GENIUS Act Enacted: 3-Year USDT Compliance Deadline
U.S. President Donald Trump signed the GENIUS Act into law on July 18, 2025, establishing new stablecoin regulation. Under the GENIUS Act, only permitted payment stablecoin providers may serve U.S. customers after a three-year transition, and all stablecoins must hold 100% reserve backing in cash or U.S. T-bills. Tether’s Q2 2025 report shows USDT is currently 81.49% backed by cash and T-bills, falling short of GENIUS Act requirements. CEO Paolo Ardoino confirmed plans to register USDT under GENIUS Act rules with U.S. regulators (SEC or CFTC), partnering with regulated institutions to ensure full fiat backing, capital requirements, reserve audits, and transparency. Nic Carter warns that USDT in its current form will lose domestic use after three years, prompting Tether to target emerging markets for existing USDT and develop a new compliant U.S. stablecoin. Federal regulators are expected to finalize detailed rules by mid-2026. Traders anticipate the USDT U.S. launch under the GENIUS Act will boost liquidity, intensify stablecoin competition with USDC, shift trading pairs, and enhance market trust, though the peg’s price impact on USDT itself is likely neutral.
Neutral
The GENIUS Act’s three-year compliance deadline for USDT and the requirement for 100% reserves introduce regulatory certainty that is likely to reinforce market trust and liquidity over the long term, but USDT’s peg to the dollar means its price impact remains minimal. In the short term, traders may see increased onshore liquidity and shifts in trading pairs, intensifying competition with USDC. Over the medium to long term, Tether’s compliance efforts and a new U.S. stablecoin could stabilize market sentiment and solidify USDT’s dominance, without causing significant price volatility for the token itself.