Tether’s Legal Reckoning: US Jurisdiction Claims All Stablecoins—No Matter Where They’re Registered

US regulators just drew a line in the sand—Tether and every other stablecoin issuer now fall under American oversight, regardless of their offshore paperwork. The ’Wild West’ of crypto just got a sheriff.

Why it matters: With $80B+ in circulation, Tether’s de facto peg to the dollar makes it a systemic risk. The SEC and DOJ now treat it like a US bank—without the FDIC insurance, naturally.

The fine print: This sets a precedent for all stablecoins. Circle (USDC) and Binance (BUSD) may face similar scrutiny, turning ’decentralized’ finance into a compliance battleground.

Bottom line: Another ’decentralized’ crypto project bends the knee to traditional finance. So much for escaping the system—turns out you can’t outrun the long arm of Uncle Sam’s financial regulators.

The bill will also offer variations of protection laws depending on the host state where a stablecoin is used. Stablecoin issuers may have different regulatory regimes based on their state of registration, while host states may choose either the general protection regime, or their own set of protections. 

The new bill differentiates stablecoins from securities and commodities, with plans to treat the assets as a tool for payments. 

Stablecoin issuers do not currently depend on a jurisdiction to issue the tokens, but use the asset’s origin as a way to circumvent some of the local payment regulations. Currently, stablecoins are gaining more detailed regulation, though for some countries, legacy assets still see no major changes or restrictions. 

Tether has shown readiness to issue US-compliant stablecoins

Tether has already been scrutinized by the New York Attorney General, with a prolonged lawsuit that was settled right before the 2021 bull market. Now, Tether is one of the key players in crypto space, ready to cooperate with regulators. Recently, the token issuer added plans to launch a US-domiciled stablecoin. Additionally, Tether remains one of the large-scale buyers and holders of US debt. 

Previously, stablecoin issuers were met with local restrictions to issuing and selling assets. In the case of Ethena Labs, the German government banned the issuer from minting tokens through a locally-registered entity. There is no single standard on the jurisdiction of minting tokens and their distribution. 

However, the new US bill will have stricter requirements for stablecoin issuers, to be enforced in 18 months following the Bill’s launch. The Bill also allows a grace period for establishing stablecoin issuers as Comptroller-regulated entities, opening the door for pure crypto companies to receive banking licenses. 

Tether has already issued over 151.2B tokens, split mostly between ethereum and TRON. Those tokens may be treated as legacy by the Genius stablecoin bill. USDT is widely used for centralized trading and by global payment networks. However, US-based listings may be threatened, unless Tether secures licenses based on the new bill’s requirements. 

In previous years, USDT has faced speculation of being wiped out by regulators. However, the stablecoin proved resilient and remains the key source of liquidity on multiple markets. USDT still trades with over $47B in daily volumes, with additional activity on decentralized markets. 

USDT added a total of $14B in the year to date, with most minted on the TRON chain. Upcoming regulation does not worry Tether, which also posts quarterly profits based on its bond holdings. Even with the bill enforcement, the company may have a long grace period, while retaining its lively international markets with no restrictions.

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