Tether (USDT) is the stablecoin with the largest circulation and highest trading volume in the global cryptocurrency market. As regulations governing stablecoins in major global jurisdictions gradually become clearer, Tether, the issuer of USDT, has adopted a diversified strategy to adapt to different regulatory environments. This article aims to outline the current status and compliance pathways for USDT in several key markets.
European Union: Phased Exit Under MiCA
The European Union’s Markets in Crypto-Assets Regulation (MiCA) establishes clear licensing and reserve requirements for stablecoins. The regulation requires stablecoin issuers to obtain authorization in EU member states and sets specific provisions regarding the location and type of reserve assets.
Since USDT’s reserve structure—particularly its failure to meet the requirement that 60% of reserves be held in European banks—does not comply with specific provisions of MiCA, Tether has not sought authorization under the MiCA framework.Consequently, since late 2024, many EU-regulated crypto-asset service providers have begun to gradually discontinue offering USDT trading pairs or related services to users.
According to guidance from the European Securities and Markets Authority (ESMA), platforms authorized under MiCA must cease offering services involving such non-compliant stablecoins by January 8, 2027. This means that the availability of USDT is shrinking across mainstream trading channels regulated in the EU.
United States: A Two-Track Strategy and the Launch of USA₮
The United States is moving forward with its stablecoin regulatory legislation. The “Payment Stablecoin Clarity Act” (GENIUS Act), enacted in mid-2025, sets clear regulatory expectations for payment stablecoin issuers, including requirements for one-to-one backing by high-quality liquid assets and periodic disclosure of proof of reserves.
To adapt to the U.S. market, Tether launched USA₮—a separate stablecoin designed to comply with the U.S. regulatory framework—through Anchorage Digital Bank in early 2026. Cantor Fitzgerald serves as the designated reserve custodian for this stablecoin, and Deloitte reviews its reserve proofs.USA₮ is distinct from the original USDT in terms of regulatory positioning, with the former focused on serving the U.S. compliant market.
Meanwhile, as an offshore-issued stablecoin, the original USDT’s reserve asset portfolio does not fully comply with the requirements of the U.S. payment stablecoin regime. Tether has adopted a “dual-track” strategy: USA₮ targets the U.S. compliant market, while USDT continues to serve the needs of the rest of the world, including offshore and emerging markets.According to the timeline set forth in the GENIUS Act, a significant restriction will take effect on July 18, 2028, at which point U.S. digital asset service providers will generally be permitted to offer only “allowed” stablecoins that meet federal standards.
Regulatory Approaches in Other Major Markets
- Japan: Japan passed relevant legislation in 2022 requiring that stablecoins be pegged to the yen, guaranteeing holders redemption at face value, and stipulating that, in principle, they may only be issued by licensed banks, trust companies, or registered money transfer agents. This creates a significant barrier to market entry for U.S. dollar-pegged stablecoins issued abroad.
- Singapore: The Monetary Authority of Singapore takes a prudent regulatory approach to stablecoins and tends to grant licenses to those that meet specific high standards, such as the quality of reserve assets and the reliability of redemptions.
- Emerging Markets: In many countries and regions facing high volatility in their local currencies or high costs for cross-border remittances, U.S. dollar-pegged stablecoins such as USDT are widely used as payment instruments and stores of value, while local regulatory frameworks are often still under development.
Reserve Transparency and Compliance Measures
Tether has faced regulatory scrutiny over issues related to reserve transparency. In 2021, the U.S. Commodity Futures Trading Commission (CFTC) fined Tether for misleading statements regarding its historical reserve holdings.
As part of its efforts to enhance transparency, Tether published in August 2026 the first comprehensive audit report of its 2025 financial statements, conducted by KPMG US. The report confirmed that, as of the audit date, the value of Tether’s reserve assets exceeded the value of its issued USDT liabilities.
In addition, Tether retains the ability to freeze on-chain addresses to assist law enforcement agencies in combating illegal activities related to hacking, fraud, and sanctioned entities.Its Terms of Service also explicitly prohibit direct use by residents of high-risk jurisdictions such as the United States (unless they are “eligible contract participants” meeting specific conditions), Canada, Cuba, Iran, North Korea, Syria, and Venezuela.
Market Observations and Strategic Implications
Tether’s “dual-track” strategy is viewed by market observers as a flexible approach designed to balance global market demand with the increasingly stringent compliance costs in specific regions, particularly the United States.This strategy may lead to market fragmentation: in heavily regulated regions, such as the U.S. and the EU, regulated platforms may be more inclined to list fully compliant stablecoins (such as USDC or USA₮); whereas in other regions, USDT may continue to maintain its dominant position thanks to its first-mover advantage and deep liquidity network.
Overall, USDT’s global adaptability is shifting from the “one-size-fits-all” model of the past toward more nuanced, region-specific compliance operations. The depth of its future penetration in different markets will continue to be influenced by both the implementation of local regulatory policies and the strategies of its competitors.
