Tether, the cryptocurrency market's largest stablecoin issuer, is preparing to launch a new stablecoin in the US.
However, the company faces serious challenges due to having to build liquidity and establish distribution channels from scratch, according to Bernstein analysts.
Tether's new US product, USAT, aims to meet regulatory compliance requirements such as proof of reserves and bankruptcy protection. However, analysts argue that simply operating within the legal framework won't be enough for success. They point out that Tether's main challenges lie in generating liquidity and integrating into the US market.
Meanwhile, rival Circle has a strong presence in the US market. Its USDC stablecoin has deep integration with US-based institutions like Coinbase, Bullish, and Anchorage Digital. Furthermore, analysts noted, “Fundamentally changing liquidity in the crypto ecosystem is extremely difficult, and simply sharing incentives is not enough.”
Tether will need to build liquidity from scratch and attract partners for USAT, which is scheduled to launch towards the end of the year. Furthermore, adoption could quickly stall if traders don't ensure interoperability with leading blockchain networks like Ethereum and Solana.
*This is not investment advice.
