Tether faces July 2028 deadline to comply with U.S. stablecoin rules
In brief
- GENIUS Act requires Tether to meet U.S. stablecoin standards by July 2028 or face delisting.
- Federal regulators missed the one-year deadline to finalize compliance rules.
- Up to 25% of USDT reserves held in precious metals and bitcoin may not meet GENIUS standards.
- Legal experts disagree on whether foreign issuers must comply immediately or have a grace period.
- Tether launched USAT this year as a U.S.-compliant alternative with limited adoption.
Tether's Compliance Challenge
Tether's CEO Paolo Ardoino stated last year that the stablecoin giant would achieve U.S. compliance for USDT. Yet the company hasn't yet revealed a sharp turn toward the demands of the GENIUS Act.
The core issue is straightforward. The GENIUS Act requires that issuers are fully reserved in the most highly liquid and reliable assets — essentially cash and U.S. Treasuries. Tether's most recent disclosures suggest as much as a quarter of USDT's reserves are held in assets that will not meet GENIUS Act standards, such as precious metals, lending, and bitcoin holdings.
This year, Tether rolled out USAT — launched with U.S. standards in mind and issued through U.S. banking partner Anchorage Digital. So far, it remains at a relatively low level of usage. The contrast with Tether's chief rival, U.S.-based Circle, is notable: Circle has made more of an apparent effort to pre-comply with what U.S. regulations will soon require.
The Legal Fog Around Compliance Timelines
Here's where it gets murky. There seems to be some disagreement over whether foreign issuers are meant to enjoy that same safe harbor as domestic stablecoin issuers. Some lawyers in finance assume that Tether gets until July 18, 2028, to comply. Others take a harder line.
"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," said Justin Levine, a lawyer at Davis Polk.
This split interpretation matters enormously for El Salvador-based Tether. If the stricter reading prevails, compliance deadlines tighten significantly.
Market Signals Ahead
Kevin Wysocki, head of policy at Anchorage Digital, believes institutional users will move toward compliant stablecoins well before any deadline arrives. That market pressure — not regulatory enforcement — may force Tether's hand sooner than the July 2028 deadline suggests. The issuer tied to President Donald Trump, World Liberty Financial — fighting it out for a very distant third place in stablecoin dominance, won't ease that pressure either.
