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

At a glance

• the The law of genius In the US, it gave private stablecoin issuers a legal framework while halting government issuance of central bank digital currencies (CBDC).
• Tether, the USDT issuer, has achieved record profits and has become one of the The largest holder of US Treasury securities.
• The company’s cooperation with regulators and law enforcement shows how to do this Stablecoins act as compliance barsNot as a substitute for them.
• Many Bitcoin advocates are now aligned with the Tether ecosystem, inadvertently helping to expand the reach of the monetary system they claim to resist.

The quiet settlement of Bitcoin

when The GENIUS Act became law on July 18, 2025The cryptocurrency industry celebrated it as the end of regulatory uncertainty. The law requires licensed stablecoin issuers to maintain liquid reserves such as cash and US Treasury securities, publish monthly disclosures, and Subject to federal or state supervision. Meanwhile, Congress has suspended Federal Reserve Bank Digital Currency.

Supporters saw it as a victory for innovation, but critics described it as a quiet union of private money. The United States no longer needs to issue its own digital dollar. It has simply delegated this function to private issuers operating under supervision. For Bitcoin users, whose movement was built around sound money and decentralization, this shift should have raised alarm bells.

Tether’s own empire

The biggest beneficiary of this new framework is… pregnancy Limited, whose USDT token dominates the global supply of stablecoins. In its testimony for the second quarter of 2025, Tether Limited reported net earnings of approximately $4.9 billion and total exposure to US Treasuries exceeding $127 billion. Treasury Bills and Reverse Repo Properties. Its balance sheet showed approx $120 billion in Treasury bondsThis makes Tether one of the largest holders of US government debt in the world.

The responsibility for custodial of those assets falls to Cantor Fitzgeralda Wall Street firm led by Howard Lutnick. Lutnick has publicly defended the safety of Tether’s reserves, emphasizing Cantor’s role as trustee while emphasizing that he has no stake in the company.

Communication is now more sensitive: Lutnick was later nominated for a senior White House economist position Supervising the elements of commercial and financial regulation. The appointment puts the Fed policymaker in close proximity to one of the largest private holders of U.S. government debt and the primary custodian of a company whose dollar-backed token relies on U.S. Treasury securities for profit. The optics are uncomfortable. What began as a business relationship is now turning into a potential conflict of interest, embedding Tether into the plumbing of Wall Street and into the political apparatus that governs it.

In effect, Tether has become a private central bank: issuing dollar obligations, earning seigniorage, and distributing liquidity through the cryptocurrency economy, all while backing US sovereign debt. Its profit per employee rivals the most profitable institutions in the field of finance.

Proxy surveillance

Stablecoins promise fast, limitless payouts; However, its structure depends on compliance. Since December 2023, Tether has maintained a proactive wallet freeze policy For addresses sanctioned by the US Office of Foreign Assets Control. The company says it has frozen billions of currencies linked to illicit activities He now works directly with the US Secret Service and the FBI.

This is not inherently evil, it is what regulators are demanding, but it means that implementation now operates within the realm of money itself. The lever of control no longer resides just with the banks, it resides in the smart contract of the token issuer.

As Tether expands USDT to neighboring Bitcoin networks such as liquid and RGB protocolThe same logic of compliance will carry over with him. The more Bitcoin infrastructure hosts these tokens, the more identity, KYC, and whitelisting mechanisms will emerge around Bitcoin wallets and payment channels. The network that once prided itself on neutrality risks becoming a conduit for surveillance.

The political economy of the digital dollar

the The law of genius This passage also led to a reorganization of digital currency policies. Its sponsors framed it as an anti-ECB measure, arguing that private stablecoins preserve choice and limit government power. However, the result is almost identical to what a central bank digital currency could achieve: programmable, trackable dollars, managed solely by corporations rather than the Fed. Some analysts have called this “birth.”CBDC by proxy“.

This policy is also carefully aligned with financial priorities. Each USDT minted represents demand for short-term Treasuries, effectively funding the very government that stablecoin advocates claim they are bypassing. Tether’s profits flow from the interest rate paid on those securities, an invisible backstop from public debt to private issuers.

By placing stablecoins within the traditional bond market, the United States has created a dollar-dependent feedback loop: demand for Bitcoin supports the issuance of Treasuries, and Treasury yields support Bitcoin’s profitability. In this episode, decentralization is incidental.

Participate in choosing a Bitcoin novel

Within the Bitcoin community, opposition to altcoins remains strong, but sponsorships, event partnerships, and integrations show how quickly the principle is bending toward finance. Bitcoin conferences increasingly include Tether executives and backers on stage, often framed as “bridges” to adoption.

A familiar phrase has emerged among Bitcoin users who take money from Tether, “If stablecoins are inevitable, they had better be managed by Bitcoin users.” Another common defense is that Tether provides a lifeline to people in countries cut off from the dollar system or suffering from hyperinflation and collapsing economies. This is an emotionally compelling novel. These convenient phrases turn compromise into a virtue, allowing Bitcoin users to receive patronage and funding from the very system they once swore to oppose.

This logic may provide comfort to some, but it erodes clarity. USDT on Bitcoin does not make Bitcoin more sovereign; It makes the dollar more widespread. When Bitcoin developers or advocates ally themselves with Tether for sponsorship or exposure, they give moral legitimacy to a system that thrives on the dominance of fiat currencies. The irony is that Bitcoin’s fiercest defenders are now helping to entrench the very structure that was built to escape.

Follow the money

Tether’s scale gives it power in markets and in messaging. With annual profits worth billions and deep connections to Wall Street custodians, they can sponsor conferences, fund research and influence narratives across the world of digital assets. Its executives frequently appear at political forums to present stablecoins as allies of innovation and freedom. Each appearance helps normalize the idea that dollar-denominated tokens represent progress for Bitcoin.

But money tells a different story. Every stablecoin transaction that settles into USDT extends the reach of the dollar system and perpetuates the use of money as a weapon. Each layer of compliance embeds monitoring deeper into the blockchain economy. And every Bitcoin user who accepts this swap helps build a network where decentralization mostly continues as a trademark.

Bitcoin doesn’t need a conspiracy against it; She just needs her followers to forget what made her different. The GENIUS Act, the rise of Tether, and the regulatory preference for private railways point to a future where digital money exists, but never without permission. The Trojan horse is not Tether, but rather the belief that working with it preserves freedom.

In the end, too many Bitcoin users remain exactly where Tether wants them, still locked into the system they are trying to escape.

This is a guest post by Plain Memo. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.