Tether surprised the market by announcing that it purchased over $33 billion in Treasury bonds last year. This makes Tether the seventh-largest buyer of US bonds, ahead of countries like Canada, Mexico, and Germany.
In a speech today, President Trump claimed that stablecoins will be used to promote dollar dominance worldwide. By purchasing these bonds, Tether could be securing an incredibly valuable partnership.
Why is Tether Buying US Treasury Bonds?
Tether, the world’s largest stablecoin issuer, might have a significant opportunity on its hands soon. At the Digital Assets Summit earlier today, President Trump alluded to some big plans for future stablecoin policies in the US.
An important factor in these plans may be that Tether is now one of the world’s largest purchasers of US Treasury bonds:
“Tether was the 7th largest buyer of US Treasuries in 2024, compared to countries. Tether brings the US dollar to more than 400 million people predominantly in emerging markets and developing countries. Without a doubt, Tether built the biggest distribution network for the US Dollar,” Tether CEO Paolo Ardoino said in a pair of social media posts.
This could potentially boost USDT compliance efforts with the forthcoming stablecoin regulation. The proposed GENIUS Act, which is pending congressional approval, requires stablecoin issuers to hold reserve assets in the US, denominated in the US treasury.
So, this purchase could allow Tether to comply with the upcoming US regulation, unlike the EU’s MiCA.
“Insane. Tether has become an essential partner to the United States in less than a decade,” wrote Anthony Pompliano.
In his speech today, President Trump didn’t make many firm commitments about future stablecoin policy. He did, however, claim that dollar-backed stablecoins will “expand the dominance of the US dollar” for years in the future.
If the US government substantially influences the stablecoin market, Tether could be a good conduit for Trump’s partnership.
Could Tether and Trump Drive USD Dominance?
All the proposed stablecoin regulations in the US include a clear demand: issuers must be subject to third-party audits. Tether has never allowed one, although its new CFO supports an audit.
This speed bump has already moved Coinbase to state that it would remove Tether’s products if asked, just like it was pushed out of the EU last December.
However, Tether may be able to solve many of these problems by purchasing Treasury bonds. Among other requirements, the GENIUS Act mandates that stablecoin issuers hold much of their reserves in US Treasuries.
It was previously theorized that Tether may need to sell its Bitcoin due to this regulation, but the fact that the company has been buying treasury bonds changes the speculations.
“Should Congress pass the GENIUS Act, the regulatory clarity might also attract traditional banking firms into the stablecoin ecosystem, fueling healthy competition. The stablecoin market can potentially hit $3 trillion in the next 5 years, a sign that the asset class can dominate the global payment ecosystem in the coming years. The essence of these regulations will be to preserve the hegemony of the US dollar, albeit in a tokenized form such as stablecoins. In the long run, the regulatory clarity will mutually benefit the crypto industry and the US economy,” Agne Linge, Head of Growth at WeFi told BeInCrypto.
Tether has purchased a staggering amount of Treasury bonds in the last year, but this might not guarantee a partnership with Trump and the US government.
Several major banks are eyeing stablecoin launches, and several people in Trump’s orbit allegedly discussed partnering with Binance to launch one, too. So far, there’s no evidence Tether had a similar deal.
Still, Tether purchased over $33 billion in US Treasury bonds in one year, and that’s bound to make an impact. If Trump’s administration decides to use Tether to promote dollar dominance, it could change everything.
It’s too soon to confidently state that such predictions will come true. Tether may still need a third-party audit despite buying these Treasury bonds. Still, if the stars align, its dominant position in the stablecoin market could be supercharged.
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