Tether Faces Pressure as GENIUS Act Nears U.S. Stablecoin Regulation

Tether’s USDT, the world’s largest stablecoin with over $155 billion in circulation, may soon face compliance challenges under a landmark U.S. regulation—the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins of 2025). As the bill heads to the House after likely Senate passage, stablecoin issuers offering tokens to U.S. users could be required to register with the Office of the Comptroller of the Currency, maintain U.S.-based reserves, and undergo monthly audits.

While the bill opens a path for foreign stablecoin issuers, it demands they operate under regulatory regimes deemed equivalent to U.S. standards. Critics argue this could allow firms like Tether, now headquartered in El Salvador, to bypass strict oversight if the Treasury Department grants reciprocity agreements—potentially undermining U.S. financial safeguards.

Tether, under scrutiny for its reserve composition and lack of U.S. regulatory alignment, has signaled it may instead launch a fully compliant U.S.-based stablecoin. Meanwhile, domestic competitor Circle (USDC) appears well-positioned to capitalize on post-regulatory institutional adoption.

Opposition from Senator Elizabeth Warren highlights concerns over national security risks and loopholes for foreign issuers. Still, with backing from both political parties and influence from pro-crypto figures in the Trump administration, the GENIUS Act represents a major step toward formal U.S. stablecoin legislation.

However, final outcomes depend on House negotiations and regulatory interpretation. If Tether remains outside the U.S. framework, it risks losing ground to regulated issuers as traditional finance embraces blockchain. For now, Tether’s future in the U.S. market remains uncertain amid shifting global regulatory tides.