Tether, the largest stablecoin issuer, launches a new version of its USD stablecoin; major rival Circle drops over 5%.

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Tether, the world’s largest stablecoin issuer, is creating a US regulation-compliant digital dollar version and has appointed former White House crypto official Bo Hines to oversee the business.

In a statement on Friday, Tether announced that the new stablecoin, called USAT, will be minted and redeemed through Anchorage Digital Bank NA’s stablecoin issuance platform and will comply with US regulatory requirements. Cantor Fitzgerald LP, which already manages the reserve assets for Tether’s main stablecoin USDT, will also oversee the reserve assets for this new stablecoin.

Tether hired Hines in August to help coordinate its US expansion efforts, just weeks after he left the Trump administration. Hines previously served as head of the Trump Digital Asset Advisory Board.

Stablecoins are cryptocurrencies designed to maintain a stable value, commonly mimicking the value of fiat currencies like the US dollar by holding a basket of assets as reserves. Earlier this year, US lawmakers passed the Genius Act, establishing the first federal rules for the industry, including requirements on the types of assets issuers may hold in their reserves.

USDT, issued by Tether, is the world’s largest stablecoin, pegged to the dollar, with a circulation of approximately $170 billion. While its reserves mainly consist of cash equivalents like short-term Treasury bills, Tether, headquartered in El Salvador, also backs USDT with a range of assets including Bitcoin, secured loans, and precious metals—none of which meet US regulatory requirements. As a result, the company must create a separate stablecoin to obtain approval for the US market.

This announcement deepens Tether’s ties to the US market, after it ceased providing direct service to US customers some years ago. The privately held company paid US authorities $41 million in fines in 2021 to settle allegations that it misrepresented the state of its reserves.

The pro-crypto administration of US President Trump is encouraging more digital asset firms to return to the US. This year, several enforcement actions against major crypto companies by US regulators have been suspended or dismissed.

This move is expected to intensify the competition between Tether and its closest rival, Circle. Circle is the issuer of USDC, the second-largest stablecoin. Headquartered in New York, Circle went public in June this year. Circle has long relied on compliance with US regulations and its global spectrum of licenses to maintain a competitive edge among institutional crypto users.

On Friday, Circle’s share price fell over 5% intraday, though it had rebounded sharply the day before with a single-day surge of over 17%, reversing its recent downward trend.

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