Key Takeaways:
The GENIUS Act's first anniversary on Saturday marked the start of a two-year countdown for Tether's USDT, the world's largest stablecoin by volume, to comply with U.S. standards or face delisting from American crypto platforms.
"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," Kevin Wysocki, head of policy at Anchorage Digital, the crypto bank that manages multiple stablecoins, said. He said the firm expects institutional users to shift toward "compliant, bank-issued digital dollars well ahead of that deadline."
The law, signed by President Donald Trump on July 18, 2025, gave stablecoin issuers a three-year transition period ending in July 2028. But the one-year mark was also supposed to see federal financial regulators finalize implementing rules — a deadline none met. Six regulators have issued 10 rulemaking proposals related to the law, but none have been completed, according to policy firm Paradigm. Federal Reserve Chair Kevin Warsh told a recent congressional hearing that final rules "could be issued soon."
The stakes are highest for Tether, whose USDT commands the largest share of the $300 billion-plus stablecoin market — up from $250 billion when the GENIUS Act passed. Tether's most recent disclosures show as much as a quarter of USDT's reserves remain in assets that fail the law's requirements, including precious metals, lending and bitcoin holdings. The GENIUS Act mandates that issuers back their coins fully with the most liquid assets: cash and U.S. Treasuries.
Lawyers disagree on whether foreign issuers like Tether, which is based in El Salvador, benefit from the same three-year grace period as domestic firms. Justin Levine, a lawyer at Davis Polk who advises clients on stablecoin issues, said foreign issuers must immediately comply with lawful orders to seize and freeze coins held by illicit actors once the law takes effect in January. But they get roughly two more years to meet additional requirements — including registration with the Office of the Comptroller of the Currency — before their coins face delisting.
"Upon the effectiveness of the GENIUS Act, foreign issuers will need to immediately comply with lawful orders to seize and freeze coins," Levine said, adding that OCC registration "is likely to require a significant undertaking."
The OCC itself signaled a two-track timeline in a footnote within a proposal published this year, stating that the 2028 drop-dead date applies generally but may trigger earlier for foreign issuers that fail to meet "certain requirements" — likely referring to the seizure-and-freeze obligations.
Tether CEO Paolo Ardoino told CoinDesk at the White House signing ceremony last year that the company would comply with the GENIUS Act and pursue a U.S.-specific token. In January, Tether launched USAT through Anchorage Digital, a federally regulated stablecoin that remains at relatively low usage. The company did not respond to multiple requests for an update on its compliance stance.
Trevor Tanifum, managing principal at consulting firm FS Vector, said smaller platforms with low risk appetites will likely delist non-compliant stablecoins preemptively. But larger exchanges with robust legal departments 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 likely stance of major platforms. "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 GENIUS Act.
The industry's policy focus has now shifted to the Digital Asset Market Clarity Act, a companion bill that would create wider rules for digital asset markets. Its path through Congress remains uncertain in the final weeks of the 2026 legislative session. If passed, it could include provisions that overhaul parts of the GENIUS Act's language.
Either way, Tether, Circle and the rest of the stablecoin sector are on track to face federal regulation in the coming months. How those rules are navigated may determine which firms lead the next phase of the market.
This article is for informational purposes only and does not constitute investment advice.
