Pause the $20 billion fundraising plan and initiate the first comprehensive audit— is Tether heading toward compliance?

Article by: Glendon, Techub News

Yesterday, Bloomberg reported that Tether has hit the “pause button” on its $20 billion fundraising plan. Previously, Tether had ambitious plans to seek large private funding, aiming for a valuation of $500 billion, trying to join the ranks of top private companies like OpenAI and SpaceX.

Why has Tether paused this fundraising? It’s not due to a lack of funds but a strategic adjustment made by Tether itself. In fact, Tether’s cash flow is strong; last year, it posted a net profit of over $10 billion and holds about $122 billion in U.S. Treasuries, making it the 17th largest holder of U.S. debt worldwide. The main reason for pausing the fundraising is to wait for the results of its first comprehensive financial audit, in response to market concerns about its long-term transparency. For a long time, potential investors and bankers have urged Tether to improve financial transparency. Tether CEO Paolo Ardoino has also stated that completing a full audit is a top priority, with plans to achieve this by the end of 2026.

On March 24, Tether finally announced that it had signed an agreement with a Big Four accounting firm to initiate its first full independent financial audit. This audit is considered the largest of its kind in financial market history, covering complex assets such as digital assets, traditional reserves, and tokenized liabilities, totaling over $184 billion. It marks Tether’s official move away from operating as a “black box.”

Because of this, although it appears that Tether’s fundraising process has been delayed, in reality, market and institutional demands are pushing it toward greater compliance. Interestingly, the timing of Tether’s announcement of its first full financial audit coincides with the disclosure of the latest draft of the crypto market structure bill, the CLARITY Act.

This draft clearly defines the rules for the stablecoin market: platforms can offer reward programs (such as cashback or trading incentives) based on user stablecoin activity but are prohibited from paying users yields solely for holding stablecoins. It also restricts practices that equate such programs with bank deposits. This regulation directly targets the core business model disagreements within the stablecoin market and poses a direct challenge to Tether’s biggest rival, Circle.

Although Circle does not directly pay interest to users, its business growth heavily depends on attracting funds by paying high interest (around 3.5% annualized) through partnerships with platforms like Coinbase, thereby increasing stablecoin circulation. As a result, after the draft was revealed, the market reacted swiftly. Investors worried about whether Circle’s profit model could sustain itself. Coupled with other negative factors, Circle’s stock price once plummeted over 20%, marking its largest single-day decline since going public in June 2025.

Undoubtedly, the latest draft has a significant impact on Circle and Coinbase. If the “interest-bearing” model is completely banned, it would weaken Coinbase users’ willingness to hold stablecoins, negatively affecting the overall circulation and demand for USDC, and subsequently reducing Circle’s minting volume and reserve interest income. Interestingly, sources say that although Coinbase and some crypto firms are uncomfortable with the wording regarding stablecoin yields in the bill this week, no one has explicitly opposed it yet. This suggests the bill has a good chance of passing.

However, some analysts believe the market overreacts because the bill does not ban Circle from earning interest on reserves; it only restricts distributing yields to users. In contrast, Tether’s situation is quite different.

Objectively, the impact of the latest CLARITY Act draft on Tether’s USDT is minimal. On one hand, USDT’s core business model does not rely on “interest-bearing” features. On the other hand, due to its offshore nature and fundamental mismatch with global regulatory systems, USDT already faces multiple structural restrictions in the U.S. compliance landscape. Tether’s registered legal domicile is El Salvador, with operations mainly in Hong Kong. The U.S. GENIUS Act explicitly subjects “foreign issuers” to stricter regulation, requiring reserves to be 100% U.S. Treasuries and cash, and oversight by the U.S. Office of the Comptroller of the Currency (OCC). While Tether has increased its holdings of U.S. Treasuries significantly, it still holds high-risk assets like Bitcoin and gold, which conflict with these requirements.

Additionally, Tether lacks a U.S. financial license, preventing direct access to the banking system. It can only custody U.S. Treasuries through third parties like Cantor Fitzgerald. In contrast, Circle has obtained OCC approval to establish a national digital bank, meaning it is “native compliant.” To meet U.S. regulatory standards, Tether would need a thorough corporate restructuring.

Fortunately, Tether has already made some moves. In early January this year, it launched USAT, a regulated, compliant stablecoin in the U.S. market. USAT could potentially benefit from the latest CLARITY Act draft, serving as a key breakthrough to navigate regulatory hurdles.

USAT is issued by a new U.S. entity of Tether, with reserves fully backed by cash and short-term U.S. Treasuries, aligning with the CLARITY Act’s definition of a “compliant stablecoin.” Like USDT, USAT does not offer interest-bearing services, naturally avoiding the restrictions on passive yields and not requiring a business model adjustment like Circle. Its compliant, native status allows it to legally access the U.S. financial system, directly serving domestic institutional and retail investors.

Earlier this month, Tether released its first reserve report for USAT, verified by Deloitte—marking the first time the Big Four have issued a verification report on a stablecoin reserve related to Tether. Now, with the launch of its first full audit, Tether aims to bolster trust and facilitate USAT’s market expansion. Although the audit covers USDT’s reserves, once completed and made public, it will demonstrate Tether’s ability to meet international audit standards and dispel institutional concerns about its lack of transparency. Based on this, USAT could leverage Tether’s influence to provide U.S. institutions with a pathway to access the Tether ecosystem through federal regulatory tools.

It’s important to note that the bill is still in draft form, and whether it will ultimately pass or how its provisions will be defined remains highly uncertain. In the long term, Circle, which is already publicly listed, undergoes annual Deloitte audits and publishes monthly reserve reports, maintaining a significant advantage in compliance and transparency. According to DeFiLlama data, as of writing, USAT’s market cap is only $27.75 million, a stark contrast to USDC. For USAT to compete directly, it faces many challenges.

Conclusion

Tether’s pause on fundraising, the launch of a comprehensive audit, and the progress of the latest CLARITY Act draft all indicate that the stablecoin market’s “compliance race” will intensify. Tether’s release of USAT reserve reports and its full USDT audit show a proactive embrace of compliance. However, Circle’s early compliance advantages and large market base still make it a strong competitor in this race.

In the future, stablecoin market competition may shift from mere scale to a comprehensive contest of transparency, compliance, and strategic resilience. The ongoing rivalry between Tether and Circle will likely serve as a microcosm of the broader compliance transformation in the industry.