How Trump's GENIUS Act Could Supercharge Tether's USDT

On July 18, 2025, President Donald Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act, commonly known as the GENIUS Act, into law. This landmark legislation represents the first major federal regulation specifically targeting stablecoins, a critical segment of the cryptocurrency ecosystem.

Given Tether’s USDT, with a market capitalization of approximately $162 billion and a 62% market share, is the leading stablecoin, this act has significant implications. I want to share my point of view on why the GENIUS Act is likely optimistic for USDT, its broader impact on the crypto market, and the influence of upcoming monetary policy decisions, such as the Federal Reserve’s meeting on July 29-30, 2025.

Background on Stablecoins and Tether’s USDT

Stablecoins are cryptocurrencies designed to maintain a stable value by being pegged to a reserve asset, typically a fiat currency like the U.S. dollar. They serve as a bridge between traditional finance and the crypto world, facilitating trading, remittances, and acting as a store of value during market volatility. Tether’s USDT, launched in 2014, is the most prominent stablecoin, with a market cap of $162 billion as of recent data, compared to Circle’s USDC at $64 billion, within a total stablecoin market of $262 billion. USDT’s dominance is driven by its high liquidity and widespread acceptance across exchanges and decentralized finance (DeFi) platforms, with monthly trading volumes exceeding $1 trillion, primarily from professional trading firms (93%+ turnover)

However, Tether has faced scrutiny over the years regarding the transparency and adequacy of its reserves. Past controversies, including fines for misleading claims about reserves and questions about audit transparency, have raised concerns among regulators and users. The GENIUS Act aims to address these issues by establishing clear regulatory standards, potentially enhancing trust in USDT.

The GENIUS Act: Key Provisions and Significance

The GENIUS Act establishes a comprehensive regulatory framework for stablecoins, with key provisions including:

– Permitted Issuers: Only specific entities, such as subsidiaries of insured depository institutions, federal-qualified nonbank payment stablecoin issuers, or state-qualified issuers with issuance under $10 billion, can issue stablecoins in the U.S. This ensures that only reputable and regulated entities operate in this space.

– Reserve Requirements: Issuers must maintain reserves on a one-to-one basis with U.S. currency or other highly liquid assets, such as short-term Treasuries, ensuring each stablecoin is fully backed and redeemable at face value.

– Transparency and Audits: The act mandates monthly public disclosures of reserve composition and annual audited financial statements for issuers with over $50 billion in market capitalization, enhancing transparency and trust.

– Regulatory Oversight: Both federal and state regulators will oversee stablecoin issuers, with larger issuers under federal supervision, ensuring stringent oversight for major players like Tether.

These provisions aim to protect consumers, prevent fraud, and integrate stablecoins into the mainstream financial system, positioning them as critical U.S. infrastructure. The act’s passage, with bipartisan support (Senate 68-30, House 308-122), underscores its broad acceptance and the industry’s push for regulatory clarity.

Why the GENIUS Act is Bullish for Tether’s USDT

Research suggests the GENIUS Act is likely bullish for USDT due to several factors. Let me break this down into four key points.

1. Enhanced Credibility Through Transparency: Tether has faced criticism for its reserve transparency, with past reports indicating reserves included assets like Bitcoin and precious metals, potentially not fully compliant with the act’s requirements. The act’s mandate for regular audits and disclosures will compel Tether to provide clear evidence of its backing, potentially alleviating these concerns. For instance, Tether’s Q2 2025 attestation reported $127 billion in reserves, with 90% in cash and cash equivalents, but critics argue for independent audits, which the act now requires.

2. Regulatory Compliance and Legitimacy: By complying with the new regulations, Tether can operate with greater legal certainty in the U.S. market. As a nonbank entity, Tether would likely need to become a federal-qualified issuer, potentially expanding its user base and institutional adoption. Tether’s CEO, Paolo Ardoino, has announced plans to issue a new U.S.-focused USDT version for institutions, ensuring compliance, which could open doors to partnerships with traditional finance institutions.

3. Maintaining Market Dominance: With a 62% market share and higher trading volumes (often exceeding $60 billion daily) compared to USDC’s $11 billion, USDT is well-positioned to adapt. The act levels the playing field, but Tether’s established infrastructure and liquidity give it an edge over competitors. If Tether meets the standards, it can solidify its position as the leading stablecoin, particularly in trading and DeFi, where it is the preferred quote currency for pairs such as BTC/USDT.

4. Potential for Growth: The act’s regulatory clarity could unlock trillions in liquidity, as stablecoins are seen as infrastructure for payments, DeFi, and financial inclusion, particularly in emerging markets. Tether, with its global reach, is poised to capture significant growth, especially if compliance enhances trust among users and regulators.

Challenges exist. Tether’s current reserves may need adjustment to meet the 100% U.S. dollar or Treasury backing, with reports suggesting around 84.1% compliance in Q2 2025. The act provides a transition period (up to 36 months), allowing Tether time to align, but failure to comply could risk its U.S. market access. Given Tether’s $13 billion profit in 2024, it seems likely they can manage these adjustments, enhancing their competitive stance.

USDT vs. USDC: The Competitive landscape

Circle’s USDC, with a market cap of $64 billion, is a strong competitor, known for transparency and regulatory compliance, undergoing monthly audits. USDC is gaining traction in institutional and DeFi spaces, with growing adoption outside the U.S.

USDT’s higher liquidity and longer history (since 2014 vs. USDC’s 2018 launch) make it the go-to for traders globally. The GENIUS Act could intensify competition, with traditional banks and fintechs potentially entering the market, but Tether’s first-mover advantage and volume dominance (USDT often surpasses Bitcoin’s daily volume) suggest it will maintain leadership if compliant.

Global Implications of the GENIUS Act

The act’s impact extends globally, given stablecoins’ international use, especially in emerging markets for remittances and hedging. As the U.S. sets a precedent, other countries may follow, potentially harmonizing standards.

For Tether, compliance could enhance its reputation worldwide, making USDT more attractive in jurisdictions with regulatory uncertainty, reinforcing its role in cross-border payments.

The Crypto Market Structure Bill: CLARITY Act

The Digital Asset Market CLARITY Act, passed by the House on July 17, 2025, with a 294-134 vote, aims to clarify regulatory roles for the SEC and CFTC, defining digital assets as securities or commodities. For stablecoins, typically not investment vehicles, this ensures appropriate regulation, complementing the GENIUS Act.

This dual legislative effort fosters a stable environment, potentially boosting institutional confidence and market sentiment, indirectly benefiting USDT by enhancing the overall crypto ecosystem.

The Federal Reserve’s Upcoming Meeting: Implications for Crypto

The FOMC meeting on July 29-30, 2025, is critical, with markets anticipating a 50/50 chance of a rate cut, per the CME FedWatch Tool, based on June 2025 projections of two 25-basis-point cuts this year. A dovish stance could encourage investment in risk assets like crypto, given their sensitivity to interest rates.

A hawkish stance could temper market enthusiasm, while even subtle hints of a policy shift might significantly affect risk assets like crypto, which are highly sensitive to monetary changes. With recent economic data showing high inflation and tariff uncertainties, the Fed’s decision could influence crypto markets, with potential rate cuts viewed as bullish for USDT’s growth.

Conclusion

Here's where I stand: the GENIUS Act is a net win for USDT, assuming Tether complies. It's a chance to shed its baggage, cement its lead, and ride a wave of regulatory clarity into broader acceptance. The competitive heat and global uncertainties are real, but I think Tether's too entrenched and too profitable to falter now. Pair that with the CLARITY Act's stability and a potentially friendly Fed, and we're looking at a transformative stretch for stablecoins.

Personally, I'm excited for what's ahead. The crypto market's maturing, and USDT could either soar as a trusted pillar or stumble if it missteps. My prediction? Tether adapts, thrives, and sets the pace for stablecoins in this new era. Investors, take note: The next few months could redraw the map of digital finance, and USDT's at the heart of it.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.