- One year after the GENIUS Act, stablecoin competition is shifting from compliance to liquidity.
- Institutions may migrate toward regulated stablecoins well before 2028, reshaping U.S. crypto markets.
- USDT may stay dominant offshore as regulated U.S. dollar stablecoins expand with financial institutions.
A year after the U.S. GENIUS Act became law, the biggest question isn’t whether Tether’s USDT will comply with the rules. It’s whether the law will create two separate stablecoin markets.
Tether has until July 2028 to meet most of the law’s requirements. But many in the industry believe banks and large investors won’t wait that long. They are expected to move toward fully regulated stablecoins well before the deadline, changing where liquidity flows.
Regulated Stablecoins Could Attract Institutions
The GENIUS Act requires approved stablecoins to be backed mainly by cash and short-term U.S. Treasuries, while also meeting strict registration and oversight rules.
Tether’s reserves still include assets like Bitcoin, precious metals, and loans, which may not meet those standards.
Meanwhile, Circle, the issuer of USDC, has been preparing for the new rules, putting it in a stronger position to attract banks, asset managers, and public companies.
Kevin Wysocki, head of policy at Anchorage Digital, believes institutions will switch to compliant stablecoins long before the 2028 deadline instead of waiting for the rules to take full effect.
USDT Could Stay Strong Globally
Even if U.S. institutions reduce their use of USDT, that doesn’t mean Tether will lose its global leadership.
USDT remains the most widely used stablecoin on international exchanges, in cross-border payments, decentralized finance (DeFi), and crypto derivatives. Most of its trading activity already happens outside the United States.
Instead of replacing USDT, the GENIUS Act could create two markets:
- Regulated stablecoins used by U.S. banks and financial institutions.
- Offshore stablecoins, led by USDT, serving the global crypto market.
Tether has also introduced a new U.S.-focused stablecoin, USAT, through Anchorage Digital, but it has not yet seen significant adoption.
Exchanges Will Play a Key Role
How U.S. crypto exchanges respond could shape the market. Legal experts say foreign stablecoin issuers will likely have about two years to meet the new requirements to stay listed on U.S. exchanges.
Some smaller exchanges may remove non-compliant stablecoins early to reduce legal risk, while larger exchanges could continue offering them until regulators provide clearer guidance because USDT generates significant trading volume.
Coinbase has not said how it plans to handle stablecoin listings under the new law.
Liquidity May Matter More Than the Deadline
Tether CEO Paolo Ardoino has said the company plans to make USDT compliant with the GENIUS Act while also developing a separate U.S. stablecoin. However, Tether has not shared an updated compliance plan.
With regulators still writing the final rules, much remains uncertain. But many believe the real shift will happen before 2028 as institutional investors move toward regulated stablecoins.
If that happens, the stablecoin market may split into two ecosystems: one built around regulated U.S. dollar tokens and another centered on offshore crypto liquidity. In that scenario, USDT may remain dominant, but mainly outside the U.S.
Related: Fidelity Launches Stablecoin Reserve Fund Under GENIUS Act
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