Tether’s flagship stablecoin USDT expands at a record pace, even as new U.S. legislation threatens its future in the world’s largest financial market.
Its market cap recently reached an all-time high of $160 billion, driven largely by soaring activity on the TRON blockchain and growing demand from decentralized users across the globe. USDT’s supply on TRON has now topped $80 billion, surpassing the amount issued on Ethereum by $6 billion, as per an analysis published on July 18 by CryptoQuant contributor Darkfost.
TRON alone issued more than $22 billion worth of Tether since January, indicating a strong and persistent demand for dollar-backed tokens on fast, low-cost rails, particularly in emerging markets and peer-to-peer ecosystems. The network’s low fees and quick settlement times have made TRON the go-to blockchain for routine USDT transactions.
The bulk of USDT activity on TRON now consists of decentralized transfers, which often outnumber exchange-based volume by a factor of five to ten. This shift is part of a wider trend in stablecoin usage, where protocols, rather than platforms, are becoming the primary method of settlement.
U.S. Regulation Threatens to Upend Tether’s Dominance
Still, Tether now faces a more complicated regulatory position. On July 17, the U.S. House of Representatives passed the GENIUS Act, which establishes clear reserve and licensing requirements for all stablecoin issuers doing business in the U.S. Although Tether is based in El Salvador, the legislation gives U.S. regulators authority to assess the compliance of foreign entities.
Increased regulatory scrutiny could face Tether, or the U.S. markets could bar it if it doesn’t meet these requirements, outcomes that might impact its international operations. The bill also opens the door for additional stablecoin issuers based in the United States, which could eventually pose a threat to Tether’s dominance.
Rivals like USD Coin, which are already more in line with regulatory expectations, may benefit from growing institutional interest in transparent, compliant alternatives. Regulation and increased competition may also pressure Tether as new players, such as banks and fintech companies, start issuing stablecoins under the new guidelines.
Despite these challenges, Tether’s strategy remains focused on expanding in non-US jurisdictions, especially in Asia and Europe. However, international repercussions may be had by U.S. legislation.
Global regulators may adopt Washington’s position, further tightening the conditions for Tether, as seen with delistings on European exchanges and growing demand for compliant alternatives like RLUSD.
For now, Tether’s greatest advantage continues to be its ability to satisfy demand outside of the U.S., even as pressure mounts to adapt to a changing regulatory landscape.
