Tether faces a two-year clock on U.S. stablecoin rules
The GENIUS Act's first anniversary passed with roughly a quarter of USDT's reserves still in assets that won't meet the law's standards.
The GENIUS Act turned one year old on July 18, and the regulators who were supposed to finish writing its stablecoin rules by that date haven't. That leaves Tether, the issuer of the world's most-traded stablecoin, with two years left on a compliance clock it hasn't publicly started running.
What the reserves show
Tether's own recent disclosures put as much as a quarter of USDT's reserves in assets the GENIUS Act won't allow: precious metals, lending positions, and bitcoin holdings. The law requires issuers to be backed almost entirely by cash and U.S. Treasuries. CEO Paolo Ardoino told CoinDesk at the White House signing ceremony a year ago that "Tether will comply with the GENIUS Act," but the company hasn't detailed how it plans to close that reserve gap, and representatives didn't respond to CoinDesk's recent requests for an update, according to the CoinDesk report. Tether did launch USAT, a U.S.-focused token issued through Anchorage Digital, but usage remains low. Meanwhile rival Circle has moved further toward pre-compliance with the coming rules, and even the safe-harbor timeline for foreign issuers like Tether is disputed: some lawyers read the three-year grace period as running to July 2028, others argue foreign issuers must comply the moment the law takes effect, likely around January.
Why this is a real deadline, not a soft one
The read here is simple. GENIUS didn't just set standards, it set an expiration date for the status quo. Once the safe harbor lapses, U.S. platforms can't list stablecoins from issuers that haven't checked every box, including OCC registration, which Davis Polk's Justin Levine calls a "significant undertaking" on its own. Tether has spent a year signaling intent without showing the mechanics: no published reserve rebalancing plan, no timeline for shedding bitcoin and metals exposure, no clarity on whether USAT is meant to replace USDT's U.S. footprint or just supplement it. That ambiguity is a bigger risk than the deadline itself. Anchorage's Kevin Wysocki said institutions won't wait for 2028 to move toward compliant, bank-issued dollars, which means the market could start pricing Tether out of U.S. venues well before any regulator forces the issue. A quarter of reserves in non-conforming assets isn't a rounding error to fix in a quarter. It's a structural rework of how the company backs its coin, and two years is not a long runway for an entity that has resisted this kind of restructuring for most of its existence.
What would change the picture
Watch whether Tether publishes an actual reserve transition plan, specific asset classes, specific timelines, before the end of 2026. If that document doesn't appear, and if USAT volume stays flat while Circle's compliant stablecoin share grows, the two-year countdown becomes a one-way exit for USDT from regulated U.S. exchanges, regardless of which safe-harbor interpretation wins in court or in guidance.