The GENIUS Act, passed by the Senate in June 2025, could demolish Tether’s $156 billion empire by forcing the stablecoin giant to abandon its diversified reserves of Bitcoin and gold for boring cash and Treasury securities only. The legislation mandates annual public audits—something Tether has historically dodged like a bad breakup. With stricter transparency requirements and potential 18-month compliance deadlines, Tether faces a complete operational overhaul that threatens its very identity and market dominance.
When the U.S. Senate passed the GENIUS Act on June 17, 2025, by a 68 to 30 vote, Tether‘s executives probably felt their stomachs drop. The world’s largest stablecoin, worth $156 billion, just got a regulatory wake-up call that could shatter its entire business model.
The GENIUS Act establishes federal oversight for “payment stablecoins” and their issuers. Sounds boring, right? Wrong. This legislation could obliterate Tether’s competitive advantage overnight. Similar to Ripple’s legal battle, clear regulatory guidelines are becoming increasingly crucial for cryptocurrency operations.
Federal stablecoin oversight might sound mundane, but it’s actually a business-killing bombshell for market leaders.
Here’s the brutal reality: Tether currently backs its reserves with Bitcoin, gold, and other non-cash assets. The GENIUS Act says absolutely not. Under the new rules, stablecoins must be backed strictly with cash or short-term U.S. Treasury securities. Period. No exceptions.
That’s a massive problem for Tether. Their diversified reserve strategy, which includes crypto and precious metals, suddenly becomes illegal in the U.S. market. They’ll need to dump those assets and restructure everything.
The transparency requirements are equally harsh. Annual public audits become mandatory. Tether has historically resisted full disclosure about their reserves, and that resistance could become a regulatory liability. The days of playing coy with audit details are over.
CEO Paolo Ardoino isn’t panicking yet. He’s indicated plans to develop a new U.S.-compliant token. Smart move, considering the alternative is getting kicked out of American markets entirely. Tether might pivot toward Asia and Latin America, where most of their volume already occurs anyway. The company recently relocated to El Salvador, further signaling its strategic shift away from traditional regulatory jurisdictions.
The compliance timeline offers some breathing room. Three years to get their act together under the GENIUS Act, though the House companion bill suggests an 18-month deadline. That’s not much time to overhaul a $156 billion operation. The complexity increases further since the House is pursuing the STABLE Act as companion legislation with different provisions that must be reconciled.
Foreign issuers face additional hurdles. They must meet “comparable” standards and submit to Office of the Comptroller of the Currency supervision for U.S. sales. More bureaucracy, more costs, more headaches.
The broader goal makes sense. After TerraUSD’s spectacular collapse in 2022, regulators want bulletproof reserves and crystal-clear transparency. But for Tether, compliance means abandoning the very strategies that made them dominant. The question isn’t whether they can adapt—it’s whether they’ll still be Tether when they’re done.
