The GENIUS Act and Tether’s potential return
On July 18, U.S. President Donald Trump signed into law the GENIUS (Guiding and Establishing National Innovation for U.S. Stablecoins) Act, in a move which the government claims will heighten protection for consumers in the digital market and combat criminal activity involving stablecoins.
Stablecoins are a form of cryptocurrency backed by assets generally perceived as reliable, or stable, such as the U.S. dollar or gold.
The GENIUS Act requires stablecoin firms to prove that their reserves are 100% backed by liquid assets, disclose their reserve compositions on a monthly basis, and comply with marketing regulations to protect consumers from deceptive practices.
Just five days after the GENIUS Act was signed, El Salvador-based stablecoin firm Tether Holdings SA told Bloomberg that it was considering a return to trading in the U.S., after it was fined almost $60 million in 2021.
Tether’s murky past
In February 2021, Tether and its sister company Bitfinex were banned from trading in the state of New York. Tether, owner of the stablecoin USDT, was found to have lied about the facts its cryptocurrency was fully backed by U.S. dollars at all times, with the Attorney General accusing Tether and Bitfinex of “recklessly and unlawfully [covering] up massive financial losses to keep their scheme going and protect their bottom lines.”
In October 2021, Tether and Bitfinex were ordered to pay a further $42.5 million in fines. Tether was found to have made “untrue or misleading statements” about its stablecoin being backed by U.S. dollars, while Bitfinex was found to have carried out illegal, off-exchange transactions. Tether faced a $41 million fine, while Bitfinex was made to pay $1.5 million. However, the companies were not required to admit wrongdoing.
In October 2024, the Wall Street Journal reported that the federal government was investigating the firm for possible violations of sanctions and anti-money laundering rules. Also under investigation was the possibility that its currency had been used by third parties to fund crime such as the drug trade, terrorism, and hacking, or to launder the profits created by these activities.
Cryptocurrency watchdog outlet Protos reported that this was the nineteenth time Tether had attracted U.S. government action.
Tether is not currently operating in the U.S.
Tether’s ties to Nayib Bukele’s government
In January 2025, Tether announced its move from the British Virgin Islands to El Salvador, with President Nayib Bukele telling the company: “Welcome home.”
At the time, Tether claimed that the move “mark[ed] a step in Tether’s journey to foster global Bitcoin adoption.”
El Salvador has long been considered a pioneer in Bitcoin, becoming the first country in the world to make Bitcoin legal tender.
The Salvadoran government also claims to have been buying one Bitcoin a day since November 2022, despite an agreement with the International Monetary Fund (IMF) which requires the country to “confine” Bitcoin accumulation by the public sector. The IMF has maintained that El Salvador is complying with this condition, and that apparent increases in Bitcoin reserves are a result of movement of existing coins in the country’s possession between wallets.
In March of this year, ElSalvador.com revealed that Tether’s sister company Bitfinex was the source of nearly 100% of the Bitcoins in the strategic Bitcoin reserve at that time. The report stated that, of the 6114 Bitcoins in the strategic reserve, 6111 of them originated from Bitfinex.
Both Tether CEO, Paolo Ardoino, and Tether CFO, Giancarlo Devasini, contributed to the drafting of El Salvador’s Digital Asset Issuance Law, which provided the country with a legal framework for cryptocurrency transactions.
Bitfinex was also set to be responsible for handling the government’s “Volcano Bonds” which were to be used to finance the country’s geothermally powered “Bitcoin City”. The bonds were due to be launched at the start of 2024, though there has been little mention of them since.
Tether’s link to the Donald Trump administration
The U.S. government’s commerce secretary, Howard Lutnick, is Tether’s banker.
In May, The Guardian reported that financial services firm Cantor Fitzgerald, of which Lutnick was CEO and chairman until handing over control to two of his sons in February, holds an effective 5% stake in Tether.
The newspaper also reported that Cantor had negotiated several investments on behalf of Tether, and is custodian of the U.S. treasury holdings which generate the company’s profits.
Devaini reportedly told associates in November that Lutnick would “use his political clout” to reduce the scrutiny surrounding Tether.
A move towards U.S. compliance?
Tether has now told Bloomberg that it is looking to comply with the newly-approved GENIUS Act, which demands “strict marketing rules to protect consumers from deceptive practices,” and seeks to ensure “fair and consistent regulation throughout the country.”
Ardoino said: “We are well in progress of establishing our US domestic strategy,” adding: “It’s going to be faced on the U.S. institutional markets, providing an efficient stablecoin for payments but also for interbank settlements and trading.”
When asked about the possibility of an audit, the absence of which has been a source of criticism over recent years, Ardoino said that the company was in contact with potential auditors.
If Tether is able to prove its compliance with the GENIUS Act, it could resume business in the U.S., where it may pose a threat to the recently successful Circle Internet Group Inc.
Circle is the owner of stablecoin USDC, whose shares have shot up by over 500% since it went public in June of this year. However, while Circle is a publicly listed company, Ardoino insists that Tether has no intention of going public.
Instead, he claims that Tether is more interested in emerging markets, which Ardoino says Tether “has done incredibly well for the past ten years,” adding: “We have a better technology, we have a much better understanding of this market than anyone else.”
Featured image credit:
Image: Tether tokens
Artist: Viet Media
Source: https://flickr.com/photos/189872208@N05/52751659777/in/photolist-2onu3Bt-2oyU9KB-2oq55vx-2oRhxMv-2e1RCGW-dhby3F-2nPuEEE-2kHsK59-2nHtLGV-25cXKSF-2hzjZCG-2iKh2pa-2oubiL8-8i1tfS-8i1tkJ-2ocqJrg-7ErPGv-9inwwY-2nGoxkm-2iMgt4b
License: https://creativecommons.org/publicdomain/zero/1.0/
