Tether Unveils New Stablecoin, Hires Trump Ally. Circle Stock Is Falling.

Tether is the issuer of USDT, the world’s largest dollar-backed stablecoin. (AFP via Getty Images)

The stablecoin race heated up Friday as Tether unveiled a planned U.S.-regulated, dollar-backed token called USA₮ and appointed former Trump administration official Bo Hines as USA₮ CEO.

Tether already issues USDT, which is the world’s largest dollar-backed token, with a market capitalization of nearly $170 billion. Unlike USDT, USA₮ will have a U.S. issuer and will be designed to comply with new federal legislation governing stablecoins, the company said. It wasn’t immediately clear when the token would first be issued.

Stablecoins are a type of cryptocurrency, pegged to assets like the greenback and backed by reserves such as Treasury bonds. The Genius Act, which President Donald Trump signed into law in July, establishes a regulatory framework for the coins, paving the way for more institutions to use them.

“USA₮ is our commitment to ensuring that the dollar not only remains dominant in the digital age, but thrives,” said Tether CEO Paolo Ardoino in a statement.

Hines, who will lead the issuance of USA₮, last served as executive director of the White House Crypto Council. He left that post to join Tether as an advisor on U.S. strategy in August. The 30-year-old former college football player twice unsuccessfully ran for Congress as a Republican.

See more…

Cantor Fitzgerald will serve as the designated custodian of USA₮ reserves, which will likely consist of Treasuries. Commerce Secretary Howard Lutnick was chairman and CEO of Cantor, a longtime Tether partner and custodian, until his confirmation this year.

The Department of Commerce didn’t immediately respond to a request for comment.

Tether’s entrance into the regulated stablecoin arena shakes up a market that many on Wall Street believe will expand rapidly. Bernstein analyst Gautam Chhugani projected in June that the global stablecoin supply could reach $4 trillion by 2035, up from less than $300 billion today.

The move also means a new competitor for Circle Internet Group and its USDC stablecoin. The New York-based company has capitalized on the growing legislative clarity to position itself as a first mover in the coming stablecoin revolution. It went public in June, giving many investors direct exposure to the asset class for the first time.

Circle shares were down 5.6% to $126.66 on Friday afternoon. The stock has more than quadrupled from its initial public offering price of $31 a share.

“Building a compliant, regulated stablecoin is not something that happens overnight — it takes years of investment in compliance, banking partnerships, transparency, and trust,” a Circle spokesperson told Barron’s. “Circle has done that hard work from day one, which is why USDC is one of the most widely trusted dollar stablecoins in the U.S.”

As a U.S. issuer, Circle had a regulatory head start on its privately held rival Tether, which said earlier this year that it would relocate to El Salvador. It had previously been incorporated in the British Virgin Islands. Still, many analysts had expected Tether to enter the regulated U.S. market at some point.

The U.S.-based crypto bank Anchorage Digital will serve as the legal issuer of USA₮, Tether said. It didn’t specify how this arrangement would work.

“This is a testament to the fact that USDC is more commoditized than people initially thought!” Dan Dolev of Mizuho Securities told Barron’s. “That is exactly why are cautious on Circle.” Mizuho has an Underperform rating on the stock and a target of $84 for the price.

Write to Nate Wolf at nate.wolf@barrons.com