Tether has faced renewed scrutiny over whether USDT can remain available on U.S. crypto platforms unless the stablecoin issuer meets the requirements of the GENIUS Act before its compliance window closes.
Summary
- Tether could face restrictions on USDT in the United States if it does not meet GENIUS Act requirements before the 2028 compliance deadline.
- Legal experts say foreign stablecoin issuers still have time to comply, though some obligations may begin once the law takes effect.
- Tether has continued expanding USAT, enterprise payments and Latin American investments while U.S. stablecoin rules are still being finalized.
According to a CoinDesk report, the first anniversary of the GENIUS Act has brought renewed attention to Tether’s regulatory path as the company remains the largest stablecoin issuer by market value while U.S. regulators continue working on rules needed to fully implement the law.
President Donald Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act into law one year ago. Although the legislation introduced a three-year transition period for compliance, questions remain over how some of its deadlines apply to foreign-issued stablecoins such as Tether’s USDT.
While U.S.-based Circle has moved to align itself with the incoming framework, Tether has not publicly detailed how it intends to bring USDT into full compliance. The report also noted that Tether did not respond to multiple requests for an updated position before publication.
Last July, Tether chief executive Paolo Ardoino said the company intended to comply with the GENIUS Act. Speaking to CoinDesk after the bill was signed at the White House, Ardoino said, “Tether will comply with the GENIUS Act,” adding that the company planned to launch a separate U.S.-focused token while also ensuring USDT satisfied the law’s foreign issuer requirements.
Questions remain over compliance timeline
Even with two years remaining before the law’s general transition period expires in July 2028, lawyers continue to debate whether foreign issuers receive the same grace period as domestic companies.
Justin Levine, a lawyer at Davis Polk who advises clients on stablecoin regulation, told CoinDesk that foreign issuers will need to comply immediately with provisions allowing authorities to freeze and seize assets linked to illicit activity once the law becomes effective, which is expected around January. However, he said additional requirements tied to continued U.S. exchange listings would likely 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.
He added that one of those future obligations, registration with the Office of the Comptroller of the Currency, would likely require a “significant undertaking.”
“So they do have time, as long as they comply with seize and freeze orders,” Levine said.
“But those that want to have their coins continue to be traded on U.S. centralized platforms and have that liquidity should still be thinking about it right now, even if it’s not imminent that they’re going to get delisted.”
CoinDesk also reported that an earlier legal interpretation published by law firm Paul Hastings had suggested foreign issuers could face a different compliance timeline. After the publication sought clarification, the report said the interpretation was removed from the firm’s website, while representatives did not immediately respond to requests for comment.
Further guidance from the Office of the Comptroller of the Currency has also left room for interpretation. CoinDesk said an OCC proposal includes a footnote indicating that 2028 remains the general compliance deadline but notes that certain requirements for foreign issuers begin once the law takes effect. These early obligations appear to center on cooperation with law enforcement requests involving asset freezes and seizures, while broader requirements would follow later.
Beyond these initial measures, foreign issuers are expected to satisfy additional conditions, including OCC registration, maintaining reserves at U.S. financial institutions, and operating under home-country supervision that the U.S. Treasury determines is comparable with the American regulatory framework.
Reserve structure draws attention
CoinDesk also pointed to Tether’s latest reserve disclosures, saying approximately one-quarter of USDT’s backing remained invested in assets that would not qualify under the GENIUS Act’s reserve standards. According to the report, those assets include bitcoin holdings, precious metals, and lending exposure.
The legislation instead requires qualifying stablecoins to be backed by highly liquid assets such as cash and short-term U.S. Treasury securities.
Although regulatory questions continue, Tether has already introduced USAT, a U.S.-focused stablecoin issued through banking partner Anchorage Digital with American compliance standards in mind. Adoption of the token has remained relatively limited compared with USDT.
Kevin Wysocki, head of policy at Anchorage Digital, told CoinDesk the company expects institutional adoption to move ahead of the legal deadline.
“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,” Wysocki said. He added that Anchorage expects institutions to migrate toward “compliant, bank-issued digital dollars well ahead of that deadline.”
Expansion continues as regulation develops
Even as compliance discussions continue in the United States, Tether has expanded both its investment activity and enterprise payment strategy across several 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 more than $11 trillion annually. Tether said the partnership is intended to allow employers to settle wages using blockchain payment rails instead of relying solely on conventional banking systems.
Outside payroll, Tether has also increased its focus on corporate treasury operations. Hyundai Motor America and Hyundai Motor Mexico recently completed a pilot cross-border treasury payment using USDT over the Avalanche blockchain, settling a $20,000 transfer in about seven minutes through infrastructure provided by Axiym, while Hyundai Card managed the compliance and operational framework for the transaction.
Latin America has remained another priority. Over recent weeks, Tether has invested $20 million in Brazilian exchange Mercado Bitcoin and another $20 million in Argentine digital bank Ualá as part of its latest funding round. The company also previously led a $14 million investment in Argentine crypto platform Belo to expand crypto payment products and financial services across the region.
Meanwhile, Bolivia is evaluating a proposal that would recognize USDT alongside the boliviano and the U.S. dollar within parts of its payment system. Local reports have indicated that Banco Unión and Banco FIE already provide services connected to USDT, although authorities have yet to publish a final legal framework.
Despite those international expansion efforts, the regulatory picture inside the United States remains unfinished. Federal agencies have yet to finalize the implementing rules required under the GENIUS Act, leaving stablecoin issuers without a complete regulatory framework to follow even as the first compliance obligations approach.
Trevor Tanifum, managing principal at consulting firm FS Vector, was cited in the report saying that some trading platforms with lower risk tolerance could choose to delist non-compliant stablecoins early, while larger exchanges with stronger legal resources may continue supporting them until regulators provide definitive guidance.
“It’s pretty much what has happened, I think, at every major crypto hurdle,” Tanifum said. “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.”
At the same time, much of the crypto industry’s policy focus has shifted toward the proposed CLARITY Act, which lawmakers continue to debate in Congress. If enacted, the legislation could revise parts of the GENIUS framework, adding another layer of uncertainty as Tether, Circle and other stablecoin issuers prepare for federal oversight in the months ahead.
