Tether Unveils an All-American Stablecoin

Olivia Capozzalo & Christopher Storaker
September 12, 2025

Happy Friday, Defiers!

Today’s big story:

Tether CEO Paolo Ardoino just announced the firm is launching a GENIUS-compliant USD stablecoin, USAT, specifically for U.S. markets.

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TICKER	VALUE	24H
Bitcoin	$115,201	0.72 %
Ethereum	$4,543.56	2.56 %
XRP	$3.04	1.38 %
Solana	$240.38	5.95 %
BNB	$908.34	1.06 %

Today’s Big Story

Tether’s All-American Red Herring

Tether has unveiled $USAT, a flag-waving all-American, U.S.-compliant stablecoin designed to meet every requirement of the new Genius Act: cash and Treasuries only, GAAP audits, OFAC enforcement, U.S. domicile, and went as far as to appoint Trump’s former digital asset advisor, Bo Hines, as its CEO.

On the surface, it looks like Tether’s pivot into compliance. But to understand what’s really happening, let’s consider the three worlds where stablecoins operate.

The compliant zone. This is where U.S. institutions live — banks, fintechs, globally-regulated funds. They already prefer Circle’s USDC, PayPal’s PYUSD, or eventually bank-issued tokens. Tether has never competed here; adding USAT may give it a seat at the table, but it’s late to the party.
The grey zone. This is Tether’s sweet spot, and where most of its trading volume comes from. Offshore exchanges in Asia and MENA, OTC brokers in Hong Kong and Dubai, dollar-hungry savers in Argentina and Turkey. In these markets, demand for a digital dollar is real, and U.S. rules are too rigid to accommodate it. USDT dominates here because it’s flexible: willing to serve markets where wires don’t reach, but not so reckless as to ignore real criminal risk.
The dark zone. Truly illicit finance. Chainalysis reports that stablecoins accounted for 63% of illicit crypto transaction volume last year. Here, Tether has shown it does comply, freezing addresses linked to terrorism, hacks, or sanctioned actors. Contrary to myth, USDT is not lawless: it cooperates with law enforcement when needed.

The moat is the grey zone. If Tether forced USDT into full U.S. compliance, it would lose this distribution advantage overnight. Mandatory KYC, proactive OFAC, and regulator sign-off on counterparties would cut off the very exchanges and brokers that make USDT indispensable across emerging markets.

The reserves' story just makes the pill even harder to swallow. According to its June audit, $30B (16–18% of Tether’s $162B reserves) sit in non-compliant assets. Replacing them with Treasuries would slash yields by 0.3–0.7% portfolio-wide, or $0.5–1.1B in lost annual profit. That’s 10–20% of earnings gone, and worse if Treasury rates fall.

So yes, USAT is a new coin “built for Americans.” But is it really? Americans already have the dollar for payments. Institutions already have USDC. Maybe USAT will power its way to becoming trading collateral, backed by Tether’s much larger war chest ($13B+ reserve profits vs. Circle’s $658M before distribution payments). Or maybe, as critics argue, USAT is just a shiny object for Washington, while USDT remains the real business, keeps markets where dollars are needed most and heavy-handed regulators can’t reach.

Stay real,

Chris, Product and RWAs at The Defiant

This story is a teaser for our weekly newsletter about stablecoins and RWAs, Real World. Subscribe to read the rest of this analysis, and make sure you don’t miss the next one.

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