Tether Company recently officially announced its plan to launch USAT, a compliant stablecoin targeting the U.S. market, and appointed Bo Hines, former head of the Trump Digital Asset Advisory Committee, as CEO. This move is seen as a key strategy by Tether to actively respond to stringent U.S. regulatory requirements such as the “GENIUS Act,” and it also provides a new compliance paradigm for the global development of stablecoins. The market expects the USAT stablecoin to be officially launched by the end of 2025.
The architectural design of USAT highlights a high degree of compliance and mechanism innovation: issuance is handled by Anchorage Digital, a federally regulated crypto bank in the U.S., while the well-known financial institution Cantor Fitzgerald serves as the custodian of reserve assets and a primary dealer (an institution with privileged access to trading U.S. Treasury securities).
This mechanism highly aligns with Hong Kong’s Linked Exchange Rate System——Tether plays a role similar to that of the Hong Kong Monetary Authority (HKMA), overseeing the issuance, security, and value anchoring of the stablecoin; Anchorage Digital corresponds to Hong Kong dollar note-issuing banks (such as HSBC, Standard Chartered, and Bank of China). More importantly, USAT may introduce more regulated banks to participate in its issuance in the future, forming a pattern of “multiple institutions issuing a single stablecoin.” This also addresses the issue raised in the earlier article, “Will Introduction of the tablecoin Act Trigger a ancial Tsunami?“which warned that “if every bank issues its own stablecoin, it will lead to market chaos,” and aligns with the proposal in my recent article, “77 Stablecoin License Applications – Major Opportunities and Challenges for Hong Kong’s Financial Innovation” which advocated for “the HKMA taking the lead in issuing a dollar-backed stablecoin, USHK.”
Unlike USDT’s direct self-custody model, USAT emphasizes third-party custody. This design, which separates “issuance, custody, and regulation,” significantly enhances transparency and market trust. However, the HKMA entrusts its U.S. dollar assets to several major banks through the Exchange Fund without disclosing their names.
Although the HKMA does not publicly disclose the specific custodian banks for its U.S. dollar reserves, its years of accumulated experience in managing the Exchange Fund can still provide a solid institutional foundation for USHK. Further optimization of the information disclosure mechanism in the future will be more conducive to enhancing public trust.
From the perspective of the global stablecoin landscape, the U.S. will form a compliant stablecoin system with USAT and USDC as the two dominant players. Both will assume a regulatory function in the stablecoin field similar to that of the HKMA in Hong Kong. The high efficiency and low-cost characteristics of cryptocurrencies have already posed challenges to the traditional fiat currency system. The U.S. is further consolidating the advantage of the U.S. dollar through legislation and compliance innovation. This trend deserves serious attention from global financial practitioners, who must also avoid traditional financial thinking to avoid missing this historic opportunity.
For Hong Kong, issuing a dollar-backed stablecoin, USHK, represents a unique historical opportunity and market potential, as well as a critical window of time——because replacing non-compliant USDT is time-sensitive.
Leveraging Hong Kong’s advantages as an international financial center, its mature financial regulatory system, and the market trust accumulated over years of operating the Linked Exchange Rate System, USHK has the potential to replace USDT and rank among the top three global dollar-backed stablecoins. Optimistically, it could capture 40% to 50% of the future global stablecoin market.
In terms of technical path selection, Tether has disclosed that USAT will use the Hadron chain as its issuance platform. The Hadron chain is positioned as a multi-chain compliant issuance platform and a tool for multi-chain RWA (Real World Asset) tokenization. It currently supports the Liquid network (Blockstream’s Bitcoin sidechain with about 60 nodes, emphasizing privacy and fast settlement), Ethereum (open and transparent), and Avalanche (high throughput), with plans to integrate the TON chain (Telegram ecosystem, enhancing social applications). The goal is to provide compliant solutions for traditional enterprises to issue tokens. However, it should be noted that the Hadron chain suffers from issues such as opaque code, non-public ledgers, and a lack of long-term testnet trials, making it difficult to accurately assess the overall project risk.
In contrast, Ethereum, with its high openness, transparency, and mature ecosystem, has been tested by the market and is undoubtedly a more reliable technical foundation for USDC and the potential USHK. In the long run, the success of stablecoins must rely on three pillars: transparency, compliance, and trust. Whether it is the practical experience of Hong Kong’s Linked Exchange Rate System, the architectural design of USAT, or theoretical deductions, all corroborate the correctness of the path centered on a “HKMA-like” regulatory agency supported by a multi-issuer mechanism.
Hong Kong should seize the opportunity, learn from USAT’s compliance experience, leverage its own institutional advantages, and accelerate the research, development, and implementation of USHK. The window of opportunity is fleeting. This is not only about financial innovation but also a strategic choice to consolidate Hong Kong’s position in the new global monetary landscape.
