Tether’s 80K BTC Swap for UST

Tether’s 84,000 BTC Swap for U.S. Treasuries: A Strategic Bitcoin Reserve Accumulation Plan for the U.S.

As part of a potential strategy for the U.S. to build a strategic Bitcoin reserve, discussions may emerge regarding an exchange of Tether's 84,000 BTC holdings for U.S. Treasuries.

As of March 11, 2025, Tether's total issuance stands at approximately 144.6 billion USDT. Around 80% of its reserves are held in U.S. Treasuries, and it also holds approximately 84,000 BTC.

Tether has previously stated that its reserves amount to 103% of its total issued USDT.

If the U.S. government strengthens reserve requirements, Tether may be compelled to liquidate its Bitcoin and gold reserves to purchase additional U.S. Treasuries.

In February, the "U.S. Stablecoin Innovation Act (GENIUS Act 2025)" was proposed, mandating that stablecoin issuers hold reserves equivalent to their total issued stablecoins.

Stablecoin issuers must maintain reserves equal in value to the issued stablecoins and cannot use these reserves as collateral for other financial transactions.

The act specifies that acceptable reserve assets include:

U.S. Treasuries with maturities of three months or less,

Federal Reserve deposits,

Cash,

Repurchase agreements (RPs) with maturities of seven days or less,

Reverse repurchase agreements (reverse repos).

These measures aim to ensure the stability of stablecoin reserves.

Only authorized entities will be permitted to issue stablecoins, and they will be subject to oversight by both federal and state regulators. Additionally, stablecoin issuers with an issuance exceeding $10 billion will automatically fall under federal regulatory supervision. The legislation also strengthens penalties, including fines and imprisonment, for illegal issuances.

In the event of an issuer's bankruptcy, stablecoin holders will be guaranteed priority distribution of remaining assets.

Although Tether is registered in Hong Kong and the British Virgin Islands, making it not directly subject to U.S. regulations, it must comply with relevant laws if it wishes to operate within the U.S. financial system.

Thus, Tether may need to sell its 84,000 BTC and convert its reserves into U.S. Treasuries or other compliant assets.

A straightforward solution would be for the U.S. Treasury to issue bonds in exchange for Tether's Bitcoin holdings.

A Win-Win Strategy for Trump’s Administration

Against this backdrop, former President Trump has reportedly instructed Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick to devise a way to acquire Bitcoin without allocating additional budgetary funds.

This proposed barter arrangement could be a mutually beneficial solution:

The U.S. government would not need to allocate extra funds to secure Bitcoin.

If Tether were to sell 84,000 BTC directly on exchanges, it could negatively impact Bitcoin prices.

However, a direct Bitcoin-for-Treasury exchange would prevent market price disruptions while simultaneously bolstering U.S. Treasury demand.

This potential strategic maneuver could serve as a pivotal move for both Tether’s regulatory compliance and the U.S. government’s financial strategy.