In June 2025, the regulatory framework for stablecoins in the United States has entered a new phase with the passage of the GENIUS Act, marking the first establishment of a systematic federal regulatory framework in the U.S.

1. Strict Reserve Requirements

Stablecoins must be 100% backed by highly liquid assets (such as cash and short-term U.S. Treasury bonds), prohibiting rehypothecation or misappropriation of reserve assets to ensure a 1:1 redemption capability.

Reserve assets should primarily consist of short-term U.S. Treasury bonds, with the act requiring assets maturing within 93 days, aiming to consolidate the dollar's position and enhance the stability of stablecoins.

2. Tiered Regulatory Mechanism

Issuers of stablecoins with a market capitalization exceeding $10 billion (such as Tether's USDT and Circle's USDC) must accept direct federal regulation, while smaller issuers are regulated at the state level. Issuers are required to establish robust anti-money laundering and KYC mechanisms to ensure that stablecoins are not used for illegal activities.

3. Transparency and Compliance

Issuers are mandated to disclose the composition of reserve assets monthly and undergo third-party audits to enhance market trust. Interest-bearing stablecoins and algorithmic stablecoins are prohibited, restricting them from evolving into investment financial products, clarifying the positioning of stablecoins as "payment tools."

4. Strategic Objectives

The act aims to support dollar-backed stablecoins to reinforce the dollar's status as the global reserve currency, addressing competition from the digital yuan and the EU's MiCA regulations, while encouraging the use of stablecoins in digital payments and DeFi, and protecting user rights and market transparency.

Currently, the USDT, which holds the largest market share in stablecoins, faces two major challenges:

1. Transparency Issues: USDT has long faced skepticism due to insufficient reserve transparency. Although Tether regularly publishes reserve reports, its asset composition is complex (about 2/3 in short-term U.S. Treasury bonds, 15% in cash and cash equivalents, and 5% in precious metals and Bitcoin), with some assets difficult to verify.

2. Compliance Pressure: Tether, headquartered in El Salvador, may face challenges in applying for licenses in the U.S. and accepting federal regulation.

If it does not comply with the requirements of the GENIUS Act and promptly fulfill its obligations to the SEC to enhance reserve transparency and adjust the composition of reserves, USDT may become marginalized or face restrictions in the U.S. market.

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