a steep cost.
The third option? Launch a compliant, U.S.-only stablecoin. CEO Paolo Ardoino hinted at this earlier, stating the new product would be “tailored to domestic needs,” unlike USDT, which serves global underbanked markets.
Still, even this route has risks – it fractures the brand, invites scrutiny, and doesn’t guarantee legislative goodwill. Yet Tether’s market size might make lawmakers more willing to negotiate than punish.
If not Tether, then who?
Tether commands 62% of the stablecoin market – more than double Circle’s 25% share.
Source: X
But with the GENIUS Act tightening the noose, USDC’s regulatory-first strategy could pay off. As a U.S.-compliant issuer, Circle may lure institutional capital and users seeking safer rails.
Still, the charts tell us dominance won’t shift overnight; compliance isn’t the same as market capture.
Stablecoins may only account for 1.1% of the U.S. dollar supply, but that sliver is scaling fast.
Source: X
What happens with Tether (and who fills the gap if it falters) could very well shape the future of digital dollars.
