Tether is deploying a dual-track strategy: launching USAT, a compliant stablecoin adhering to the US GENIUS Act, while continuing its globally circulating USDT. This creates separate operational models catering to the regulated US market and the global non-regulated market.

Preface

In August of this year, Bo Hines resigned from the White House Crypto Committee and swiftly became the CEO of Tether's newly established US division. His mission: launch USAT, a stablecoin compliant with the GENIUS Act. USAT will undergo monthly audits, hold reserves exclusively in cash and short-term US Treasury bonds, and operate under the full supervision of federal banks.

Meanwhile, USDT continues to process over $1 trillion in monthly transactions, its reserves including Bitcoin, gold, and secured loans. These assets are managed through offshore entities that have never undergone a full audit.

Two entirely different product approaches from the same company.

USDT's Current Status

USDT's circulating value reaches $172 billion, with a monthly trading volume exceeding $1 trillion. However, its reserves contain non-compliant assets like Bitcoin and gold, managed by offshore entities lacking comprehensive audits. Last year, Tether, with its "ask for forgiveness, not permission" model, profited $13.7 billion. In contrast, Circle, emphasizing due diligence, eventually went public with a $7 billion valuation.

This announcement should have been a celebration. After years of regulatory battles, transparency issues, and persistent questions about reserve backing, Tether was finally offering the US market what critics had long demanded: full compliance, independent audits, regulated custodians, and reserves held solely in cash and short-term Treasuries. Yet, the discussion revolves around regulatory arbitrage, competitive moats, and the awkward moments when revolutionary technology clashes with the established order.

The GENIUS Act & Compliance Challenges

The GENIUS Act, enacted in July 2025, establishes strict rules for the US market:

* Reserves must be 100% cash and short-term U.S. Treasuries (excluding Bitcoin, gold, loans).

* Monthly independent audits, with CEO/CFO attestations.

* US-licensed issuers and US-regulated custodians.

* Full AML/KYC compliance, with freeze functions.

* No interest paid to holders.

* Full transparency of reserve composition.

Comparing this list to USDT's existing structure reveals clear challenges. The law effectively draws a line between "foreign" and domestic stablecoins. USDT, issued by Tether entities in the BVI and Hong Kong, cannot simply flip a switch to comply. It requires an overhaul of corporate structure, reserve composition, and operational framework. Furthermore, genuine compliance demands the transparency Tether has historically avoided. As of 2025, Tether still provides quarterly "attestations" rather than full audits, and about 16% of its reserves are in assets prohibited by the GENIUS Act.

Why not just fix USDT? Why launch a new token instead of making USDT compliant? Simply put, retrofitting USDT would be like trying to convert a speedboat into an aircraft carrier while it's still sailing. USDT serves 500 million global users who chose it precisely because it operates outside strict US regulation. For many in emerging markets, it provides dollar access where local banking is unreliable or costly. Implementing US-level KYC, freeze functions, and audit protocols globally would fundamentally alter the essence of USDT's success. A deeper strategic reason exists: market segmentation. USAT allows Tether to offer a "premium" regulated product for US institutions while maintaining USDT as the "global standard" for other markets.

USAT's Positioning and Value Proposition

USAT will be issued by Tether's US division, with reserves held by regulated custodians, aiming to attract US institutional users. But what does USAT offer that Circle's USDC doesn't? Tether's pitch seems vague here.

Technically, both tokens leverage Tether's Hadlin platform, allowing seamless integration with existing infrastructure while maintaining regulatory segregation. Liquidity can flow between systems where legally permitted, but compliance "firewalls" ensure each token operates independently within its jurisdiction.

USAT will be issued by Anchorage Digital Bank (a federally chartered crypto bank), with reserves custodied by Cantor Fitzgerald. It will be fully GENIUS Act compliant. Under Bo Hines's leadership, USAT benefits from political connections. However, Circle's USDC already meets all these conditions, boasting deep liquidity, established exchange integration, institutional partnerships, and a solid regulatory track record.

Tether's main advantage is... being Tether. The company built the world's largest stablecoin distribution network, holds massive market share, and generates $13.7 billion in annual profit to fuel growth. As CEO Paolo Ardoino stated, "Unlike our competitors, we don't need to rent distribution channels, we own them." But Tether needs to build USAT liquidity from scratch, convincing exchanges to list it, market makers to provide liquidity, and institutions to use it.

Competition and Risks

Tether relies on its global distribution network and substantial profits (e.g., $5.7B in H1 2025) to support USAT promotion. However, it faces fierce competition from USDC's mature ecosystem and is criticized for "compliance theater," failing to address USDT's core transparency issues.

Circle's recent moves highlight the competition. Its successful IPO in June 2025, the launch of the Arc blockchain for stablecoin finance, and expanding global payments channels show its regulatory-first strategy is paying off institutionally.

USAT's potential advantages include compatibility with existing Tether infrastructure, making transition easier for developers. Some institutions might simply want diversification among regulated stablecoins to mitigate counterparty risk concentrated in Circle (USDC) or Tether (USAT).

The timeline is crucial. With a planned late-2025 launch, Tether has limited time to build liquidity and secure listings. In finance, first-mover advantage is often decisive; users prefer established, liquid options.

Critics argue USAT is essentially "compliance theater" – a way for Tether to access the US market without addressing core transparency issues in its primary business. This criticism holds some weight; choosing to launch USAT rather than fully compliant USDT suggests prioritizing operational flexibility over comprehensive regulatory legitimacy. Conversely, one might argue this is how markets should work: different client segments have different needs. US institutions require compliance, while emerging market users prioritize accessibility. Why can't one firm serve both segments with different products?

Industry Significance and Conclusion

The dual-coin strategy reflects the broader crypto industry's struggle to balance regulation, decentralization, and institutional adoption. It highlights the challenge of balancing crypto's original permissionless spirit with the regulatory frameworks needed for mainstream adoption.

USAT represents Tether's bet that it can gain regulatory legitimacy for institutions while maintaining flexibility for the global retail market. Its success hinges on execution efficiency, market acceptance, and regulatory stability. The regulatory landscape remains fluid; implementation details of the GENIUS Act are uncertain, and changes in administration or regulatory priorities could significantly impact strategies.

Fundamentally, USAT raises key questions about the nature of Tether's initial success. Was USDT's dominance built on regulatory arbitrage that may be unsustainable? Or did it reflect genuine innovation in global financial infrastructure, which regulatory compliance can foster rather than hinder? The answer will ultimately determine whether USAT marks Tether's evolution into a mature financial institution or an admission of the fundamental limitations of its original model. Regardless, the launch of USAT signifies a new chapter in stablecoin competition and regulation.

The king is building a second kingdom. Whether it can rule both remains to be seen.

Tether is deploying a dual-track strategy: launching USAT, a compliant stablecoin adhering to the US GENIUS Act, while continuing its globally circulating USDT. This creates separate operational models catering to the regulated US market and the global non-regulated market.

Preface

In August of this year, Bo Hines resigned from the White House Crypto Committee and swiftly became the CEO of Tether's newly established US division. His mission: launch USAT, a stablecoin compliant with the GENIUS Act. USAT will undergo monthly audits, hold reserves exclusively in cash and short-term US Treasury bonds, and operate under the full supervision of federal banks.

Meanwhile, USDT continues to process over $1 trillion in monthly transactions, its reserves including Bitcoin, gold, and secured loans. These assets are managed through offshore entities that have never undergone a full audit.

Two entirely different product approaches from the same company.

USDT's Current Status

USDT's circulating value reaches $172 billion, with a monthly trading volume exceeding $1 trillion. However, its reserves contain non-compliant assets like Bitcoin and gold, managed by offshore entities lacking comprehensive audits. Last year, Tether, with its "ask for forgiveness, not permission" model, profited $13.7 billion. In contrast, Circle, emphasizing due diligence, eventually went public with a $7 billion valuation.

This announcement should have been a celebration. After years of regulatory battles, transparency issues, and persistent questions about reserve backing, Tether was finally offering the US market what critics had long demanded: full compliance, independent audits, regulated custodians, and reserves held solely in cash and short-term Treasuries. Yet, the discussion revolves around regulatory arbitrage, competitive moats, and the awkward moments when revolutionary technology clashes with the established order.

The GENIUS Act & Compliance Challenges

The GENIUS Act, enacted in July 2025, establishes strict rules for the US market:

* Reserves must be 100% cash and short-term U.S. Treasuries (excluding Bitcoin, gold, loans).

* Monthly independent audits, with CEO/CFO attestations.

* US-licensed issuers and US-regulated custodians.

* Full AML/KYC compliance, with freeze functions.

* No interest paid to holders.

* Full transparency of reserve composition.

Comparing this list to USDT's existing structure reveals clear challenges. The law effectively draws a line between "foreign" and domestic stablecoins. USDT, issued by Tether entities in the BVI and Hong Kong, cannot simply flip a switch to comply. It requires an overhaul of corporate structure, reserve composition, and operational framework. Furthermore, genuine compliance demands the transparency Tether has historically avoided. As of 2025, Tether still provides quarterly "attestations" rather than full audits, and about 16% of its reserves are in assets prohibited by the GENIUS Act.

Why not just fix USDT? Why launch a new token instead of making USDT compliant? Simply put, retrofitting USDT would be like trying to convert a speedboat into an aircraft carrier while it's still sailing. USDT serves 500 million global users who chose it precisely because it operates outside strict US regulation. For many in emerging markets, it provides dollar access where local banking is unreliable or costly. Implementing US-level KYC, freeze functions, and audit protocols globally would fundamentally alter the essence of USDT's success. A deeper strategic reason exists: market segmentation. USAT allows Tether to offer a "premium" regulated product for US institutions while maintaining USDT as the "global standard" for other markets.

USAT's Positioning and Value Proposition

USAT will be issued by Tether's US division, with reserves held by regulated custodians, aiming to attract US institutional users. But what does USAT offer that Circle's USDC doesn't? Tether's pitch seems vague here.

Technically, both tokens leverage Tether's Hadlin platform, allowing seamless integration with existing infrastructure while maintaining regulatory segregation. Liquidity can flow between systems where legally permitted, but compliance "firewalls" ensure each token operates independently within its jurisdiction.

USAT will be issued by Anchorage Digital Bank (a federally chartered crypto bank), with reserves custodied by Cantor Fitzgerald. It will be fully GENIUS Act compliant. Under Bo Hines's leadership, USAT benefits from political connections. However, Circle's USDC already meets all these conditions, boasting deep liquidity, established exchange integration, institutional partnerships, and a solid regulatory track record.

Tether's main advantage is... being Tether. The company built the world's largest stablecoin distribution network, holds massive market share, and generates $13.7 billion in annual profit to fuel growth. As CEO Paolo Ardoino stated, "Unlike our competitors, we don't need to rent distribution channels, we own them." But Tether needs to build USAT liquidity from scratch, convincing exchanges to list it, market makers to provide liquidity, and institutions to use it.

Competition and Risks

Tether relies on its global distribution network and substantial profits (e.g., $5.7B in H1 2025) to support USAT promotion. However, it faces fierce competition from USDC's mature ecosystem and is criticized for "compliance theater," failing to address USDT's core transparency issues.

Circle's recent moves highlight the competition. Its successful IPO in June 2025, the launch of the Arc blockchain for stablecoin finance, and expanding global payments channels show its regulatory-first strategy is paying off institutionally.

USAT's potential advantages include compatibility with existing Tether infrastructure, making transition easier for developers. Some institutions might simply want diversification among regulated stablecoins to mitigate counterparty risk concentrated in Circle (USDC) or Tether (USAT).

The timeline is crucial. With a planned late-2025 launch, Tether has limited time to build liquidity and secure listings. In finance, first-mover advantage is often decisive; users prefer established, liquid options.

Critics argue USAT is essentially "compliance theater" – a way for Tether to access the US market without addressing core transparency issues in its primary business. This criticism holds some weight; choosing to launch USAT rather than fully compliant USDT suggests prioritizing operational flexibility over comprehensive regulatory legitimacy. Conversely, one might argue this is how markets should work: different client segments have different needs. US institutions require compliance, while emerging market users prioritize accessibility. Why can't one firm serve both segments with different products?

Industry Significance and Conclusion

The dual-coin strategy reflects the broader crypto industry's struggle to balance regulation, decentralization, and institutional adoption. It highlights the challenge of balancing crypto's original permissionless spirit with the regulatory frameworks needed for mainstream adoption.

USAT represents Tether's bet that it can gain regulatory legitimacy for institutions while maintaining flexibility for the global retail market. Its success hinges on execution efficiency, market acceptance, and regulatory stability. The regulatory landscape remains fluid; implementation details of the GENIUS Act are uncertain, and changes in administration or regulatory priorities could significantly impact strategies.

Fundamentally, USAT raises key questions about the nature of Tether's initial success. Was USDT's dominance built on regulatory arbitrage that may be unsustainable? Or did it reflect genuine innovation in global financial infrastructure, which regulatory compliance can foster rather than hinder? The answer will ultimately determine whether USAT marks Tether's evolution into a mature financial institution or an admission of the fundamental limitations of its original model. Regardless, the launch of USAT signifies a new chapter in stablecoin competition and regulation.

The king is building a second kingdom. Whether it can rule both remains to be seen.