Why does Tether make so much money and still push for compliant stablecoins in the United States?

Author: Zhang Feng

According to media reports, on September 13, Tether, the issuer of the world's largest stablecoin USDT, announced that it will issue a new stablecoin USAT in accordance with the U.S. stablecoin legislation and appointed former White House advisor Bo Hines to lead Tether's U.S. operations.

This news is surprising - as one of the most profitable cryptocurrency companies in the world, Tether reported a profit of up to $13 billion last year, and it is one of the largest holders of U.S. Treasury bonds, ranking 18th globally, with holdings greater than sovereign nations like Germany, South Korea, and Australia. In this context, Tether still announced its entry into the U.S. market to launch a compliant stablecoin USAT. What strategic considerations are hidden behind this move?

1. Facing Opportunities and Challenges, Tether Announces the Launch of a US Compliant Stablecoin

Tether has announced the launch of the USAT stablecoin, a compliant product specifically designed for the US market. Unlike the existing USDT, USAT will fully comply with the requirements of the recently passed GENIUS Act in the United States. This new stablecoin will utilize Tether's proprietary tokenization platform Hadron, with Anchorage Digital serving as the issuer, while the renowned Cantor Fitzgerald will act as the reserve custodian and preferred lead underwriter.

In terms of personnel arrangements, Tether has hired Bo Hines, the former executive director of the White House Crypto Council, as the CEO of Tether's U.S. operations. Hines was appointed by Trump as the executive director of the White House Crypto Council earlier this year and announced his departure in August after pushing for the stablecoin legislation.

Tether's entry into the U.S. market is not coincidental, but rather a result of dual factors of regulatory pressure and market demand. With the passage of the U.S. stablecoin bill, USDT faces the threat of being expelled from the U.S. market due to non-compliance with regulatory requirements. According to the U.S. bill, operators must back stablecoins with a 1:1 reserve of high-rated assets such as U.S. Treasury bonds, provide monthly reserve reports, and undergo annual audits. However, in the reserves of USDT, up to 20% of the assets consist of Bitcoin, gold, other investments, and mortgages, which does not meet U.S. regulatory requirements.

In terms of the market, the United States is the largest financial market in the world. Although Tether has 500 million users globally, it has been suppressed by its competitor Circle in the U.S. market. Circle's USDC stablecoin, while only having a scale of 72.8 billion dollars, less than half of Tether's, obtained the crucial digital currency license from New York State early on.

2. Dual-track parallelism, complementary to USDT

Tether has adopted a "dual-currency strategy" to balance the demands of the global market and the U.S. market. Tether's CEO Paolo Ardoino stated that they plan to launch USAT by the end of 2025, while also working to ensure that USDT continues to circulate in the U.S. He pointed out that the stablecoin legislation allows overseas issuers registered in certain jurisdictions with comparable regulations to offer stablecoins in the U.S. USDT will continue to serve the global market, particularly emerging market users, while USAT is specifically aimed at the U.S. market to meet strict regulatory requirements.

USAT's business model places greater emphasis on compliance and transparency. It will be fully backed by cash and US Treasury bonds, adhering to a 1:1 reserve requirement, and providing regular audits and reports. This stands in stark contrast to the reserve composition of USDT.

USAT is not intended to replace USDT, but rather to form a complementary relationship with USDT. Anton Golub, the Chief Business Officer of Freedx, believes that Tether currently operating both USA₮ and USDT stable products will lead to issues of fragmented liquidity pools.

However, Tether seems to take a different perspective, viewing USAT and USDT as products targeting different markets and user groups.

"For over a decade, Tether - as the creator of the stablecoin industry - has issued USDT, which is a pillar of the digital economy, providing dollar stablecoins to hundreds of millions of underserved people in emerging markets today, proving that digital assets can provide trust, resilience, and freedom on a global scale," said Tether CEO Paolo Ardoino. USAT focuses on the U.S. market, serving businesses and institutional users that require full compliance. This dual-track strategy allows Tether to meet the needs of different markets simultaneously.

3. Impact on Other Stablecoins in the United States

Tether's direct competitor to USAT is Circle's USDC. Circle has long relied on compliance with U.S. regulations and its global regulatory license portfolio to maintain a competitive edge among institutional crypto users. After the announcement, Circle's stock price fell over 5% during the session, indicating that the market believes Tether's compliant stablecoin will pose a serious threat to Circle.

The launch of USAT could change the competitive landscape of the U.S. stablecoin market. Tether, with its significant economies of scale and brand influence, has the potential to quickly capture market share from USDC. At the same time, this will also pose a challenge to other traditional financial institutions attempting to enter the stablecoin space, including traditional financial giants like Bank of America that are testing stablecoin strategies.

4. Insights on the Regulation of Stablecoin Applications in Hong Kong

Tether's move into the US market has also provided insights for stablecoin regulation in regions like Hong Kong. On August 1, 2025, Hong Kong’s "Stablecoin Regulation" officially came into effect, establishing the world’s first regulatory framework specifically targeting fiat-backed stablecoins. Hong Kong adopts a "prudent and gradual" regulatory approach: high capital requirements, strict reserve requirements, KYC real-name system, and scrutiny of the sustainability of business models.

The U.S. "GENIUS Act" adopts a "market-first" approach, without rigid capital requirements, with a diversified issuance path that relies more on market selection and user choice. Each regulatory model has its advantages and disadvantages. The Hong Kong model places greater emphasis on investor protection and systemic stability, but may stifle innovation; the U.S. model is more flexible but also carries higher risks. Therefore, some market analysts believe that for issuers, the Hong Kong model is suitable for compliant funds, financial institutions, and large internet companies; while the U.S. model is more suitable for early-stage startup teams and new mechanism exploration.

V. The Future of Stablecoins: Refining Scenarios and Meeting Regulations

Stablecoins are gradually transitioning from being viewed as niche or experimental cryptocurrency tools into mainstream financial and payment infrastructure. In the next 6-12 months, we can expect the following developments: further regulatory clarification, expansion of stablecoins in payments and cross-border transactions, competition between local currency stablecoins and sovereign currencies, as well as industry collaboration and infrastructure improvement.

For Tether, the launch of USAT is just the first step. Balancing the relationship between USDT and USAT, meeting regulatory requirements in different jurisdictions, and addressing competition from traditional financial institutions are all challenges that need to be faced in the future.

In the future, Tether may form a "dual currency strategy" with distinct internal and external aspects: USDT will continue to serve as the "offshore dollar" for a wide range of developing markets and crypto-native users globally; while USAT will act as the "onshore dollar" entering the establishment financial world in the United States. The launch of USAT means that Tether is transitioning from the "king of offshore" to a "global powerhouse," moving from regulatory avoidance to actively embracing compliance.