One company, two stablecoins

Original Title: Tether's Compliance Adventure: Can USAT Secure a Hold in the U.S.?

Original Author: Block Unicorn

Source:

Compiled by: Daisy, Mars Finance

Foreword

In August of this year, Bo Hines resigned from his position as a member of the White House Cryptocurrency Council and quickly took on the role of CEO of Tether's newly established U.S. division. His mission is to launch USAT, a stablecoin compliant with the GENIUS Act. USAT will undergo monthly audits, with its reserves held entirely in cash and short-term U.S. Treasury bills, operating under comprehensive regulation by federal banks.

Meanwhile, USDT continues to handle over $1 trillion in transactions each month, with reserves that include Bitcoin, gold, and secured loans. These assets are managed through offshore entities that have never undergone comprehensive audits.

The same company, two completely different product approaches.

Tether made a profit of $13.7 billion last year with its "seeking forgiveness, not permission" model. In contrast, Circle went public with a valuation of $7 billion, thanks to the due diligence it conducted and the right questions it asked before advancing its business.

This announcement should have been a celebration.

After years of regulatory struggles, transparency issues, and ongoing questions about reserve support, Tether has finally provided what critics have long demanded for the U.S. market: full Compliance, independent audits, regulated custodians, and reserves that only hold cash and short-term U.S. Treasury bonds.

However, we find ourselves discussing regulatory arbitrage, competitive moats, and those delightful awkward moments when revolutionary technology clashes with the established order, while everyone pretends that this has always been part of the plan.

It turns out that as long as there is enough creativity in the corporate structure, it is possible to serve two masters at the same time.

Before diving into USAT, let's first understand the tremendous achievements that Tether has made with USDT. The circulating token value of USDT reaches up to $172 billion, processing over $1 trillion in transactions in the cryptocurrency market every month. If Tether were a country, it would be the 18th largest holder of U.S. government debt, with a total of $127 billion in government bonds.

The company made a profit of 13.7 billion dollars last year—not revenue, but profit—placing it among the most profitable companies, surpassing many of the Fortune 500 companies.

All these achievements have not undergone comprehensive audits, comprehensive regulation, or the transparency that traditional financial institutions take for granted. Instead, Tether relies on quarterly "proofs" rather than comprehensive audits, and includes assets such as gold, Bitcoin, and collateralized loans in its reserves—assets that are not permitted under strict stablecoin regulations. Furthermore, it primarily operates through offshore entities in Hong Kong and the British Virgin Islands.

This is a prime example that illustrates how sometimes it is possible to achieve great success by completely going against the preferences of regulators.

The emergence (and issues) of the "GENIUS Act"

Then, in July 2025, the "GENIUS Act" was introduced, which is the first comprehensive stablecoin regulatory framework in the United States. Suddenly, the U.S. market— the most profitable and influential cryptocurrency market in the world—had new strict rules:

· 100% reserves in cash and short-term US Treasury bonds (excluding Bitcoin, gold, or secured loans)

· Monthly independent audits, the CEO and CFO must provide certification.

· Issuers with a US license and custodians regulated by the US

· Fully compliant with Anti-Money Laundering (AML) / Know Your Customer (KYC) requirements, equipped with freezing capabilities.

· No interest payment to holders

· The composition of reserves is completely transparent

Look at this list and then look at the existing structure of USDT; the challenges are obvious. This law actually delineates a clear line between "foreign" and domestically issued stablecoins in the United States. The USDT issued by Tether entities in the British Virgin Islands and Hong Kong cannot simply flip a switch to become compliant. This requires a thorough reform of its corporate structure, reserve composition, and operational framework.

For Tether, the more challenging aspect is that true compliance with the GENIUS Act requires the kind of transparency that the company has long avoided. As of 2025, Tether continues to provide quarterly "proofs" rather than comprehensive audits. Approximately 16% of its reserves consist of assets explicitly prohibited by the GENIUS Act: gold (3.5%), bitcoin (5.4%), secured loans, and corporate bonds.

So why not directly fix USDT?

Why launch an entirely new token instead of simply making USDT Compliance?

In simple terms, transforming USDT into compliance is like trying to convert a speedboat into an aircraft carrier while it is still sailing. Currently, USDT serves 500 million users worldwide, who choose it because it is not subjected to strict U.S. regulations. Many of these users are in emerging markets, where the local banking system is unreliable or costly, and USDT provides them with a means to access U.S. dollars.

If Tether suddenly imposes U.S.-level KYC requirements, freezing functions, and audit protocols on all USDT users globally, it would fundamentally change the nature of USDT's success. A small business owner in Brazil using USDT to avoid currency fluctuations does not want to deal with U.S. regulatory compliance requirements, and a cryptocurrency trader in Southeast Asia does not need a monthly certificate issued by the CEO.

But there is a deeper strategic reason behind it: market segmentation. By creating USAT, Tether can provide a "premium" regulated product for U.S. institutions while maintaining USDT as the "global standard" for other markets. It's like having a luxury brand and a mass-market brand at the same time—one company offering different products for different customers.

The value proposition of USAT (as it is itself)

So what functions does USAT offer that USDC has not provided? Tether's promotion seems a bit vague in this regard.

The technical architecture supports this dual-track strategy. Both tokens utilize Tether's Hadron platform, allowing for seamless integration with existing infrastructure while maintaining regulatory isolation. Where legally permissible, liquidity can flow between the two systems, but the Compliance "firewall" ensures that each token operates independently within its jurisdiction.

USAT will be issued by Anchorage Digital Bank (a federally chartered crypto bank), with reserves held by Cantor Fitzgerald. It will fully comply with the GENIUS Act, including monthly audits, transparent reserves, and various regulatory requirements expected by institutional users. Under the leadership of former White House crypto advisor Bo Hines, USAT benefits from strong political support and a network of connections in Washington.

However, Circle's USDC has already met all of these criteria. USDC boasts strong liquidity, mature exchange integration, institutional partnerships, and a good regulatory record. It has become the preferred stablecoin for U.S. institutions.

The main advantage of Tether is that... well, it is Tether. This company has built the world's largest stablecoin distribution network, has a huge existing market share, and generates $13.7 billion in profits annually to support its growth. As CEO Paolo Ardoino said, "Unlike our competitors, we do not need to rent distribution channels; we own them."

Tether needs to establish liquidity for USAT from scratch. This means convincing exchanges to list USAT, ensuring market makers provide liquidity, and getting institutional clients to actually use it. Even with Tether's strong financial resources and large distribution network, this is not an easy task.

USDC controls about 25% of the global stablecoin market but dominates the regulated US market. USDT has a 58% market share globally but is essentially excluded from the compliant US market.

The company bets that institutional users need alternatives to avoid concentrated risks. If Circle or USDC encounters problems, institutional users may seek other fully regulated options. Additionally, Tether can leverage its existing relationships (such as its partnership with Cantor Fitzgerald) to offer better terms or services.

Circle's recent actions highlight the intensity of the competition. In June 2025, Circle successfully went public and launched Arc, a blockchain specifically for stablecoin finance, while continuing to expand global payment channels. Circle's compliance-first strategy has evidently paid off in terms of institutional adoption.

But USAT also has certain advantages that USDC lacks. According to CEO Paolo Ardoino, Tether's global distribution network includes "hundreds of thousands of physical distribution points," as well as digital partnerships such as the $775 million investment in Rumble. This infrastructure has been built over more than a decade and is difficult to replicate easily.

Tether's strength lies in its global relationships and financial power. In the first half of 2025, the company generated $5.7 billion in profits, providing ample resources for market-making, liquidity incentives, and partnership development. Unlike competitors who must "rent" distribution channels, Tether has its own infrastructure.

The biggest advantage of USAT may be its compatibility. If it can work in conjunction with the existing USDT infrastructure, users won't need to completely overhaul their systems. For developers who have already spent months integrating USDT, switching to another Tether token is much better than starting from scratch with a completely different provider.

Some institutions or users with a strong risk awareness may simply wish to hold a variety of regulated stablecoins for diversification, reducing counterparty risk between Circle (USDC) and Tether (USDT).

The timeline is crucial here. USAT is scheduled to launch by the end of 2025, which means that Tether has a limited time to build liquidity, ensure exchange listings, and establish market maker relationships. In financial markets, first-mover advantage can be decisive, and users tend to prefer established and liquid options over newcomers.

The timeline here is crucial. USAT is scheduled to launch by the end of 2025, which gives Tether limited time to establish liquidity, secure exchange listings, and build market maker relationships. In financial markets, first-mover advantage is essential—users tend to prefer established and liquid options over newcomers.

Critics argue that USAT is essentially a "compliance performance"—a way for Tether to enter the U.S. market, but it does not address the transparency and operational issues at the core of its business.

This criticism has some merit. Tether's choice to launch USAT instead of making USDT fully compliant indicates that the company values current operational flexibility over comprehensive regulatory legitimacy.

On the other hand, some might say this is exactly how the market should operate. Different customer groups have different needs and risk preferences. U.S. institutions require regulatory Compliance and transparency, while users in emerging markets prioritize accessibility and low fees. Why can't a company meet the needs of both segments simultaneously through different products?

Conclusion

Tether's dual stablecoin strategy reflects the broader contradictions in the crypto industry regarding regulation, decentralization, and institutional adoption. The industry increasingly faces the challenge of balancing the original permissionless spirit of cryptocurrencies with the regulatory framework demands that promote mainstream adoption.

USAT represents Tether's bet: they can obtain regulatory legitimacy for institutional users while maintaining flexibility for global retail investors. The success of this strategy will depend on execution, market acceptance, and the stability of the ever-changing regulatory framework.

The regulatory environment is still constantly changing. Although the GENIUS Act provides some clarity, the specific details of its implementation and enforcement remain uncertain. Changes in administrative agencies or shifts in regulatory priorities could significantly impact the strategies of stablecoin issuers.

More fundamentally, USAT raises key questions about the fundamental nature of Tether's initial success. Is USDT's dominance built on regulatory arbitrage that may no longer be sustainable? Or does it reflect true innovation in global financial infrastructure, where regulatory Compliance can promote rather than hinder such innovation?

The answer to this question may ultimately determine whether USAT is an evolution of Tether towards mature financial institutions or an acknowledgment of the fundamental limitations of its original model. Regardless, the launch of USAT marks a new chapter in the competition and regulation of stablecoins.

The king is building a second kingdom. Whether he can rule both at the same time remains to be seen.