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In the United States, a new regulation that could significantly impact the crypto asset markets is under discussion. The USDT, a crypto token from Tether directly linked to the US dollar, leads the global market with a supply of $155 billion. However, the current GENIUS Act being deliberated in the US Senate seeks to impose stricter compliance rules on companies like Tether.
Stablecoin Legislation Approved
Should this legislation come into effect, companies desiring to offer stablecoins to US users will need to adhere to local or US-recognized international financial regulatory standards. Moreover, these companies are required to register with the US authorities and maintain reserves that can meet customer demands at a US financial institution.
The new rules stipulate that company reserves be held entirely in cash, government bonds, or similar liquid assets and subject to monthly independent audits. Chief executives of these companies will bear legal responsibility for the declarations provided. In this framework, regulations combating money laundering applicable to all US financial institutions will be enforced. The legislation recently gained strong support in the Senate; however, due to a different bill in the House of Representatives, the two need merging and a final vote is yet to happen. Trump wanted this legislation on his desk by August.
Tether’s Stance on the US Market
According to many experts, it seems challenging for Tether to fully comply with the new US regulations in its current state. The company is shifting its focus to countries with lighter regulations like El Salvador and has not made definitive announcements regarding its operations in the US.
The proposed bill also raises discussions over the US Treasury Secretary’s broad discretion in endorsing foreign regulations, which might allow Tether entry into the US market under specific exemptions.
USDC token, issued by US-based Circle, aims to capitalize on the market share that Tether holds and benefit from potential growth post-regulation in the US.
Other major tech firms within the crypto sector could enter the stablecoin market once the regulatory framework is clarified. The bill does not propose defining all stablecoins as securities or commodities.
Tether has recently updated its users that failing to adhere to the evolving regulatory environment might subject it and its subsidiaries to various sanctions.
The legislative process has not yet concluded, leaving the final regulations and their market impacts uncertain. The US House of Representatives might make amendments to the bill.
The US stablecoin market could undergo significant changes in the near future. While the new bill seeks to create an equitable and transparent competitive environment for foreign and domestic issuers, some critics highlight the potential risks of its shortcomings and implementation gaps. Market participants await clarity on regulatory uncertainties and potential financial implications. For US consumers, the key issue will be under what conditions domestic and foreign stablecoin providers will operate and the level of consumer protection available.
