Points of Focus

• Non-compliant stablecoins will lose US exchange eligibility by July 18, 2028, with USDT’s Bitcoin and gold reserves excluded.
• Tether launched USAT through Anchorage in January 2026, keeping global USDT outside the US compliance framework.
• Lawyers remain split on whether the foreign issuer deadline is January 2027 or July 2028.

The GENIUS Act was signed on July 18, 2025, with full compliance required by July 18, 2028. Its implementation framework took effect on July 18, 2026, starting a two-year compliance window. The law requires stablecoin reserves to consist mainly of cash and short-term Treasurys.

Tether’s reported $27 billion in Bitcoin (BTC) and gold falls outside those permitted reserve categories, raising questions over whether Tether’s USDt (USDT) can meet the law’s requirements without restructuring its reserves.

What USDT actually faces and what the law requires

The GENIUS Act’s framework requires highly liquid government-asset reserves, monthly independent audits, Anti-Money Laundering (AML) programs, and a ban on paying holders interest.

For a domestic issuer, the path is straightforward: apply for permitted entity status, restructure reserves, and submit to monthly audits. For a foreign issuer such as Tether, which is headquartered in the British Virgin Islands and issues USDT through its El Salvador entity, the path runs through a separate foreign-issuer route that requires a reciprocity determination from the US Treasury. As of mid-2026, that determination remains pending.

The reserve restructuring required would be the more fundamental challenge even if the legal route were clear. USDT’s non-Treasury reserve holdings represent a meaningful share of Tether’s balance sheet and generate a significant portion of the yield that funds its operations.

JUST IN: 🇺🇸 GENIUS ACT PUTS $USDT RESERVES ON THE CLOCK

July 2028 requires stablecoin reserves to be held only in cash and Treasuries, while Tether still lists 25% in precious metals, lending, and $BTC.

The world’s largest stablecoin now has two years to comply or risk losing… pic.twitter.com/i2eFwhSgVI

— CryptosRus (@CryptosR_Us) July 19, 2026

Converting those holdings into short-term Treasurys would align USDT with the GENIUS Act’s reserve requirements but would also reduce Tether’s investment income and remove the Bitcoin and gold positions that management has publicly described as strategic diversification choices rather than operational necessities.

USDT stays global; USAT goes domestic

On Jan. 27, 2026, Tether launched USAT, a GENIUS Act-compliant stablecoin issued through Anchorage Digital Bank. The strategy keeps USDT focused on global markets while USAT serves US users.

If USDT is not approved under the GENIUS Act by mid-2028, US exchanges will likely delist it, while USAT preserves Tether’s access to the domestic market. The approach allows Tether to maintain USDT’s existing reserve structure and global business model without overhauling it to meet US regulatory requirements.

The legal ambiguity that changes everything

The market still lacks clarity on the compliance timeline for foreign issuers because the GENIUS Act contains multiple provisions that take effect on different dates. While the primary compliance deadline is July 18, 2028, certain registration, oversight, and enforcement requirements could begin as early as January 2027, when the act’s core provisions become effective.

However, the legal ambiguity creates a two-tier market dynamic. Smaller platforms with lower risk appetites are expected to delist certain stablecoins early rather than maintain legal uncertainty, while larger venues with robust legal departments may be willing to hold non-US issuers available until regulators force a decision.

Kevin Wysocki, head of policy at Anchorage Digital, said noncompliant stablecoins cannot be used by US institutions once the safe harbor expires in 2028, but he added that the market may not wait until that deadline, with institutional users likely to move toward compliant bank-issued digital dollars well ahead of the cutoff.

USDC’s structural advantage and Circle’s moment

Circle is the biggest structural winner of the GENIUS Act. USDC (USDC) already complies with reserve requirements by holding cash and short-term Treasurys, giving Circle a regulatory advantage that smaller issuers and USDT cannot easily match.

Despite its smaller market cap, USDC processed $1.21 trillion in June 2026, more than double USDT’s $576 billion. If USDT loses eligibility on major US exchanges after the 2028 deadline, USDC could further strengthen its lead without changing its business model. Tether, meanwhile, continues positioning USAT, rather than USDT, as its US-compliant stablecoin.