U.S. Congress Advances GENIUS Act, Impacting Tether’s Market Presence – Coincu

In an effort to mainstream stablecoins, the U.S. Congress is advancing the GENIUS Act, requiring issuers to back their tokens with safe assets. The legislation has captured the interest of various stakeholders, including startups and large corporations.

This legislative action introduces significant regulatory changes, affecting both current market practices and future stablecoin operations.

GENIUS Act Demands Rigorous Stablecoin Reserve Backing

The upcoming GENIUS Act enforces stricter regulation of stablecoins, requiring reserve backing with cash and U.S. Treasury bonds. Large issuers must also publish audited annual financial reports. This regulation notably challenges Tether’s existing reserve management practices.

Tether holds a dominant share of 66% in the stablecoin market, with USDT partially backed by Bitcoin and gold. The GENIUS Act’s requirements compel Tether to examine its reserve strategies, prompting discussions about potential localized stablecoin issuance in the U.S.

Scott Armstrong, former U.S. federal prosecutor, commented, “This could lead to Tether being unable to continue operating in the U.S.”

Market reactions have been varied, with experts suggesting potential volatility for USDT. Former federal prosecutor Scott Armstrong highlighted an operational risk for Tether within U.S. regulations, while the company remains silent on specific actions.

Tether’s Compliance Challenges Under New Legislation

Did you know? The GENIUS Act could mimic the effects seen after the New York Attorney General’s 2021 settlement with Tether, which led to adjustments in the stablecoin market share.

The cryptocurrency Tether USDt (USDT) is priced at $1.00, maintaining a market cap of approximately $156.76 billion alongside a 24-hour trading volume of $69.57 billion. Recent price changes indicate a 5.22% increase over the past 90 days, as reported by CoinMarketCap.

Coincu Research highlights that the GENIUS Act could drive the development of stablecoin audit technologies and promote transparency. Regulatory clarity may bolster market confidence and encourage stablecoin usage, provided compliance and adaptation strategies are effectively managed.