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Key Takeaways
- The GENIUS Act marked its first anniversary without finalized implementing rules, and Tether has not shown reserve changes to meet the law’s standards.
- Roughly a quarter of USDT’s backing sits in assets outside the law’s cash-and-Treasuries standard, including precious metals, lending positions, and Bitcoin.
- Lawyers are split on when foreign issuers like Tether must fully comply, though a three-year safe harbor for platform delisting runs out in July 2028.
The GENIUS Act, the law establishing federal stablecoin standards, marked its first anniversary this weekend without regulators finishing the rules required to implement it. Tether, issuer of the world’s largest stablecoin by trading volume, has yet to show the reserve changes needed to meet the law’s requirements.
The compliance clock is now running. Non-U.S. issuers whose stablecoins do not meet federal standards face removal from U.S. crypto platforms once a three-year safe harbor period lapses in July 2028.
What GENIUS Requires and Where Tether Stands
The Guiding and Establishing National Innovation for U.S. Stablecoins Act, signed into law one year ago, requires issuers to hold reserves in highly liquid, low-risk assets, primarily cash and U.S. Treasuries.
Tether’s most recent reserve disclosure shows roughly a quarter of USDT’s backing held in assets that fall outside that standard, including precious metals, lending positions, and Bitcoin. Tether’s chief executive said last year, shortly after the law’s signing, that the company would bring USDT into compliance with the foreign-issuer standards while also pursuing a separate U.S.-specific token. Tether did not respond to requests for an update on its compliance plans this month.
Tether launched USAT in January, a stablecoin built to U.S. standards and issued through banking partner Anchorage Digital. Usage of the token remains limited so far. Kevin Wysocki, head of policy at Anchorage Digital, said institutional demand is likely to shift toward compliant, bank-issued stablecoins well before the 2028 deadline. Wysocki said:
“Non-compliant stablecoins cannot be used by U.S. institutions when the safe harbor expires in 2028, but we don’t expect the market to wait.”
Regulators Have Not Finished Writing the Rules
The one-year mark was also supposed to bring finalized implementing rules from federal financial regulators. None have completed that work. Some rulemaking efforts are further along than others, and no formal regulations are yet in effect for issuers to follow.
That gap has left room for disagreement over how parts of the law apply, particularly to companies based outside the United States.
A Dispute Over the Foreign-Issuer Timeline
Lawyers who advise stablecoin issuers are split on when foreign companies like Tether must comply. Some read the law as giving foreign issuers until July 18, 2028, the same date as domestic issuers. Others argue foreign issuers face immediate obligations once the law takes effect, expected around January.
Justin Levine, a lawyer at Davis Polk who advises clients on stablecoin matters, said the immediate requirement applies narrowly.
“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.”
Levine added that one of the remaining requirements, registration with the Office of the Comptroller of the Currency, is likely to be a “significant undertaking.”
An analysis previously published by law firm Paul Hastings had described separate timelines for foreign and domestic issuers. That interpretation was removed from the firm’s website after inquiries about its current position, and the firm did not respond to requests for clarification.
A footnote in an OCC rulemaking proposal points to a two-track structure: a general 2028 deadline, paired with an immediate trigger for foreign issuers that fail to meet “certain requirements” once the law is effective. Those requirements appear tied to the freeze-and-seize obligations rather than the full compliance package, which also includes reserve rules, OCC registration, and a Treasury Department determination that an issuer’s home regulator is comparable to the U.S. regime.
Some Exchanges May Delist Noncompliant Tokens
Trevor Tanifum, a managing principal at FS Vector, said smaller platforms with limited risk appetite are likely to delist noncompliant stablecoins rather than navigate the uncertainty. Larger firms, he said, may take a different approach.
“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,” Tanifum said, describing the posture he expects from companies with larger legal budgets. “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 U.S. exchange, declined to discuss its stablecoin listing plans under the new law.
A Companion Bill Still in Limbo
Industry attention has increasingly shifted to the Digital Asset Market Clarity Act, a broader crypto market structure bill that has not yet passed Congress. The stablecoin and market structure bills were designed as complementary measures, but the Clarity Act remains unresolved as its 2026 legislative window narrows.
Its outcome could still reshape parts of the GENIUS framework, since the two bills were written to work together. For now, Tether, Circle, and other stablecoin issuers face federal rules that are enacted into law but not yet fully written into regulation, leaving the exact compliance path still in motion.
