Tether Shifts Its Focus to Emerging Markets as U.S. Lawmakers Struggle to Define Stablecoins

Tether, the issuer of the biggest stablecoin worldwide, USDT, is deliberately turning its attention toward emerging countries as U.S. legislators struggle to provide a clear legislative framework for stablecoins.

Tether, the issuer of the biggest stablecoin globally, USDT, is purposely turning its attention toward emerging countries as U.S. legislators grapple to provide a clear legislative framework for stablecoins.

The company is also discussing a new U.S.-compliant stablecoin to navigate the changing regulatory terrain even as it actively participates in legislative debates.

The company’s involvement in U.S. regulatory affairs comes amid a series of moves by Tether to adjust its operations to align with evolving regulations in key markets.

The company’s efforts to engage with U.S. lawmakers are also part of a broader move by cryptocurrency firms to influence the direction of policy in Washington, D.C., especially as it relates to stablecoins.

Tether, which is best known for its USDT stablecoin pegged to the U.S. dollar, has been operating in a regulatory gray area for several years.

The company’s stablecoins have been used by traders and investors in a variety of markets, especially in emerging economies where financial access is limited by conventional banking systems.

But as the cryptocurrency industry has grown, so too has the pressure on lawmakers to provide clear rules for the new financial technology.

In the case of stablecoins, lawmakers and regulators have raised concerns about the potential for such coins to be used for illicit activity or to pose a threat to the stability of the financial system.

According to a recent report by the Center for Law and Economics, a nonpartisan research institute, these fears appear to be unfounded.

The report’s authors—who include former U.S. Treasury official Mark A. Zandi and Georgetown University law professor Barry A. Obruch—find that, despite assertions to the contrary by some economists and policymakers, stablecoins do not appear to pose a threat to macroeconomic stability.

Moreover, they add, assertions that major stablecoin issuers like Tether and Circle—which issues the USD Coin (USDC) stablecoin—are poorly capitalized and thinly disclosed appear to be based on a misunderstanding of the companies’ balance sheets and on a failure to recognize the significant role that's played by U.S.-based accounting firms in auditing the companies' financials.

The company is also considering introducing a new stablecoin specifically for the U.S. market, which would be meant to satisfy one of the particular criteria of U.S. rules—namely, that stablecoins be fully backed by liquid assets at all times and undergo frequent audits by U.S.-based accounting firms.

This new coin, which is still in the early stages of planning, would be designed to appeal to large, regulated institutions and would be subject to ongoing audits by a U.S. accounting firm, in accordance with U.S. Generally Accepted Accounting Principles (GAAP).

This new offering would be in addition to Tether’s existing line of stablecoins, which are currently available in several emerging markets and are already used by millions of people around the world to transfer value, make payments, and access financial services.

In a statement regarding the company’s involvement in U.S. regulatory affairs, Paolo Ardoino, the CEO of Tether, said that the company is working closely with U.S. legislators to ensure that any new regulations are practical and can be implemented effectively.

“We are grateful for the opportunity to engage with U.S. lawmakers as they work to develop legislation for the digital asset industry,” Ardoino said in a statement. “We believe that it is important for regulators to hear directly from industry participants and for industry participants to provide their feedback on proposals that may have a significant impact on their businesses and operations.”

Ardoino also noted that Tether is the world’s largest stablecoin issuer and that its coins are used by a diverse range of customers, including institutions, merchants, and individual investors.

“We are committed to working with regulators to create a regulatory framework that is clear, transparent, and supports innovation,” Ardoino added.

As part of its efforts to provide input on pending legislation, Tether has been in talks with influential figures behind the STABLE Act, a bipartisan bill that is currently being considered by the U.S. Congress.

The bill, which stands for Stable Token And Bank Envsioned Linked by Agreement, proposes a new regulatory framework for stablecoins, aiming to balance innovation in the cryptocurrency sector with consumer protection.

The bill's authors—Senators Bill Hagerty (R-TN) and Mark Warner (D-VA)—have said the bill is designed to ensure that stablecoins are "issued in a safe, sound, and efficient manner." The legislation would also require stablecoin issuers to maintain a one-to-one backing for their tokens with fully liquid assets, such as U.S. Treasury bills, demand deposits at U.S. banks, or other assets specified by the Federal Reserve.

In recent months, Tether has been meeting with