The impending U.S. stablecoin regulations have led Tether, the major issuer of stablecoin in the world, to change its strategic focus to global markets. The move is made just as the U.S. Congress considers the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) which seeks to create a comprehensive stablecoin regulatory framework.
In proposing requirements for stablecoin issuers to maintain reserves in liquid, safe assets like Treasury bills, meet anti-money laundering (AML) and counter terrorism financing (CTF) requirements and accord priority in bankruptcy to holders, the GENIUS Act represents some of the sturdiest rules yet in the debate over regulating cryptocurrencies. These metrics are intended to bring consumer protection and enable stablecoins to be used widely at the system level.
Even so, Tether CEO Paolo Ardoino has underscored the company’s determination to avoid engaging with a U.S. market. Speaking in a recent interview Ardoino added: “We can be compliant and still be very focused on foreign markets.”
Currently, Tether’s home of El Salvador has more than 60 percent of the global stablecoin market share and it does not directly hold U.S. customers. If the GENIUS Act is finalized, the company will then launch a new dollar pegged stablecoin slated for the U.S. market.
Tether says that to bolster transparency and regulatory compliance it is on a path to conduct a full audit of its reserves by a major accounting firm. At the moment the company provides quarterly attestations certified by BDO Italia SpA. Such an audit would strengthen the institutions’ trust and solve many long time questions about Tether reserves’ composition.
But also it’s the focus on the international markets with the USDT stable coin which is broadly used for transferring money internationally as remittances or as a hedge against local currency volatility in emerging markets is what really stands out. Rather than focusing on these areas, Tether seeks to assist the approximately 30 billion uncashed individuals worldwide in access to digital financial services.
Yet Tether’s strategic pivot showcases issues global crypto firms such as the Miami based company, face in overcoming varying regulatory environments. Tether’s approach may be an example of how to strike the balance between compliance and international growth in a fast developing stablecoin market.
