Galaxy’s research head Alex Thorn believes that genius acts can support tethers by allowing them to operate under relatively flexible conditions.
The thorns were evaluated The bill opens a pathway for Tether to register onshore, but it does not need to do that to continue operations.
Limited Limitations for Offshore Issuers
If Tether chooses not to register under the new framework based on the current text of the bill, it will not violate the law.
Under the current language of the bill, major restrictions on unregistered stubcoin issuers like tethers include interbank settlement bans, with token marketing being sold in the US as “stablecoins.”
Thorne said the initial restrictions are not currently a significant issue for Tether, but could affect future adoption in the facility’s finances.
The second limit introduced as an amendment during the recent Senate Banking Committee session prevents Tether from advertising USDT as a Stablecoin within the US market, but does not stop it from being traded on land.
The Genius Act defines rules for issuance and monitoring and proposes a regulatory framework for Stablecoins. The regulations include a 1:1 reserve requirement consisting of US dollars, insured bank deposits, or short-term Treasury bills.
The Senate Banking Committee approved the bill on March 13 with bipartisan support. The full Senate vote has been revealed.
Registration route
The Genius Act appears to offer Tether a clear option to register as a US Stablecoin issuer, perhaps through the currency (OCC) office. If you choose this route, Tether can either register the USDT fully or create a subsidiary that issues a compliant version of the token.
However, if Tether is not registered, it still operates in the US if it complies with compliance requirements set by the Office of Foreign Assets Control (OFAC) and Financial Crimes Enforcement Network (Fincen).
Thorne added that the bill provides important clarification on anti-money laundering. The US Treasury designates foreign non-registered issuers as non-compliant only if they fail to comply with a legal order to freeze or seize assets.
This specification is not automatic for all unregistered Stablecoin publishers. Tether has a history of adhering to such orders, and has frozen at least 2,150 addresses so far.
Additional Limitations
Analysts also highlighted a new amendment to the bill that would introduce further restrictions on offshore, unregistered stable coins.
Specifically, stubcoins issued by entities not registered under the framework are not treated as cash equivalents for accounting purposes.
You are not entitled to margin or cash equivalent treatment by a broker-dealer, swap-dealer, futures committee merchant (FCMS), or derivative clearing organizations (DCOs).
Thorn reiterated that these measures would limit the financial and institutional use of unregistered stivcoins, but would not ban their existence or prevent them from trading within the US market.
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