Tether & US Stablecoin Regulation

Tether, the leading stablecoin issuer, is actively collaborating with U.S. lawmakers to shape the upcoming regulatory framework for stablecoins. This engagement follows the introduction of several key bills in the House and Senate, each proposing different approaches to regulating digital assets.

Key Regulatory Proposals

• Monthly Audits: Proposed regulations mandate monthly audits by a U.S. accounting firm, a significant increase from Tether's current quarterly audits conducted by BDO.
• 1:1 Reserve Requirement: Stablecoin issuers would be required to maintain a one-to-one reserve, backed by high-quality, liquid assets such as U.S. Treasury bills and insured deposits.

Tether CEO, Paolo Ardoino, confirmed the company's proactive engagement, stating their commitment to working within the regulatory framework while advocating for their interests. He emphasized Tether's willingness to compromise to ensure its continued operation within the legal parameters. This includes providing input on proposed legislation to ensure their "voice is heard."

Representative Bryan Steil, chairman of the Financial Committee Digital Assets Subcommittee, confirmed Tether’s participation in discussions surrounding the STABLE Act. This bipartisan bill, co-introduced with Congressman French Hill, focuses on establishing a robust regulatory framework for stablecoins.

The STABLE Act mandates that stablecoin reserves consist solely of high-quality, liquid assets. Tether, currently holding over $114 billion in short-term Treasury bills, is already well-positioned in this regard. However, JPMorgan analysts have suggested that passing the STABLE Act might require Tether to liquidate some Bitcoin and precious metals holdings to ensure full compliance.

Ardoino countered JPMorgan's assessment, suggesting their analysis misrepresents Tether's operational capabilities and the evolving regulatory landscape. Tether's current reserve composition already aligns significantly with the proposed regulations.

Tracking Key Stablecoin Bills

• The STABLE Act: Seeks to create a comprehensive regulatory framework for stablecoins with bipartisan support. It's currently under review before a digital assets subcommittee hearing.
• The GENIUS Act (Senator Bill Hagerty): Introduced on February 4, 2025, this bill proposes federal oversight of payment stablecoins while respecting state regulatory roles. It has gained bipartisan support and is prioritized for swift passage.
• Rep. Maxine Waters' Stablecoin Bill: Introduced on February 10, 2025, this bill focuses on consumer protection and anti-fraud measures, mandating registration and a one-to-one reserve requirement backed by U.S. currency or approved assets.

The GOP-controlled House and Senate aim to pass and enact stablecoin legislation by April. The outcome of these regulatory developments will significantly impact the stablecoin sector, including the market leader Tether and its 60% market share.

Codeum provides crucial blockchain security services, including smart contract audits, KYC verification, and custom smart contract and DApp development. We are committed to fostering a secure and transparent blockchain ecosystem.