The GENIUS Act and Its Impact on Tether
The first anniversary of the GENIUS Act has brought renewed scrutiny to Tether, the largest stablecoin issuer by market value, as questions mount over whether its USDT token can remain listed on U.S. crypto platforms. Signed into law by President Donald Trump one year ago, the legislation introduced a three-year transition period for compliance, expiring in July 2028. However, legal experts debate whether foreign issuers like Tether receive the same grace period as domestic firms.
In a CoinDesk report, Tether CEO Paolo Ardoino stated after the bill signing at the White House: “Tether will comply with the GENIUS Act.” He added that the company plans to launch a separate U.S.-focused token while ensuring USDT meets the law’s foreign issuer requirements. Despite these statements, Tether did not respond to multiple requests for an updated position before the article’s publication.
Compliance Timeline for Foreign Issuers
With two years remaining before the general transition period ends in July 2028, lawyers continue to analyze the timeline. Justin Levine, a lawyer at Davis Polk specializing in stablecoin regulation, told CoinDesk that foreign issuers will need to immediately comply with provisions allowing authorities to freeze and seize assets linked to illicit activity once the law becomes effective—expected around January. However, additional requirements for continued U.S. exchange listings will have a longer implementation period.
“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 said. One such future obligation is registration with the Office of the Comptroller of the Currency (OCC), which Levine described as a “significant undertaking.”
Earlier legal interpretations from Paul Hastings suggested a different compliance timeline for foreign issuers, but that guidance was later removed from the firm’s website. Representatives did not respond to requests for clarification. Additional OCC proposals include a footnote indicating that 2028 remains the general deadline, but certain requirements for foreign issuers—such as cooperation with law enforcement on asset freezes and seizures—begin once the law takes effect. Broader requirements, including registration, maintaining reserves at U.S. financial institutions, and operating under home-country supervision deemed comparable by the U.S. Treasury, will follow later.
Legal Interpretations and Market Reactions
Trevor Tanifum, managing principal at FS Vector, noted that some trading platforms with lower risk tolerance may delist non-compliant stablecoins early, while larger exchanges with robust legal resources might wait for definitive regulatory guidance. “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,” Tanifum said. Meanwhile, the crypto industry’s policy focus has shifted toward the proposed CLARITY Act, which lawmakers have introduced to revise parts of the GENIUS framework, adding further uncertainty.
Reserve Structure and Compliance Hurdles
Tether’s reserve disclosures reveal significant challenges under the GENIUS Act’s reserve standards. According to the CoinDesk report, approximately one-quarter of USDT’s backing remains in assets that would not qualify under the new law, including bitcoin holdings, precious metals, and lending exposure. The GENIUS Act requires qualifying stablecoins to be backed by highly liquid assets such as cash and short-term U.S. Treasury securities.
To address this, Tether has introduced USAT, a U.S.-focused stablecoin issued through banking partner Anchorage Digital, designed with American compliance standards. However, adoption of USAT remains relatively limited compared to USDT. Kevin Wysocki, head of policy at Anchorage Digital, told CoinDesk: “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.” He expects institutions to migrate toward “compliant, bank-issued digital dollars well ahead of that deadline.”
Tether’s Global Expansion Strategy
As regulatory discussions continue in the U.S., Tether has expanded its investment and enterprise payment activities across multiple markets. Earlier this month, the company led a $7 million funding round for Pact Labs to integrate USAT into payroll infrastructure serving a U.S. payroll market processing over $11 trillion annually. The partnership aims to enable employers to settle wages using blockchain payment rails instead of conventional banking systems.
In corporate treasury operations, Hyundai Motor America and Hyundai Motor Mexico executed a cross-border treasury payment using USDT over the Avalanche blockchain, settling a $20,000 transfer in about seven minutes via infrastructure from Axiym. Hyundai Card managed the compliance and operational framework.
Latin American Investments and Adoption
Latin America remains a priority for Tether. Recent investments include $20 million in Argentine digital bank Ualá and a previous $14 million investment in Argentine crypto platform Belo to expand crypto payment products. Additionally, Bolivia is reportedly developing legislation that would recognize USDT alongside the boliviano and the U.S. dollar within parts of its payment system. Local reports indicate that Banco Unión and Banco FIE already offer USDT-related services, though a final legal framework has yet to be published.
Despite these global expansion efforts, the U.S. regulatory environment remains incomplete. Federal agencies have yet to finalize implementing rules for the GENIUS Act, leaving stablecoin issuers without a complete framework as the first compliance obligations approach. As of the article date (July 20, 2026), Bitcoin traded at $63,967, Ethereum at $1,857.96, and other major cryptocurrencies fluctuated similarly, reflecting ongoing market volatility amidst regulatory developments.
