Tether faces 3-year deadline as GENIUS Act becomes U.S. law

Key Takeaways

Tether’s USDT is only 81.5% compliant with the GENIUS Act, per the Q2 reserves report. But Tether still has a 3-year window. The CEO recently stated that they’ll issue a new stablecoin focused on the U.S. market. 

U.S. President Donald Trump signed the stablecoin bill, the GENIUS Act, into law on the 18th of July. This marked a historic shift for regulated issuers of digital dollars on blockchain rails. 

Crypto and AI czar David Sacks hailed it as a way to ‘update archaic payment rails’ with ‘revolutionary’ stablecoin payment systems. He added, 

“For every digital dollar in a crypto wallet, there will be a traditional dollar reserved in a US bank account, creating trillions of dollars of demand for U.S. Treasuries.”

With clear rules, now the focus will shift to potential issuers, and the dominant player, El Salvador-based Tether (USDT), has hit headlines again. 

Tether’s 3-year window and U.S. plans

Commenting after the bill became law, Nic Carter, partner at crypto-focused VC Crystal Island Ventures, said, 

“Under GENIUS, Tether (in its current form), would be phased out from being used by domestic service providers within 3 years.”

Carter was referencing the GENIUS Act, section 3(b), which states, 

“Beginning 3 years after enactment, it shall be unlawful for a digital asset service provider to offer or sell a payment stablecoin to a person in the U.S., unless the stablecoin is issued by a permitted payment stablecoin issuer.”

Additionally, the law requires that the issuer hold 100% of the reserves in cash, cash equivalents, or U.S. short-term treasury bills (T-bills). 

Earlier in the year, J.P. Morgan reported that Tether’s reserve backing was only 84% compliant with the GENIUS Act at that time. This was based on its T-bills, cash, and cash equivalents. 

In response, Tether CEO, Paolo Ardoino, dismissed the report and stated that the firm was very liquid with over $1B in quarterly profits from T-bills interest alone. 

Now, in mid-2025, the firm was still short of the 100% reserve compliance.

The Q2 2025 reserves report showed that Tether’s cash and T-bills exposure accounted for 81.49% and the rest was in Bitcoin [BTC], precious metals, and loans. 

That said, last month, Ardoino stated that USDT will be focused on emerging markets, but Tether will explore a new stablecoin for the U.S. market with a yield-sharing feature like other issuers. 

Meanwhile, federal agencies like the Federal Reserve and the Treasury Department are expected to issue regulations implementing the Act within six months, per Pillsbury Law. 

“Those regulations will likely be finalized and become operational by early to mid‑2026, as specified in the promulgated regulations.”