Tether Is Buying Bitcoin’s Revolution, How Devastating Will The Consequences Be?

The passage of the U.S. GENIUS Act in July 2025 provided a regulatory framework for private stablecoins like Tether (USDT), effectively stalling a government CBDC by delegating the function of digital dollars to regulated private issuers. Tether has become a massive beneficiary, reporting billions in profit and becoming one of the world's largest private holders of U.S. Treasuries, with its custodian, Cantor Fitzgerald, having ties to federal economic nominations, creating uncomfortable political proximity.

Tether's operation functions as a compliance rail, proactively freezing sanctioned wallets in cooperation with U.S. law enforcement, meaning surveillance mechanisms are embedded directly into the token's smart contract. As USDT expands onto Bitcoin-adjacent networks like Liquid and RGB, this compliance logic travels with it, risking the transformation of Bitcoin infrastructure into a conduit for surveillance.

The article argues that this situation is a 'CBDC by proxy,' where programmable, trackable dollars are administered by corporations instead of the Fed. Furthermore, Bitcoin demand supports Treasury issuance, which in turn supports Tether's profitability, creating a feedback loop that entrenches the fiat system. Many Bitcoin advocates rationalize aligning with Tether through sponsorships or by claiming it helps those in economically unstable regions, but the author concludes this compromises Bitcoin's core principles, making its followers 'tethered to the system they are trying to escape.'

(Source：Bitcoin Magazine)