How the GENIUS Act Could Impact Tether’s Operations
Galaxy head of research Alex Thorn believes that the GENIUS Act could potentially benefit Tether by offering more flexibility in its operations.
Limited Restrictions for Offshore Issuers
- Tether could continue operations without registering under the new framework.
- Primary restrictions for non-registered stablecoin issuers include interbank settlement prohibitions and limitations on marketing tokens as “stablecoins” within the US.
- These restrictions could impact future adoption in institutional finance.
Regulatory Framework and Reserves Requirement
- The GENIUS Act proposes a regulatory framework for stablecoins, including a 1:1 reserves requirement of US dollars, insured bank deposits, or short-term Treasury bills.
- The bill was approved by the Senate Banking Committee with bipartisan support and is set for a full Senate vote.
Registration Pathways for Tether
- Tether has the option to register as a stablecoin issuer in the US through the Office of the Comptroller of the Currency (OCC).
- If Tether chooses not to register, it must comply with OFAC and FinCEN requirements.
Anti-Money Laundering Protections
- Tether has a history of compliance with anti-money laundering regulations.
- The US Treasury will only designate non-compliant foreign issuers if they fail to comply with lawful orders.
Additional Restrictions on Offshore Stablecoins
- Stablecoins issued by non-registered entities will not be treated as cash equivalents for accounting purposes.
- These stablecoins will not be eligible for margin or cash equivalency treatment by financial institutions.
