The GENIUS Act — the Guiding and Establishing National Innovation for U.S. Stablecoins Act — became law on July 18, 2025. Almost a year later, the implementing rules are still being drafted by the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC) and the Financial Crimes Enforcement Network (FinCEN). The formal comment period closed on May 1, 2026, with 47 organizations filing — among them Visa, JPMorgan, Coinbase, and three European central banks acting as informal observers. Final rules are widely expected by mid-2026.

In the meantime, the market is already pricing the outcome. USDC supply has expanded. USDT supply has contracted on US-facing venues. Tether has launched a parallel US-compliant token, USAT (USA₮), through a federally chartered bank. The competitive picture among on-chain dollars looks meaningfully different than it did six months ago.

What the GENIUS Act actually requires

The core provisions are straightforward and explain most of what is now happening in the market.

Every payment stablecoin must be backed 1:1 by high-quality liquid assets — US Treasuries or cash equivalents. Fractional reserve models are prohibited. Only federally or state-approved entities can issue payment stablecoins, which means a credible US issuer needs either a federal charter, an OCC trust license, or a qualifying state framework. Reserves must be audited and reported on a defined cadence, and consumer protections require segregation of customer assets and clear redemption rights.

The law also gives federal regulators authority to limit foreign-issued stablecoins that do not meet equivalent standards. That is the lever that has reshaped the US-facing market most visibly.

USDC: positioned for the new regime

Circle was building toward this rulebook for years, and the market has rewarded the positioning. Circle's USDC added about $2 billion in Q1 2026 and now sits at roughly $78 billion in supply. According to recent on-chain measurement, USDC accounts for close to 80% of stablecoin transaction volume on US-facing venues and roughly 85% of bot-driven activity, with institutional desks gravitating to the asset they expect to remain compliant under the final rules.

Circle's structure already aligns well with the GENIUS Act framework: reserves are held overwhelmingly in short-dated US Treasuries through BlackRock-managed funds, attestations are published monthly, and the company holds a New York DFS BitLicense alongside multiple state money-transmitter licenses. None of that is sufficient by itself — the final OCC rule will still require formal approval — but Circle is starting from a position close to the finish line.

USDT: still the global liquidity king, but losing US share

Tether's USDT remains the dominant stablecoin globally by liquidity, transaction volume on non-US venues, and integration depth across centralized exchanges. The US-facing picture is different. USDT supply contracted by roughly $3 billion in Q1 2026, the first quarterly decline since 2022, as exchanges serving US customers moved liquidity toward USDC and, increasingly, USAT.

Tether's response has been to bifurcate the product. USDT continues to serve global liquidity and offshore markets. USAT — Tether's new US-compliant token — is the entry point for capital that needs to be sure it can survive the GENIUS Act's final rule.

USAT: Tether's US-regulated answer

USA₮ (commonly written USAT) launched on January 27, 2026. It is dollar-backed, issued by Anchorage Digital Bank N.A. — an OCC-regulated, federally chartered digital asset bank — and supported by Tether. The structure is designed specifically to satisfy GENIUS Act expectations around issuer status, reserve composition, and supervisory access. Tether has been explicit that USDT and USAT are intended to coexist: USDT for global liquidity, USAT for US-regulated capital and onshore venues.

The strategic logic is simple. The US market is the most important compliant market for stablecoins, and a federally chartered bank is the clearest issuer category under GENIUS Act expectations. By issuing USAT through Anchorage, Tether secures a regulatory pathway without having to convert USDT itself, which would have been disruptive to its global user base.

What is still being worked out

The rules that will determine winners and losers over the next 12 months are sitting inside the OCC's drafting process. Several points are unresolved.

First, the exact perimeter of "payment stablecoin" — whether yield-bearing tokenized money market products fall inside or outside the GENIUS Act remains contested in the public comment record. Second, the supervisory standards for non-bank issuers, which will determine how heavy the compliance load is for Circle and similar state-chartered entities. Third, the treatment of foreign-issued stablecoins on US venues, which directly affects how much USDT volume can remain on US exchanges. Fourth, the role of stablecoin reserves in the broader US Treasury market — both the SEC and the Treasury have flagged this as an area of focus given the size of issuer Treasury holdings.

SEC Chair Paul Atkins has separately pledged to introduce an "innovation exemption" that would allow crypto startups to test new products under lighter requirements while meeting baseline consumer protection standards. How that exemption interacts with GENIUS Act compliance for stablecoin issuers is the kind of detail that will shape the actual market structure.

What investors and operators should watch

A short watchlist for the next six weeks: any OCC term sheet or final rulemaking notice; FDIC guidance on banks accepting stablecoin reserves; Circle's IPO-related disclosures, which would force more granular reporting; Tether's USAT issuance growth as a proxy for US-regulated capital absorption; and exchange-by-exchange disclosures about which stablecoins are being delisted or migrated.

The shape of the final rules will set a baseline that lasts well beyond 2026. Stablecoin issuers that survive the rulemaking with their core model intact will become permanent infrastructure for on-chain dollars. The ones that do not will either retreat offshore or transform into something the law allows.

FAQ

Q: What is the GENIUS Act in one sentence? A: It is the first comprehensive US federal law governing payment stablecoins, requiring 1:1 high-quality reserves, regulated issuers, and standardized consumer protections.

Q: When will the GENIUS Act rules be finalized? A: Industry expectation is mid-2026, with the OCC, FDIC and FinCEN finalizing implementing rules after reviewing the comments submitted by May 1, 2026.

Q: Is USDT going to be banned in the US? A: There is no public indication of an outright ban, but USDT does not yet satisfy GENIUS Act expectations on issuer status. Tether's USAT is the company's regulated alternative for US users.

Q: Is USAT the same as USDT? A: No. USAT is a separate US-regulated token issued by Anchorage Digital Bank with Tether support. USDT remains the global product. Both are dollar-pegged but live under different regulatory regimes.

Q: Does the GENIUS Act apply to algorithmic stablecoins? A: The law focuses on payment stablecoins backed by high-quality liquid assets. Purely algorithmic, undercollateralized designs are effectively excluded from the compliant US market.

Q: How does this affect ordinary stablecoin users? A: Day-to-day usage of USDC and the new USAT is unchanged. Holders of USDT on US exchanges should expect ongoing migration of liquidity toward compliant tokens.

Sources & further reading

  • Brookings — Stablecoins: issues for regulators as they implement GENIUS Act: https://www.brookings.edu/articles/stablecoins-issues-for-regulators-as-they-implement-genius-act/
  • SSGA — GENIUS Act explained, what it means for crypto and digital assets: https://www.ssga.com/us/en/intermediary/insights/genius-act-explained-what-it-means-for-crypto-and-digital-assets
  • CCN — Why USA₮ and USDC are GENIUS Act-compliant and USDT isn't: https://www.ccn.com/education/crypto/why-usat-and-usdc-are-genius-act-compliant-and-usdt-isnt/
  • SEC.gov — Application of federal securities laws to crypto assets, 2026 press release: https://www.sec.gov/newsroom/press-releases/2026-30-sec-clarifies-application-federal-securities-laws-crypto-assets

*Investment disclaimer: This article is for informational and educational purposes only and does not constitute financial, investment, tax, or legal advice. Cryptocurrency markets are volatile and you can lose all of your capital. Do your own research and consult a qualified professional before making any investment decision.*