How Did Tether Gain From The Final Stablecoin Law? The GENIUS Act gave the United States its first federal framework for stablecoins, but its final provisions were less restrictive for foreig
How Did Tether Gain From The Final Stablecoin Law?
The GENIUS Act gave the United States its first federal framework for stablecoins, but its final provisions were less restrictive for foreign issuers than several earlier congressional proposals. The law allows an overseas stablecoin company to remain outside direct U.S. supervision if the Treasury secretary determines that its home regulatory system is comparable to the American framework. For Tether, that could mean its USDT token is supervised from El Salvador, where the company is establishing its headquarters, rather than being regulated directly by U.S. authorities. The legislation also gave issuers a three-year grace period before non-compliant stablecoins can no longer be offered through U.S. trading platforms. Democrats had sought to reduce that period to 18 months, but the longer deadline remained in the final bill. According to a Bloomberg report, people familiar with the negotiations said former White House digital assets official Bo Hines treated the three-year period as a non-negotiable issue because Tether wanted more time. Hines joined Tether as an adviser one month after
President Donald Trump signed the law in July 2025 and later became chief executive of the company’s U.S.-focused stablecoin, USAT. Tether rejected any suggestion that its policy engagement was improper. The company said the legislation provides no special advantage and applies equally to issuers seeking to operate under the federal framework.
What Role Did Howard Lutnick Play?
Before becoming U.S. commerce secretary, Howard Lutnick served as chairman and chief executive of Cantor Fitzgerald, the financial services company responsible for managing a large portion of Tether’s reserves. A federal court filing alleges that Lutnick used his influence in Washington and the media to defend Tether and oppose legislation that would have placed tighter requirements on foreign stablecoin issuers. The filing cited notes from Bitcoin entrepreneur Cory Klippsten, who was involved in a separate business dispute with Tether. According to the filing, Tether Chairman Giancarlo Devasini told Klippsten that Lutnick had helped stop earlier stablecoin bills from advancing. Lutnick has not been accused of wrongdoing by prosecutors, and an attorney representing him described attempts to obtain records about the relationship as an effort to harass and embarrass him. Cantor also acquired the right to a potential 5% stake in Tether through a $600 million convertible bond in April 2024. Based on a valuation Tether later discussed with investors, that interest could have been worth billions of dollars on paper. A Commerce Department spokesperson said Lutnick complied with his federal ethics agreement, divested his holdings and did not participate in matters involving the
GENIUS Act’s stablecoin provisions.
Investor Takeaway
The central market question is whether the GENIUS Act gives foreign stablecoin issuers a cost advantage over U.S. competitors. If overseas companies can avoid parts of the domestic compliance burden, regulated American issuers may face higher expenses while competing for the same dollar-based liquidity.
Why Are The Foreign-Issuer Rules Controversial?
Earlier bipartisan proposals would have required foreign issuers serving U.S. customers to follow American anti-money-laundering and disclosure rules. The GENIUS Act replaced that approach with a reciprocity system that may permit supervision by an approved foreign regulator. Critics argue that this structure could make it harder for U.S. authorities to oversee how dollar-backed tokens are used outside regulated exchanges. Another provision limits issuers’ responsibility for transactions conducted through
decentralized finance platforms, where users can trade directly through blockchain protocols. Former Treasury and
Commodity Futures Trading Commission official Timothy Massad said weaker controls could allow foreign issuers to avoid compliance costs faced by American companies. He also argued that enabling anonymous or lightly supervised dollar transactions could conflict with efforts to protect the dollar’s role in global finance. Tether said it works with more than 340 law enforcement agencies across 67 jurisdictions and has frozen assets linked to criminal activity. The company argues that its
cooperation with investigators is more operationally effective than the programs maintained by many traditional financial institutions.
What Financial Ties Drew Scrutiny?
Tether’s connections to Trump administration figures extended beyond the stablecoin negotiations. In December 2024, the company invested $775 million in Rumble, a video and cloud-services company with commercial and investor links to several Trump associates. After the GENIUS Act passed, Tether hired Hines and placed him in charge of USAT, which was created to comply with U.S. rules. The token had about $186 million in circulation, a small amount compared with USDT. In October 2025, Tether also made a loan to a trust benefiting Lutnick’s children as they purchased their father’s interests in Cantor Fitzgerald. The size and purpose of the loan were not disclosed, and Lutnick has not said whether it helped finance the transaction. These relationships do not establish that the law was improperly written. They do, however, intensify scrutiny of whether financial interests and future employment affected the policy process. For investors, the next test will be how regulators implement the foreign-equivalency rules. Those decisions will determine whether USDT remains widely available through U.S. platforms and whether domestic stablecoin issuers must compete against overseas rivals operating under less expensive regulatory structures.
