Circle Soars, Tether Sweats: What Wall Street’s GENIUS Act Means for Stablecoins

Tether Faces Major U.S. Challenge After GENIUS Act Passes Senate

What Is the GENIUS Act and Why It Matters

The U.S. Senate has passed a powerful new bill called the GENIUS Act, aimed at regulating stablecoins — digital tokens pegged to fiat currencies like the U.S. dollar. This bill is a huge win for crypto regulation advocates, but it could be a nightmare for Tether, the world’s largest stablecoin issuer with over $156 billion in circulation.

The GENIUS Act is designed to bring stablecoins into the mainstream financial system by requiring issuers to:

• Back tokens fully with cash or U.S. Treasuries

• Submit to public, annual audits

• Comply with U.S. financial regulations

This puts Tether in a tight spot, since its reserves currently include Bitcoin, gold, and other non-cash assets — which wouldn’t meet the new rules.

Tether’s Transparency Problem

Tether has long been criticized for its lack of full financial transparency. It has refused to provide regular, comprehensive audits, relying instead on “attestations” — short reports from accountants that show a snapshot of its reserves at a single moment.

That lack of clarity may soon turn from a PR issue into a legal one.

“There’s no ambiguity about those requirements,” said Scott Armstrong, a former U.S. federal prosecutor. “It could definitely put Tether in a pinch.”

How Long Does Tether Have to Comply

• The GENIUS Act gives stablecoin issuers 3 years to meet the requirements.

• A related bill in the House would shorten this to just 18 months.

Either way, Tether has two options:

1. Change its reserve model to match the law.

2. Lose access to the U.S. financial system.

Tether’s Response: A New Token for the U.S.

Tether CEO Paolo Ardoino has hinted at a potential solution: launching a new U.S.-compliant token backed only by cash and Treasuries.

This would allow Tether to:

• Maintain its current model for international markets like Asia and Latin America.

• Create a separate, clean product to meet U.S. regulations.

 Why Asia and Latin America Matter

Over 80% of Tether’s trading volume comes from these regions. So even if it loses U.S. access, the company could still thrive globally — at least for now.

Winners: Circle and USDC

While Tether faces compliance pressure, its biggest U.S. rival — Circle, the issuer of USDC — is celebrating.

After the GENIUS Act passed:

• Circle’s stock jumped 34%

• It now trades at $223.20

• Investors are betting that Circle’s close relationship with U.S. regulators will help it dominate

Even so, Circle’s market cap is less than half of Tether’s, showing that market trust doesn’t always equal market share — yet.

Could Trump Help Tether Stay in the U.S.

Here’s where it gets political.

Tether recently moved its operations to El Salvador, a crypto-friendly country where Bitcoin is legal tender. Under the Trump administration, there’s speculation that the U.S. could still allow Tether access to American markets by recognizing El Salvador’s crypto regulations as “equivalent” to U.S. standards.

This would give Tether a backdoor into the U.S. system without fully complying with the GENIUS Act — a controversial move that could spark more legal battles.

What Tether Is Saying Publicly

In a statement shared with TheStreet Roundtable, Tether said:

“The GENIUS Act’s passage in the Senate marks a meaningful step toward fostering innovation while providing much-needed clarity for the stablecoin industry.”

Tether also expressed optimism:

“We’re encouraged by the thoughtful approach policymakers are taking to distinguish between different types of issuers and support responsible reserve practices.”

And importantly:

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

This suggests Tether isn’t looking to pick a fight — at least not yet.

What Happens Next

 Timeline:

• The GENIUS Act is now on its way to the U.S. House of Representatives.

• If approved there, it will go to the President for final signing.

 What to Watch:

• Will Tether restructure its reserves to comply?

• Will it launch a new U.S.-compliant token?

• Will Trump offer a regulatory loophole via El Salvador?

This isn’t just about one company. The future of stablecoins in the U.S. — and how much control the government will have over them — is now in motion.

 A Defining Moment for Crypto’s Future in the U.S.

The GENIUS Act may become one of the most important crypto laws in U.S. history. It sets the stage for how stablecoins are used, backed, and regulated.

For Tether, the world’s biggest player, the pressure is on. It must either change its business model or risk being locked out of the American financial system. Meanwhile, Circle stands ready to benefit from the shift.

With regulatory clarity finally emerging, the stablecoin landscape is about to transform — and the clock is ticking.

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