Tether, the issuer behind the $187 billion USDT stablecoin, might be banned from US exchanges by mid-2028 if it fails to meet new regulations under the GENIUS Act. The law sets strict rules for stablecoins to operate in the United States, including asset backing and transparency requirements.

The GENIUS Act, signed into law on July 18, 2025, demands that any stablecoin serving US users must have one-to-one reserves in US dollars or equivalent liquid assets. Issuers must disclose these reserves monthly and comply fully with the Bank Secrecy Act, which covers anti-money laundering and know-your-customer rules.

A transition period lasts until 2028; after that, exchanges will be required to drop stablecoins lacking compliance. Detailed rules on how to follow the Bank Secrecy Act are expected in early 2027, following proposals by Treasury, FinCEN, and OFAC.

Tether's Compliant Stablecoin Strategy

To meet the new standards, Tether introduced USA₮ in January 2026, a stablecoin issued via Anchorage Digital Bank, a federally licensed crypto bank. USA₮ targets the US market and aligns with the GENIUS Act's requirements, while USDT continues serving global users outside the United States.

For USDT to remain accessible in the US, Treasury approval via a reciprocity determination is needed to classify it as a compliant foreign issuer. This determination remains unresolved as of mid-2026, leaving USDT's future on American exchanges uncertain.

Regulatory Impact on the Market

Complying with monthly reserve disclosures and Bank Secrecy Act provisions puts financial and operational pressure on smaller stablecoin issuers, potentially consolidating the US stablecoin space among a few well-resourced companies.

Circle's USDC stablecoin, known for regulatory readiness, benefits from the GENIUS Act, reinforcing its position against USDT. Tether now faces the challenge of managing a dual-token system, which may increase complexity and operational overhead.

If the US Treasury does not grant reciprocity to USDT or imposes conditions Tether cannot satisfy, the firm will be forced to maintain two separate stablecoins: USA₮ for the US and USDT for the international market, permanently segmenting its business.

This article is for informational purposes and does not constitute financial advice.