The GENIUS Act was signed into law by US President Donald Trump on July 18, marking an important step in regulating stablecoins and imposing strict regulations on issuers in the United States.
The GENIUS Act requires stablecoins to hold 100% reserves in cash or US Treasury bills, while committing to a 3-year transition phase for existing stablecoins like Tether's USDT, paving the way for a more stable and transparent cryptocurrency market.
MAIN CONTENT
The GENIUS Act requires stablecoin issuers to comply with 100% reserves in cash or US Treasury bills.
Tether has 3 years to adjust or replace USDT to comply with the law in the US market.
Tether plans to develop a new stablecoin specifically for the US market with yield-sharing features.
What is the GENIUS Act and how does it affect stablecoins?
The GENIUS Act is a cryptocurrency stability law enacted by President Donald Trump on July 18, 2025, aimed at shaping the legal framework for stablecoins in the US, especially regarding reserve assurance and transparency of supporting assets. This is seen as an important step in updating the traditional payment system with new technology.
David Sacks, a cryptocurrency and AI expert, stated that this law opens a stable era for digital payments using stablecoins, creating enormous demand for US Treasury bills and establishing a "direct link between traditional USD and cryptocurrency."
"Each digital USD in a cryptocurrency wallet will be backed by a traditional USD held in a US bank, creating a demand for trillions of USD for US Government bonds."
David Sacks, Cryptocurrency & AI Investor, July 2025
How long is Tether allowed to maintain USDT in the US under the GENIUS Act?
The GENIUS Act requires stablecoin issuers to fully support 100% reserves in cash or US Treasury bills and prohibits the circulation of stablecoins that do not meet this standard within three years after the law takes effect.
Nic Carter, a partner at Crystal Island Ventures, asserted that Tether has a 3-year transition period to adapt or remove USDT from domestic services if it does not meet the new standards.
"After 3 years, Tether in its current form will not be allowed to provide stablecoins in the US if it does not comply with the licensed stablecoin regulations in the law."
Nic Carter, Partner at Crystal Island Ventures, July 2025
What is the current status of Tether's reserves?
According to Tether's Q2 2025 report, the total reserve assets of USDT only meet 81.5% of the required cash and Treasury bill reserves under the GENIUS Act. The remainder is held in Bitcoin, precious metals, and loans.
Previously, J.P. Morgan also assessed that USDT's reserve level only met 84% of the standard. Tether's CEO Paolo Ardoino stated that the company maintains very high liquidity with quarterly profits exceeding $1 billion from Treasury bill interest, but still does not meet the 100% requirement under the law.
Tether and the plan to develop a stablecoin specifically for the US market
Paolo Ardoino recently revealed that USDT will focus on emerging markets, while Tether will develop a new stablecoin specifically for the US, featuring yield-sharing similar to other issuers, in order to meet the reserve requirements of the GENIUS Act.
The detailed regulations of the act are expected to be issued by the Federal Reserve and the Department of Treasury within the next 6 months, effective from early to mid-2026, helping to complete the legal framework for stablecoins in the US.
"The regulations for implementing the GENIUS Act will be issued and take effect from early to mid-2026."
Information from Pillsbury Law, July 2025
The reserve requirements for stablecoins under the GENIUS Act
Criteria Requirements under the GENIUS Act Current Status of USDT Cash/T-bill Reserves 100% of total stablecoin value 81.49% Reserves in other assets (Bitcoin, precious metals) Not accepted 18.51% Compliance time frame 3 years from the law's effective date In the transition phase
Frequently Asked Questions about the GENIUS Act and Tether
What impact does the GENIUS Act have on the stablecoin market?
The law creates a clear legal framework to stabilize the stablecoin market, while requiring issuers to maintain 100% reserves in cash or US Treasury bills, enhancing transparency and protecting users.
What plans does Tether have to comply with the GENIUS Act?
Tether has 3 years to adjust and develop a new stablecoin specifically for the US market with yield-sharing features to comply with the law and maintain its market position.
What impact does the cash reserve portion have on USDT?
The portion of reserves in Bitcoin and precious metals is currently not accepted by the law, creating a legal barrier that prevents USDT from fully complying with the GENIUS Act and requiring adjustments in the future.
When does the GENIUS Act take effect?
The law will take effect from July 18, 2025, but detailed regulations will be issued and finalized from early to mid-2026, with a 3-year transition period for current issuers.
Which regulatory bodies will oversee the implementation of the GENIUS Act?
The Federal Reserve and the Department of Treasury will be responsible for building and enforcing regulations to manage stablecoins under the GENIUS Act.
Source: https://tintucbitcoin.com/tether-doi-mat-han-chot-genius-act/
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