Wall Street's GENIUS Act could spell trouble for the largest stablecoin issuer

Wall Street's GENIUS Act could spell trouble for the largest stablecoin issuer originally appeared on TheStreet.

The GENIUS Act, a bill regulating stablecoins that passed the U.S. Senate last week, poses a significant threat to Tether, the world's largest stablecoin issuer, with a total circulation of $156 billion.

The GENIUS Act, which aims to integrate stablecoins into the everyday financial world, requires issuers to back their tokens' value with cash and short-term Treasury securities, submit to annual public audits, and comply with U.S. financial regulations. This could be difficult for Tether as the stablecoin issuer's current reserve model is backed in part by Bitcoin and gold.

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Tether's long-held rejection of total financial transparency may soon become a regulatory liability, according to WSJ. "There's no ambiguity about those requirements," said former federal prosecutor Scott Armstrong to WSJ. "It could definitely put Tether in a pinch."

The act provides a 3-year compliance grace period. A related House bill provides only 18 months, but either way, Tether would have to either change its reserve practices or lose access to the US market.

Tether to explore new U.S.-compliant token

CEO Paolo Ardoino has suggested Tether would create a new U.S.-compliant token, but they could just as easily concentrate all their effort on Asia and Latin America. This is where Tether earns the overwhelming majority of its trading volume.

In the meantime, the U.S.-based company Circle, which issues the USDC stablecoin, will be the biggest benefactor. At press time, Circle stock is trading at $223.20.

After the GENIUS Act cleared the Senate with a bipartisan vote, Circle's stock price jumped 34%, indicating that investors believe the company is aligned with regulators. Still, Circle only has a market cap that is less than half that of Tether.

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Recently, Tether moved to El Salvador. The Trump administration could still allow Tether access to the U.S. market if it deems El Salvador’s regulatory framework equivalent to that of the U.S., WSJ reported.

Tether shared a written statement with TheStreet Roundtable, “The GENIUS Act’s passage in the Senate marks a meaningful step toward fostering innovation while providing much-needed clarity for the stablecoin industry. We’re encouraged by the thoughtful approach policymakers are taking to distinguish between different types of issuers and support responsible reserve practices."

Tether added it "welcomes the opportunity to continue engaging with U.S. regulators and remains committed to contributing to a stable and inclusive digital financial ecosystem.”

Wall Street's GENIUS Act could spell trouble for the largest stablecoin issuer first appeared on TheStreet on Jun 26, 2025

This story was originally reported by TheStreet on Jun 26, 2025, where it first appeared.