Tether’s dominant US dollar stablecoin, USDT, could be forced off major US crypto platforms within two years unless the company overhauls how it operates to meet sweeping new American regulations.
The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act – signed into law by President Donald Trump a year ago – sets strict standards on reserves, supervision and enforcement powers for stablecoin issuers. But US regulators have missed key rule-writing deadlines, leaving the world’s biggest stablecoin in a race against a ticking clock that is still not fully defined.
Under the law, non-compliant stablecoins will not be available to US institutions once a regulatory “safe harbour” expires in July 2028. Lawyers warn that foreign issuers such as Tether could face some obligations far sooner, from early 2027 – and that exchanges may start to act well before the legal cut-off.
US-based rival Circle, issuer of USDC, has moved more visibly to align itself with the forthcoming regime, while other players – including World Liberty Financial, a firm linked to Mr Trump – remain distant challengers in market share terms.
One year on, rules still unwritten
The GENIUS Act, the first comprehensive US stablecoin law, passed its first anniversary at the weekend. Over the past year, interest in stablecoins has accelerated, with both crypto-native firms and traditional financial institutions seeking US trust bank charters to smooth their way into the business.
Yet the statute’s first major deadline – requiring federal financial regulators to write implementing rules within 12 months – has come and gone. Agencies including the Office of the Comptroller of the Currency (OCC) have yet to finalise how the law will work in practice.
That delay is complicating compliance planning for global issuers.
“Tether will comply with the GENIUS Act,” Paolo Ardoino, the company’s chief executive, told CoinDesk at the White House moments after Mr Trump signed the law last year.
He said then that Tether intended to launch a separate US-focused token while also managing USDT to satisfy the statute’s foreign-issuer provisions.
In the year since, Tether has created USAT, a stablecoin issued via US banking partner Anchorage Digital and designed with US standards in mind. Its circulation, however, remains modest compared with USDT.
Tether, which is now based in El Salvador, did not respond to multiple recent requests for comment on where it stands on GENIUS compliance.
Reserves under scrutiny
GENIUS requires that stablecoins be backed fully by highly liquid, low-risk assets – essentially cash and US Treasuries – to give holders confidence they can redeem their tokens at par at any time.
Tether’s latest public attestations indicate that up to a quarter of USDT’s reserves are still invested in assets that would fall outside those requirements, including precious metals, lending activities and holdings of bitcoin.
That composition sits uneasily with the new regime, which will ultimately demand that foreign issuers keep reserves in US institutions and be overseen by regulators whose standards are judged “comparable” to those of the United States.
On top of that, foreign issuers wishing to remain listed on US centralised platforms must register with the OCC – a step described by one adviser as a “significant undertaking”.
“Upon the effectiveness of the GENIUS Act, foreign issuers will need to immediately comply with lawful orders to seize and freeze coins held by illicit actors, but they will have a runway of approximately two more years to prepare for the additional requirements so that their coins may remain eligible for listing on U.S. centralized trading platforms,” said Justin Levine, a lawyer at Davis Polk who advises clients on stablecoin issues.
“So they do have time, as long as they comply with seize and freeze orders,” he said. “But those that want to have their coins continue to be traded on U.S. centralized platforms and have that liquidity should still be thinking about it right now, even if it’s not imminent that they’re going to get delisted.”
Confusion over foreign-issuer deadlines
A key area of uncertainty is how GENIUS treats foreign issuers such as Tether.
Many lawyers, including Mr Levine, read the law as granting them the same broad three-year transition period as US-based firms: roughly until July 18, 2028. But others previously argued that foreign issuers could be subject to stricter timelines once the law becomes effective, likely in January 2027, following a six-month implementation period.
A now-removed analysis from law firm Paul Hastings had suggested that foreign and domestic issuers faced different clocks under GENIUS. The firm declined to clarify its position when contacted.
Regulatory footnotes add to the ambiguity. In a proposal for implementing aspects of GENIUS, the OCC wrote that the 2028 “drop-dead date” for most issuers could be triggered earlier for foreign firms whose coins do not meet “certain requirements” as soon as the law takes effect. Those requirements may primarily concern rapid compliance with “seize and freeze” orders against illicit users.
Until agencies complete their rulemaking, however, those interpretations remain provisional – and market participants have nothing concrete to comply with.
Exchanges weigh risk and volume
The murky timelines are creating strategic dilemmas for US crypto trading platforms that rely heavily on stablecoin liquidity.
If uncertainty persists, “smaller platforms with low risk appetites will delist certain stablecoins and avoid the bother,” predicted Trevor Tanifum, managing principal at consultancy FS Vector. Bigger players, he suggested, may be more willing to hold their ground.
He said some large firms with deep legal resources may conclude: “We’re going to spend the money on lawyers and lobbyists until someone walks up to our door and forces us to delist these non-U.S. issuers.”
“It’s pretty much what has happened, I think, at every major crypto hurdle,” he said. “These platforms still count on a lot of transaction volumes, liquidity from non-U.S. issuers, and so I can’t see them giving up those volumes without a fight.”
Coinbase, the largest US crypto exchange, declined to discuss how GENIUS might reshape its stablecoin listings.
Wider crypto reform still in limbo
GENIUS was conceived as one half of a broader legislative package, alongside the Digital Asset Market Clarity Act, which aims to set ground rules for the wider US crypto market.
Industry lobbyists had sought a “one-two punch”, first securing a stablecoin law and then a more expansive markets framework. While GENIUS is now in force, the Clarity Act remains stalled as the current congressional session nears its end, and any final compromise could rewrite parts of the existing stablecoin regime.
Whatever happens on Capitol Hill, though, one trend is clear: Tether, Circle and other major stablecoin issuers are heading into a period of direct federal oversight for the first time.
How they respond – particularly whether Tether is willing and able to reshape USDT’s reserves, structure and supervision to meet US demands – will help determine which digital dollar dominates on American trading platforms after 2028.
