In Jan 2025, Tether became a regulated stablecoin issuer after acquiring the DASP license in El Salvador. The license is issued by the National Commission of Digital Assets (CNAD), a federal regulator created by the Law for Issuance of Digital Assets, adopted by El Salvador in 2023.

The license requires Tether to maintain 100% reserves against all tokens issued. The issuer must invest 70% of reserves in assets redeemable in less than 30 days. However, the regulator is also empowered to grant a waiver against this requirement. The license does not mandate key provisions such as redemption timelines, asset segregation, or bankruptcy remoteness. We continue to monitor new information to evaluate the effectiveness of the license. 

Tether is registered with the Financial Crimes Enforcement Network (FinCen) as a money services business. As per FinCen, such a registration is “no recommendation, certification of legitimacy, or endorsement of the business by any government agency”.

For holders of fiat-backed stablecoins, the best form of protection comes in the form of regulations that recognize the company as a stablecoin issuer and mandate provisions that ensure stablecoin holders can redeem even in the event of a bankruptcy. In Tether’s case, USDT holders will likely be treated as ordinary creditors of the business.