In search of acceptance: Why Tether launched a stablecoin in the U.S.

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Tether and the U.S.

Fighting the past

Tether’s decision to secure a foothold in the U.S. follows years of scandal. When the company first launched its stablecoin in 2014, it claimed each token was backed one-to-one by U.S. dollars. But in 2021, it was revealed that reserves also included commercial paper, loans, and riskier assets. As a result, the New York Attorney General’s office fined Tether $41.6 million for making “false statements” about its reserves.

“Tether has always been the elephant in the room,” noted crypto commentator David Gerard, adding, “everyone uses it, but no one truly trusts it.”

Critics also pointed to the company’s entanglements with shadow markets. Transactions involving Tether were repeatedly traced to the darknet, sanctioned jurisdictions, and money-laundering networks. The company was accused of “turning a blind eye.” In response, Tether began highlighting its cooperation with authorities, emphasizing that in 2023 alone it froze more than $300 million linked to fraud and sanctioned entities.

“We are actively working with law enforcement to clean up the industry,” stressed Tether CEO Paolo Ardoino.

Despite these efforts, U.S. regulators remained wary, and competitors never missed the chance to remind markets of Tether’s weak spots.

What’s next?

The launch of USAT is a pivotal moment for the company, and Ardoino makes no secret of it:

“This is a watershed moment for Tether. With the new token, we demonstrate our commitment to transparency and compliance, while continuing to provide stable digital dollars to the market,” he said.

Tether’s flagship coin, USDT, still dominates the global crypto economy, with more than $100 billion in circulation. It is used for trading, remittances, and as a dollar substitute in countries with unstable banking systems. Yet its presence in the U.S. has remained limited: institutional investors and regulators kept their distance due to doubts about reserves and past legal issues. USAT is meant to be a fresh start, potentially attracting banks, funds, and corporations seeking stronger guarantees.

The launch is also widely seen as a move against rival USDC from Circle.

“Circle built its reputation on transparency. Tether built its on dominance,” noted Clara Medalie, head of research at Kaiko. “Now, by issuing a compliant token in the U.S., Tether is trying to close the reputational gap.”

Skeptics, however, warn that new rules may expose Tether to fresh risks. “The big test will be whether Tether can withstand U.S. regulators’ transparency requirements,” said a former U.S. Treasury official, speaking on condition of anonymity.

Too big to fail?

Globally, the market still heavily relies on USDT. In Asia and Latin America, it serves as a dollar substitute amid inflation and capital controls. For millions, Tether is not an investment but a tool to preserve savings. That grassroots demand may cushion the company even if its American experiment falters.

Still, USAT could reshape the balance of power. By launching a product under U.S. oversight, Tether is clearly seeking to bridge crypto and traditional finance. To persuade skeptics, it has pledged to keep reserves strictly in cash and U.S. Treasury bills. But the gamble is significant—after a decade of operating in global financial “grey zones,” the company is entering a market that demands full transparency.

“The launch of USAT is not just about Tether,” emphasized Sheila Warren, CEO of the Crypto Council for Innovation. “If successful, it will legitimize stablecoins as part of the financial system. If it fails, it will only deepen skepticism.”

Or as one New York hedge fund manager bluntly put it: “Tether has long been too big to ignore. Now it must prove it’s too solid to fail.”

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In search of acceptance: Why Tether launched a stablecoin in the U.S.

Fighting the past

What’s next?

Too big to fail?

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