Major Legislative Advancements in the U.S. Congress
Reports from The Wall Street Journal indicate major legislative advancements in the United States Congress with the impending approval of the “GENIUS Act,” a transformative measure aimed at legitimizing stablecoins within the broader financial arena. This initiative has garnered attention not just from innovative startups, but also from established financial institutions and retail leaders such as Walmart.
Key Provisions of the GENIUS Act
Central to the Act is a stipulation requiring stablecoin issuers to back their currencies with secure reserves, including cash and short-term U.S. Treasury securities. Moreover, larger issuers are mandated to submit audited financial statements annually, a requirement that poses significant hurdles for Tether, the dominant player in the stablecoin market, commanding a staggering 66% share with a market cap of $156 billion.
Concerns Over Tether’s Compliance
Currently, Tether’s USDT is only partially supported by traditional assets such as cash, with a notable reliance on cryptocurrencies like Bitcoin and precious metals such as gold, leading to longstanding criticism over their financial transparency. Legal expert Scott Armstrong, with experience in cryptocurrency-related legal matters, has raised concerns that the compliance demands of the “GENIUS Act” could jeopardize Tether’s ability to function in the U.S. market.
As of now, Tether has not provided any comments regarding the Act’s implications. In past discussions, CEO Paolo Ardoino suggested the feasibility of launching a region-specific stablecoin to maintain operational viability in the U.S.
Legislative Process and Next Steps
The legislation offers a grace period to facilitate compliance, with the Senate proposing a three-year extension, while the House version sets a shorter 18-month timeframe. For the Act to become law, it still requires the endorsement of President Trump, who has publicly expressed support for the initiative.
These developments underscore a critical juncture for Tether as it navigates regulatory challenges amidst a rapidly evolving digital finance landscape.
