Tether Faces Liquidation Fears as GENIUS Act Nears Passage | 100K BTC at Stake
Edited By
David Kim
The impending passage of the GENIUS Act has stirred concern that Tether, a major player in the cryptocurrency market, may be forced to liquidate significant assets, including its backing of USDT with 100,000 BTC. This looming threat has captured the attention of investors and skeptics alike in July 2025.
Concerns Over Tether's Backing
Tether's reserves, valued at approximately $150 billion, reportedly consist of around 65% in US Treasuries, with small percentages allocated to Bitcoin (BTC) and gold. Commentators are questioning whether the government would target a holder of $100 billion in U.S. assets.
In various forums, several comments expressed skepticism about the potential effects of the GENIUS Act on Tether. One comment pointed out that “the only way they’ve made it this far must be because they have state backing.” Others speculated that the act, while requiring independent audits, would still not impact Tether's operational stability directly.
Potential Backlash of Proposed Regulations
Skeptics believe the act will limit Tether's ability to operate freely. There are concerns about audits exposing potential insolvency or flaws in their operational model. “Theoretically, the bill would require them to be independently audited thus exposing an insolvency in their product,” one forum user commented.
Interestingly, Tether’s incorporation in El Salvador has sparked debate. Some see this as a strategic move to avoid stringent regulations in the U.S. “They left a loophole for Tether.” That incorporation could allow Tether to continue its operations with fewer restrictions.
Sentiment Patterns Emerge
Most comments reflect a mix of confusion and disbelief regarding Tether's stability and the GENIUS Act's intentions. A significant portion of the crypto community remains skeptical about the potential for liquidation, with many declaring outright it “is not getting liquidated.”
Key Insights:
🔶 Tether holds 65% of its reserves in US Treasuries.
🔴 Users question the urgency and implications of the GENIUS Act.
🟢 Tether’s El Salvador incorporation could bypass many regulations.
“The US uses Tether against p2p cash. Where does this hope come from that a state would kill them?”
As the clock ticks down to the bill's passage, Tether’s fate remains uncertain. Investors are closely watching for any sign of disruption in the stablecoin market.
Possible Outcomes for Tether Amid Regulatory Change
As the GENIUS Act looms, there's a strong chance that Tether will face increased scrutiny over its operations. Experts estimate around a 60% probability that the proposed regulations could force Tether to liquidate a portion of its Bitcoin holdings to meet compliance requirements. This could result in significant market volatility, impacting not just Tether but the broader cryptocurrency market. Conversely, there are arguments that their existing reserve structure may insulate them from immediate fallout, leading to a 40% chance of relative stability, even as audits unfold. Time will tell if Tether can navigate these complexities or if the act will tighten its grip.
History's Echo from Unexpected Places
Consider the similarly turbulent waters of the tech bubble burst in the early 2000s. As businesses like Pets.com crumbled under scrutiny, some companies pivoted successfully—shifting strategies and adapting their business models to new market realities. Just like those firms emerged more robust and focused, Tether might also find ways to adapt its structure and meet regulatory demands. This unexpected comparison reminds us that not all collapses lead to failure; some create openings for transformation within crises.