Tether CEO Paolo Ardoino told Bloomberg on Friday that the company is “open to” creating a separate domestic stablecoin to meet the needs of the U.S. market. The news comes amid the U.S. trying to push through a stablecoin legislation—the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act).
The international issuer of the largest stablecoin, USDT, is “getting comfortable” with the GENIUS Act and will be compliant, Ardoino said. However, USDT’s main market will continue to be emerging economies, because those are the markets that “need us the most,” he added, stating:
“We believe in the importance of USDT as the most used digital dollar in all the emerging markets.”
Ardoino also added that Tether’s plans for the U.S. domestically issued stablecoin are “closer to the second half,” in terms of football games.
Why Tether believes the U.S. needs a separate stablecoin
The World Bank estimates that around 1.4 billion adults remain unbanked, mostly concentrated in emerging economies in Sub-Saharan Africa and parts of Asia. Catering to the needs of these individuals, who have no access to traditional financial systems, is the main mission of Tether, according to Ardoino.
Stablecoin users in emerging markets mostly use USDT for foreign remittances and to preserve the value of their savings amid local currency depreciations. Ardoino said that 37% of USDT’s user base uses the stablecoin for savings, while Tether has over 420 million users across developing countries, adding:
“They [unbanked adults] need something that is stable in their lives, and that is the U.S. dollar in digital form, that is USDT.”
However, the U.S. needs a stablecoin to serve purposes different from those of users in emerging markets. Tether has been advocating that “stablecoins are surely important also in the United States,” but with a wide array of payment methods available in the country, USDT is better suited to meet the needs of the unbanked population, Ardoino explained. He stated:
“In the U.S., you wouldn’t use stablecoins for payments to improve the efficiency of our money.”
Therefore, Tether is looking to launch a domestically issued stablecoin that will be “competitive” in the U.S. economy. That is why the domestic stablecoin will have a “different feature set” than USDT, Ardoino added.
Tether wants to see the GENIUS Act passed
Ardoino said that Tether is “very interested” in seeing how the U.S. government regulates stablecoins. He stated:
“It’s important for us to see how the GENIUS Act is, in fact, distinguishing between the foreign issuers and the domestic issuers.”
Tether plans to ensure that USDT complies with the GENIUS Act, which Ardoino claimed is better than Europe’s MiCA regulation. Tether’s issue with MiCA is that it requires U.S. dollar-based stablecoins to hold 60% of their reserves as cash deposits in European banks, which is a “bad idea,” Ardoino said.
The GENIUS Act, on the other hand, requires stablecoin issuers to hold 100% of their reserves in cash equivalents, preferably U.S. treasuries, which Ardoino called a “great idea.”
Adroino does not foresee complications in complying with the GENIUS Act, whether as a foreign or domestic stablecoin issuer. However, he added that he wants to see the GENIUS Act passed because:
“…in general, we think that it’s important for the domestic one [U.S. stablecoin of Tether] to have regulatory clarity before moving forward.”
On May 19, the U.S. Senate voted to invoke cloture on the motion to proceed to the GENIUS Act. On May 21, the Senate voted on a motion to proceed, moving the GENIUS Act closure to the vote on final passage. The final floor vote is expected to take place after Congress’s Memorial Day recess.
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