Tether Faces EU Scrutiny as Stablecoin Bill Gains Traction

By Joseph, Contributor
May 2, 2025 – 1:30 PM CST, Milwaukee, WI

Tether, the $90 billion stablecoin, faced EU scrutiny on May 2, 2025, over reserve transparency, as the U.S. Senate advanced the GENIUS Act, including stablecoin oversight. The dual pressures highlight global regulatory convergence, with Tether’s dollar peg under question. The outcome could reshape the stablecoin market, critical to crypto’s $2 trillion ecosystem.

Tether’s dominance, handling 60% of crypto transactions, has drawn regulator attention since 2019. Fined $41 million by the CFTC in 2021 for reserve misstatements, Tether claims full dollar backing but lacks public audits. The EU’s MiCA framework and the U.S.’s GENIUS Act, debated since 2024, aim to curb systemic risks from stablecoins.

The EU’s European Banking Authority demanded Tether disclose reserve details, threatening fines under MiCA. The GENIUS Act requires U.S.-listed stablecoins to hold 1:1 reserves, impacting Tether’s operations. Tether’s market cap dipped 0.1%, many investors speculating on a $85 billion valuation if compliance fails, shaking trader confidence.

Stakeholders include Tether CEO Paolo Ardoino, EU regulator Mairead McGuinness, and U.S. Treasury’s Janet Yellen. Crypto exchanges, like Kraken, rely on Tether for liquidity, while banks, including Morgan Stanley, delayed crypto trading to 2026, citing risks. Consumer groups, like Better Markets, push for stricter rules to protect investors.

Long-term, compliance could stabilize Tether, boosting adoption, but failure risks a collapse, impacting 10% of crypto trades, per CoinGecko. The GENIUS Act may inspire global standards, with the BIS reporting $300 billion in stablecoin circulation. Overregulation could push issuers to offshore havens, undermining U.S. and EU influence.

Tether’s 2024 report claimed $90 billion in U.S. Treasuries, but a 2023 NYAG probe questioned 15% of reserves. MiCA’s 2025 budget allocates €50 million for crypto oversight, targeting Tether’s EU operations. Ardoino’s statement vowed compliance, though analysts estimate $500 million in costs to meet new rules.

Critics, including ECB’s Christine Lagarde, warn Tether’s opacity mimics unregulated banking, risking financial instability. U.S. libertarians, like Rand Paul, oppose oversight, citing privacy erosion. Some traders argue audits will strengthen Tether, but others predict a shift to rivals like USDC, which gained 5% market share in 2024.

Globally, stablecoins facilitate 20% of cross-border payments, per a 2025 SWIFT report. The EU’s scrutiny aligns with Singapore’s stablecoin rules, while China’s ban isolates its markets. Tether’s fate could influence G20 talks on digital currencies, with $1 trillion in CBDC pilots underway, reshaping global finance.

Tether plans a reserve audit by August 2025, with EU compliance talks set for July. The GENIUS Act’s stablecoin provisions, if passed, take effect in 2026, giving Tether time to adapt. Analysts predict a 50% chance of market share loss to competitors if transparency falters, impacting DeFi platforms.

Challenges include Tether’s $200 million legal budget, strained by multi-jurisdictional probes. The EU’s 300-person crypto taskforce lacks enforcement teeth, and U.S. partisan divides, with 40% of Republicans opposing regulation, risk delays. Public skepticism, with 60% distrusting stablecoins per a 2025 Harris poll, adds pressure.