The U.S. Congress is taking significant steps to regulate stablecoins with the introduction of two bills that could have a major impact on Tether, a prominent player in the stablecoin market. These legislative proposals could restrict the company’s ability to issue new USDT tokens within the country, potentially leading to its delisting on major exchanges.
What Do the New Bills Entail?
The GENIUS Act, sponsored by Senator Bill Hagerty, mandates that companies must maintain a full reserve and utilize U.S.-based auditing firms for stable asset issuance. Additionally, the STABLE Act introduced in the House echoes these requirements, both aiming to limit the operations of firms that fail to comply with these standards.
How Will This Affect Market Dynamics?
Concerns are mounting regarding Tether’s practice of submitting periodic status updates rather than comprehensive audit reports. This has led U.S. exchanges to consider trading restrictions for Tether as they evaluate potential regulatory risks. In contrast, USDC, Tether’s main competitor, is recognized for its consistent auditing practices.
A congressional aide emphasized that Tether will face consequences similar to other issuers if it does not adhere to the new regulations. Tether’s CEO, Paolo Ardoino, noted that top auditing firms often prioritize the banking sector, which influences their decision to avoid audits.
- Legislation aims to enforce strict reserve requirements.
- Tether’s reliance on periodic updates raises regulatory concerns.
- Compliance could boost trust and transparency in the market.
With the potential for these bills to take months to become law, the resulting regulations could reshape risk management protocols across exchanges and alter the landscape for affected digital currency firms.
