Tether Launches U.S.-Specific Stablecoin Amid Regulatory Changes

TLDR

• Tether will sunset USDT support on five blockchains by 2025.
• New U.S. stablecoin aims to comply with GENIUS Act regulations.
• Expected liquidity impacts on affected blockchains and DeFi activities.

Tether, a leader in the stablecoin industry, has announced a new initiative to launch a U.S.-specific stablecoin designed to compete with Circle’s USDC. This move aims to solidify Tether’s domestic presence following the U.S. Senate’s recent passage of the GENIUS Act. This legislation distinguishes between foreign and domestic stablecoin issuers, providing a regulatory framework Tether aims to comply with.

Paolo Ardoino, CEO of Tether, has confirmed the company’s intention to maintain compliance with the new reserve and anti-money laundering requirements outlined in the GENIUS Act. Ardoino highlighted the practical nature of the legislation compared to Europe’s MiCA rules, expressing optimism in adapting to the evolving digital asset ecosystem. Tether’s plan involves sunsetting USDT support on certain blockchains to streamline operations.

Changes to Blockchain Support and Its Implications

Tether will discontinue support for the stablecoin USD₮, or USDT, on five blockchains: Omni, Bitcoin Cash SLP, Kusama, EOS, and Algorand. This change, effective September 1, 2025, is part of a strategic infrastructure shift to focus resources on higher-utility chains. This action may influence liquidity and on-chain activity related to these blockchains and their stablecoin pairs.

As a response to feedback from community stakeholders, Tether’s decision mirrors past consolidation efforts seen within the stablecoin ecosystem. This move has historically led to decreased on-chain liquidity and trading pairs on affected chains. Tether’s shift is expected to concentrate usage on prioritized chains, mirroring similar strategies by competitors like Circle with their USDC adjustments.

Stablecoin Market Dynamics and Regulatory Compliance

The introduction of Tether’s U.S.-specific stablecoin comes at a time when regulatory frameworks like the GENIUS Act are reshaping the stablecoin landscape. Under these new U.S. regulations, issuing entities are required to adhere to rigorous compliance measures to operate domestically. Tether is planning to maintain its focus on global markets while complying with these domestic regulatory changes.

According to Paolo Ardoino’s comments to Bloomberg TV, Tether seeks to ensure compliance with the GENIUS Act. The company’s shift in strategy will also consider foreign market operations, particularly in areas with populations requiring better banking solutions. Tether’s strategic adjustments aim to increase stablecoin adoption on platforms with robust scalability and community activity.

Potential Impacts on Existing Blockchain Ecosystems

The cessation of USDT support on specific blockchains is likely to result in a contraction of total value locked (TVL) and stablecoin liquidity on these networks. Projects on Omni, Bitcoin Cash SLP, Kusama, EOS, and Algorand could see a decrease in DeFi activity, liquidity, and overall usage. The focus will likely shift to Ethereum, Tron, and other main chains still supporting USDT.

This shift may also impact related governance tokens and DeFi protocols on the affected networks. stablecoin adoption changes could alter liquidity flows, impacting cross-chain liquidity, particularly for assets like ETH and BTC. As Tether pivots its blockchain support, the industry may observe significant liquidity migrations or reductions in trading activities on decommissioned platforms.

Comparing Past Events and Future Prospects

Historically, when stablecoin issuers like Tether or Circle have ceased support on certain blockchains, the ecosystems on these chains have faced liquidity challenges. While overall stablecoin adoption typically remains resilient, the sunsetting networks often experience a downturn in DeFi activities. Tether’s new initiative could follow a similar pattern, impacting sunsetting blockchain networks while consolidated chains might benefit from increased activity.

Industry observers will continue to monitor these developments for their broader implications within the cryptocurrency market. As regulatory environments evolve globally, stablecoin issuers may face unprecedented changes. How Tether’s U.S. market strategy influences its position in the global stablecoin market remains an area of interest for analysts and stakeholders.

For additional details, visit Tether’s official announcement on the discontinuation of the USDT support for legacy blockchains.