Tether announces launch of new stablecoin for USAT

Tether launches a new stablecoin USAT that complies with US regulations, directly challenging Circle's position in the compliant stablecoin market and causing a significant drop in Circle's stock price. This reflects the market's immediate response to changes in the competitive landscape and recognition of Tether's compliance strategy.

🏛️ 1. Background and compliance reasons for Tether's launch of USAT

The main reason for Tether launching USAT is to adapt to the latest regulatory environment in the United States. In early 2025, the United States passed the Genius Act, which sets strict requirements on reserve assets of stable currency: they must be supported by 1:1 high rated assets such as US treasury bond bonds, and monthly reserve reports and annual audits must be provided. Although Tether's current main stablecoin USDT has a huge scale (with a circulation of about $169.5 billion), its reserve assets include about 20% of assets that do not meet the new regulatory requirements in the United States, such as Bitcoin, gold, and secured loans. In order to avoid being expelled from the world's largest financial market, the United States, Tether must launch a fully compliant new product, which gave rise to USAT.

⚔️ 2. Competitive impact on Circle and its USDC

As the "first stablecoin stock" and the second largest stablecoin in the US dollar, Circle's core competitive advantage has long been strict compliance with US regulations and holding numerous global regulatory licenses, which has made it highly favored by institutional investors. The launch of Tether USAT directly challenged this advantage. After the announcement, Circle's stock price fell more than 5% during trading, and the market reaction was intense, which clearly indicates that investors expect Tether's compliant products to erode Circle's market share and competitive advantage. The scale of USDT is more than twice that of USDC (72.8 billion US dollars), and Tether's entry into the compliance field with its huge size and resources will undoubtedly intensify the competition between the two sides in terms of competing for institutional users and exchange cooperation.

🔧 3. USAT's design and partners

To ensure full compliance with USAT, Tether has taken several key measures in designing and selecting partners:
• Compliant asset reserve: USAT's reserve assets will strictly comply with the requirements of the US Act and mainly consist of high-quality liquid assets such as US treasury bond bonds. Renowned financial institution Cantor Fitzgerald LP will be responsible for supervising these reserve assets, and the company will also be responsible for managing USDT reserves, which provides some support for its reputation.

• Issuance and Banking Cooperation: USAT will mint and redeem through the platform of Anchorage Digital Bank NA, a licensed cryptocurrency bank, ensuring compliance with the issuance process.

• Technology platform: It will be issued using Tether's proprietary tokenization platform Hadron.

🧭 4. Tether's Compliance Transformation and Political Strategy

This move by Tether is also a crucial step in its overall strategic shift towards compliance and rebuilding its connection with the US market.
• Addressing historical compliance deficiencies: Tether, headquartered in El Salvador, previously paid a $41 million fine to US authorities in 2021 for falsely reporting reserves and has ceased direct service to US customers. The launch of USAT is an important effort to reshape its image, regain regulatory and market trust.

Accurate political layout: Tether actively recruits former US government officials. Bo Hines, who was appointed to be responsible for USAT operations, was previously the Executive Director of the White House Crypto Commission in the Trump administration and directly participated in the promotion of the Genius Act. This move not only demonstrates Tether's emphasis on compliance, but also reveals its far-reaching strategy of using deep political resources to navigate the US market.

📊 5. Long term impact and future prospects of the market

The launch of USAT may have a profound impact on the stablecoin market landscape:
Market share reshuffling: Tether may leverage its huge user base (claiming over 500 million users) and brand influence to drive some USDT users to switch to USAT, while also attracting US institutional users who have not previously used USDT due to compliance issues.

Narrowing regulatory arbitrage space: Mainstream stablecoin issuers may be forced to follow suit, enhance transparency and compliance to cope with competition, such as further clarifying reserve asset structures and strengthening audits.

Tether's dual track strategy: Tether CEO Paolo Ardoino has announced plans to launch USAT by the end of the year, but will also explore utilizing the "comparable rule jurisdictions" clause in the bill to continue circulating USDT in some form in the United States. This shows that Tether is attempting to adopt a dual track strategy of "compliance" and "traditional" products in parallel to maximize market share and flexibility.

💎 summary

Tether's launch of USAT is a strategic move in response to the era of strong regulation in the United States, aimed at mitigating regulatory risks and competing for Circle's core market. This move has already caused fluctuations in the capital market in the short term (Circle's stock price has fallen), but in the long term it may drive the stablecoin market towards higher transparency and compliance, while intensifying the positive competition between the two giants in the compliance field.