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Tether Expands USDT in Eastern Europe and Central Asia – Can Stablecoin Thrive as an International Currency?

Last Updated May 10, 2024 8:57 AM
James Morales
Last Updated May 10, 2024 8:57 AM
By James Morales
Verified by Peter Henn

Key Takeaways

  • Tether has provided additional investment in the crypto payments startup Citipay.io.
  • The funding could help promote USDT adoption in Eastern Europe and Central Asia.
  • In the US, stablecoin regulation threatens Tether’s dominance.

Tether has topped up its investment in the crypto payments startup Citypay.io, providing a fresh injection of capital to fund the platform’s growth in Georgia, Armenia, Azerbaijan, Kazakhstan and Uzbekistan. 

The latest funding could help promote USDT adoption in Eastern Europe and Central Asia. This move comes at a time when Tether’s stablecoin is facing regulatory challenges in EU and US markets.

Tether Doubles Down on International USDT Adoption

Although its primary business is in digital dollars, based in the British Virgin Islands and serving a global client base, Tether has always faced the international market.

As the most popular stablecoin in the world, USDT is used by millions of people. Indeed, it is often easier and cheaper to access than fiat dollars. 

While Citpay.io also supports payments in six cryptocurrencies, USDT is the only stablecoin it has integrated.

By promoting the platform’s use in countries with underdeveloped financial infrastructures, Tether could help boost adoption in a region where stablecoin payments solve a real need.

With the new investment, Tether aims to build on the platform’s established presence in Georgia. CEO Paolo Ardoino also said  it would “drive the adoption of cutting-edge technologies that disrupt traditional payment systems.” 

Evolving Stablecoins Adoption

While the Citypay deal reflects Tether’s rising prominence as a venture capital investor, it could also be read in light of the firm’s regulatory challenges in the markets that powered its ascent to global dominance. 

As with many payment technologies, North America and Western Europe have fueled the bulk of rising stablecoin volumes recently. Indeed, Tether has been both the primary catalyst and biggest beneficiary of the stablecoin boom. 

But now, the technology is entering a new era of mainstream adoption where volumes are driven by retail payments rather than crypto trading and DeFi. As it does, lawmakers in the US and Europe are increasingly regulating the sector.

Threat of US Regulation

Although Tether holds over $100 billion in US Treasury holdings, the company isn’t exactly a Washington darling.

Stablecoin regulation put forward by Senators Cynthia Lummis and Kirsten Gillibrand would create a licensing regime for US issuers like Circle and Paxos. Meanwhile, USDT risks becoming an unlicensed token under the proposed framework, limiting its viability in the world’s most largest market for financial services.

Meanwhile, the EU’s Markets in Crypto Assets (MiCA) poses a similar threat to USDT in the EU. The UK’s expected stablecoin legislation will also impose restrictions on firms that don’t meet regulatory requirements.

To meet these challenges, Tether is doubling down on anti-money laundering compliance, as seen in its latest move to enhance USDT transaction monitoring. But such efforts are a work in progress and Tether faces an uphill battle to win regulators’ approval. 

Stablecoin regulation is a global trend that no company can avoid forever. Nevertheless, if USDT loses its shine among US businesses, it could still thrive as an international currency. 

As long as Tether still has access to American banking services and a relationship with the Federal Reserve, international users will be much less affected by US legislation.

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