Tether, the entity behind the biggest stablecoin ever — USDT, with a market cap nearing $180 billion — has just announced its official entry into the GENIUS Act stablecoin battle with the launch of USAT.
Aug 28, 2025
Tether, the entity behind the biggest stablecoin ever — USDT, with a market cap nearing $180 billion — has just announced its official entry into the GENIUS Act stablecoin battle with the launch of USAT.
Set to launch by the end of 2025, Tether’s new stablecoin USAT is being positioned as a major win for GENIUS Act compliance and, by extension, for the broader push toward dollarization.
In today’s article, we will explore why USDT has never been, and likely never will be, a U.S. regulation compliant stablecoin. We will also examine the strategic steps behind the creation of USAT, which aims to become the preferred U.S.-regulated stablecoin and challenge USDC’s growing prominence in the U.S. market.
Why USDT Isn’t Built for U.S. Stablecoin Compliance
USDT is far from meeting U.S. stablecoin compliance standards, unlike USDC. Here’s why.
Issuer Location, Licensing, and Regulatory Approval
The GENIUS Act requires stablecoin issuers to be U.S.-domiciled entities that obtain appropriate licenses and regulatory approvals to operate within the United States. Specifically, Section 3 defines “Permitted Payment Stablecoin Issuers” (PPSIs) as entities incorporated or organized under U.S. law that hold federal or state licenses and are subject to regulatory supervision.
Source: The GENIUS Act
Additionally, Section 4 mandates that all stablecoin reserves must be held in U.S.-regulated financial institutions, while Section 6 grants the Office of the Comptroller of the Currency (OCC) authority to oversee these issuers and requires foreign stablecoin issuers to obtain explicit OCC approval and comply with U.S. reserve custody requirements.
Tether, incorporated outside the U.S. (in the British Virgin Islands) and lacking the necessary U.S. banking licenses or regulatory approvals, does not meet these fundamental requirements under the GENIUS Act.
Reserve Composition and Transparency
The GENIUS Act requires that stablecoins be fully backed (1:1) by U.S. dollar-denominated assets held in U.S.-regulated institutions. Specifically, Section 4(a)(1) mandates that reserves must consist of U.S. currency, demand deposits at insured depository institutions, or U.S. Treasury securities with a maturity of 93 days or less.
Source: The GENIUS Act
Tether’s USDT reserves have long been criticized for a lack of fully transparent, PCAOB-registered audits. Since its launch in 2014, Tether has never provided a full, PCAOB-registered audit of its reserves. Instead, starting around 2019, the company began issuing reserve attestations rather than comprehensive audits. This means that for nearly a decade, Tether has fallen short of the audit standards expected for such a major stablecoin.
This ongoing lack of full transparency has fueled skepticism and controversy, and even led many in the crypto community to accuse Tether that a portion of USDT issued may not be fully backed by real assets.
Audit Standards and Third-Party Oversight
Transparency and trust in stablecoins hinge heavily on reliable, independent verification of reserves.
The GENIUS Act addresses this by imposing strict audit requirements. According to Section 4(a)(3), reserve attestations must be conducted by auditors registered with the U.S. Public Company Accounting Oversight Board (PCAOB) — the same standard that governs audits of publicly traded companies in the U.S. This requirement ensures that audits are performed under rigorous regulatory oversight, providing investors and regulators with confidence in the reported reserve holdings.
Source: The GENIUS Act
Tether, however, has consistently missed the mark here as we have just seen. Their reserve attestations come from BDO Italia a firm not registered with the PCAOB so those reports do not have the official regulatory stamp of approval that the GENIUS Act requires. Meanwhile stablecoins like USDC get regularly audited by PCAOB registered firms which helps back up their claims of being fully backed and playing by the rules.
There was no reason to believe Tether would change its debonnaire attitude toward reserve audits, and thus USAT was born.
As Max Moeller in an article for CCN very astutely put it Tether see USDT as having as main function to operate as a “global liquidity pool,” because it’s widely used worldwide as a global liquidity pool because it’s one of the most traded and broadly accepted stablecoins across many international crypto markets.
Meanwhile USAT will simply endorse the role of “US-licensed digital dollar.”
USAT and The White House Connection
Behind the birth of USAT lie probably two main objectives. The first is to gain a foothold, and possible dominance, in the U.S. market, challenging USDC on its own turf.
Simultaneously, USAT aims to manage the risk that comes with USDC gaining brand recognition as a safe and trusted stablecoin on the worldwide crypto stage after receiving a U.S. regulatory stamp of approval. This could potentially lead to USDC slowly eating away at USDT’s position as the global liquidity pool.
As to how they intend to manage that, well, they both make their own the rhetoric behind the launch of the GENIUS Act and found themselves a very-well White House connected team to both push it and legitimize it.
Bo Hines, CEO-Designate of Tether USA₮ declared:
“Tether is already one of the largest holders of U.S. Treasuries because we believe deeply in the enduring power of the dollar. USA₮ is our commitment to ensuring that the dollar not only remains dominant in the digital age, but thrives — through products that are more transparent, more resilient, more accessible, and more unstoppable than ever before.
I am honored to lead USA₮ as we prepare for its launch, creating a U.S.-regulated dollar-backed stablecoin designed to strengthen America’s role in the global economy.
By building USA₮ with compliance, transparency, and innovation at its core, we are ensuring that the dollar remains the foundation of trust in the digital asset space.”
As we can see, they strongly emphasize that USAT was created to participate in the U.S. effort to “strengthen America’s role in the global economy” by “ensuring that the dollar remains the foundation of trust in the digital asset space,” whereas USDT did so only marginally, despite being a U.S. dollar stablecoin.
We discussed at length the geopolitical impact of the GENIUS Act in this report if you wish to learn more about it:
The most interesting aspect of USAT is to whom and what it is connected to.
Bo Hines: A CEO with White House Ties
Bo Hines’ appointment as CEO of USAT is a strategic move that leverages his direct experience within the Trump administration’s crypto policy efforts.
As Executive Director of the President’s Council of Advisors on Digital Assets in early 2025, Hines was closely involved in shaping stablecoin regulations, including the groundwork behind the GENIUS Act.
This White House connection gives USAT a significant institutional advantage. Hines’ insider knowledge of U.S. regulatory processes and access to policymakers will help Tether navigate approval hurdles more efficiently and position USAT as a stablecoin aligned with U.S. interests.
His political and regulatory background provides USAT with credibility in Washington, enhancing its chances to gain acceptance among regulators and institutional investors.
In this sense, Hines serves as both a symbol and a practical asset in advancing USAT’s goal to become the U.S.-approved, dollar-backed stablecoin competing directly with USDC.
He is the perfect poster child of the American stablecoin!
To complete this patriotic stablecoin tableau, were mobilized for this USAT adventure Fitzgerald and Anchorage.
Cantor Fitzgerald: A Strategic Custodian with White House Ties
Tether’s decision to appoint Cantor Fitzgerald as custodian for USAT is a calculated move blending financial strategy with political alignment. Founded by Howard Lutnick, who resigned in February 2025 to become Commerce Secretary under President Donald Trump, the firm maintains a close connection to the White House through the Lutnick family.
By choosing Cantor Fitzgerald, Tether not only secures a reputable and regulated custodian but also aligns itself with a firm that has potentially direct access to policymakers and a vested interest in the administration’s economic agenda.
The firm is also reportedly collaborating with Tether and other entities to launch a $3 billion bitcoin investment venture through Cantor Equity Partners.
Anchorage Digital Bank: An Evident Issuer With Recent Questionable Practices?
Tether picked for is new stablecoin Anchorage Digital Bank as his issuer. Anchorage is the first (2021) and only federally chartered crypto bank in the U.S., and the only federally chartered bank approved to offer staking.
Anchorage is THE key player in the stablecoin ecosystem within the U.S..
So while Tether owns and manages USAT, Anchorage Digital Bank is the official issuer on the regulatory side. This partnership is strategic to position USAT as a “patriotic” and fully regulated U.S. dollar-backed stablecoin.
But this development could possibly have been foreseen when, at the end of June this year, lo and behold, Anchorage Digital Bank announced that they would phase out USDC!
Before phasing out USDC, Anchorage Digital was a key custodian and service provider for USDC, supporting its institutional custody and regulatory compliance. Anchorage helped manage the digital assets and infrastructure that allowed USDC to operate securely within the U.S. regulatory framework.
The argument they brought forth is that USDC, the second-largest stablecoin with $61 billion in circulation and widely favored by regulatory risk-averse institutional players, which has always seemed to be at the top of its game in terms of transparency, “no longer satisfies Anchorage Digital’s internal criteria for long-term resilience.” They apparently identified “elevated concentration risks associated with its issuer structure” and believe “institutions should carefully evaluate.”
To justify the phasing out, they published a “Stablecoin Safety Matrix Report,” where we discover that USDC performed almost as poorly as Agora USD (AUSD) and Usual USD (USD0) which Anchorage also decided to phase out.
Stablecoin Safety Matrix — Source: Anchorage Digital
Anchorage’s evaluation of USDC as unsafe for institutional use caused a big stir. But what really raised eyebrows was USDT outperforming USDC in this matrix! You mean the very same USDT that faced CFTC fines over reserve transparency and lacked proper audits for years?
Retrospectively, this report may have hinted at their upcoming partnership with Tether and the launch of USAT. According to the stablecoin team that was pushed out by Anchorage, the report is, to put it mildly, self serving nonsense. Nothing more than a propaganda leaflet meant to justify an assassination move. A “poorly executed” “hit piece”, in the words of Viktor Bunin, protocol specialist at Coinbase, which co founded USDC with Circle in 2018.
Source: Viktor Bunin
According to the delisted stablecoins, this report raises serious questions about conflicts of interest. Anchorage is part of the consortium backing the Global Dollar (USDG), a direct competitor to USDC and AUSD. The timing of their announcement also coincides intriguingly with Anchorage’s deeper push into stablecoins, marked by its July 2025 launch of USDtb, the first U.S.-based stablecoin fully compliant with the GENIUS Act. Developed in partnership with Ethena Labs, USDtb is backed 1:1 by audited cash and U.S. Treasury reserves, reflecting Anchorage’s strategic move to establish itself as a leading compliant stablecoin issuer.
For Nick Van Eck, whose firm issues AUSD: “If Anchorage had just delisted USDC and AUSD to prioritize the stablecoins that they have an economic interest in, I would understand it as a business decision. But attempting to delegitimize AUSD and USDC for ‘security concerns,’ while knowingly publishing false information, is unserious and bizarre.”
His father, CEO of asset manager Van Eck, which manages AUSD’s backing assets, supported his son’s critique: “If you need a laugh, check out this ‘safety’ matrix before Anchorage pulls it down. According to the matrix, Circle’s USDC (world’s second largest stablecoin) and AUSD (backed 100% by treasuries) have reserve issues. Oh, and by the way, AUSD’s reserve manager is regulated by umpteen different regulators.”
Source: Twitter
The fact that the report appears to bolster the credibility of both Tether and USDG while sidelining high-profile competitors raises rather reasonable suspicions among phased-out parties, that Anchorage’s phase-out decision may be less about objective institutional risk and more about potentially reshaping stablecoin market dynamics to favor its own initiatives.
While USAT is issued by Anchorage Digital Bank to ensure regulatory compliance, its technical infrastructure is powered by Hadron, Tether’s asset tokenization platform. Hadron handles the creation and management of the token, supporting features like reserve transparency, real-time monitoring, and auditable compliance with GENIUS Act requirements.
Conclusion
In the competitive landscape of U.S.-regulated stablecoins, USAT stands to gain a significant edge through strategic leadership and key partnerships that aim to reinforce its legitimacy. Moreover, USAT benefits from the well-established Tether brand and the global prominence of USDT, providing immediate recognition and credibility.
By potentially leveraging Tether’s extensive liquidity network and infrastructure, USAT could offer better interoperability and attract actors looking for the best of both world: U.S. regulatory compliance and global payment options.
Two challenges remain ahead.
The first, highlighted by Moeller in his CCN report, questions that even though Tether distanced itself as much as possible in designing USAT’s architecture, what if “the GENIUS Act forces audits of the rest of Tether’s holdings?”
This raises concerns about the level of transparency U.S.-regulated stablecoin issuer/creators will be required to meet, and whether this could potentially hinder Tether’s ability to launch USAT.
The second challenge is confronting dominant players like USDC, alongside a surge of ambitious new entrants all vying for their share of the U.S. stablecoin market.
The stakes couldn’t be higher: whoever secures dominance in the U.S. market could very well control the global stablecoin landscape.
In this light, USAT is not just a new stablecoin, it’s a battle for the survival and resilience of USDT itself.
