The GENIUS Act Stablecoin Reshuffle: Who's In, Who's Out, and Why It Matters

Circle and Paxos are positioning. Tether is executing its two-token strategy. DAI remains in limbo. Three months after the GENIUS Act became law, the stablecoin reshuffle is underway.

On July 18, 2025, President Trump signed the GENIUS Act into law—creating the first comprehensive U.S. federal framework for payment stablecoins. The stablecoin market has responded: growing 67% from $180 billion in January to over $300 billion today. Circle filed for an OCC national trust bank charter in June. Tether announced USAT, a U.S.-compliant stablecoin launching in December via Anchorage Digital Bank. Anchorage is acquiring Mountain Protocol to bring Bermuda-regulated USDM under federal supervision.

For treasury managers, compliance officers, and DeFiFinancial systems built on blockchain that operate without intermediaries like banks protocols, the strategic landscape has shifted from "wait and see" to "execute or exit." The law establishes three licensing pathways—federal PPSI, state-qualified PSI, and foreign PSI—with U.S. Treasury Department determinations on "comparable regimes" still pending. Vendor selection decisions made today determine which stablecoins remain accessible as compliance windows close over the next 12-18 months.

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Reader Role	Relevant Sections
Legal & Compliance	Click to view sections → The Framework: Three Pathways to Compliance — Federal PPSI, State-Qualified PSI, Foreign PSI licensing pathways The Barriers: Implementation Challenges — Regulatory hurdles and compliance window timing What Professionals Should Do Now — Action items for compliance officers What We Don't Know Yet — Pending Treasury comparable regime determinations
Corporate Treasury & Finance	Click to view sections → Why This Matters Now — $300B market growth and institutional adoption trends Treasury Demand & Geopolitical Leverage — Stablecoin impact on U.S. Treasury market dynamics Implementation Challenges — Vendor selection and operational considerations What Professionals Should Do Now — Treasury management strategy and risk assessment
Banking & Risk Management	Click to view sections → The Framework — OCC trust bank charters and NYDFS supervision structure The Players: Positioning for Compliance — Circle, Paxos, Tether, Anchorage Digital strategies The Scenarios: What Could Happen — Risk scenarios and market consolidation outcomes International Models Comparison — Benchmarking against MiCA, Bermuda, Singapore frameworks
Family Offices & Allocators	Click to view sections → Why This Matters Now — Market growth trajectory and adoption acceleration The Stablecoin Landscape — Visual breakdown of competitive positioning What Could Happen — Potential market outcomes and concentration risks What Professionals Should Do Now — Asset allocation and due diligence considerations
Fintech & Infrastructure	Click to view sections → The Players — Who's winning the compliance race and why Stablecoin Landscape Breakdown — Market positioning and strategic differentiation Implementation Challenges — Technical and operational infrastructure requirements What Professionals Should Do Now — Infrastructure planning and partner selection
Policy & Regulatory Analysis	Click to view sections → The Framework — Legislative structure, bipartisan consensus, voting history Strategic Subtext — Policy implications for USD dominance and Treasury financing International Models — Cross-jurisdictional regulatory comparison and alignment What We Don't Know Yet — Outstanding regulatory questions and timeline uncertainties

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The Framework: Three Pathways to Compliance

The GENIUS Act, now Public Law No. 119-27, establishes a tiered licensing structure bringing stablecoins under federal oversight while preserving state regulatory authority where standards are "substantially similar" to federal requirements.

Federal PPSI (Payment Stablecoin Issuer) is the gold standard pathway. Issuers apply for a U.S. OCC (Office of the Comptroller of the Currency) national trust bank charter, meeting the same reserve requirements, auditing standards, and federal oversight that apply to traditional trust banks. This means 1:1 fiat backing with U.S. Treasuries or cash equivalents, regular federal examination, and compliance with anti-money laundering provisions. Circle's pursuit of an OCC trust bank charter, filed June 30, 2025, exemplifies this strategy. If granted, USDC ($74-76 billion in circulation, 24.5% market share) would operate under federal banking supervision—precisely what institutional treasurers require.

State-Qualified PSI provides an alternative for issuers already operating under U.S. state regimes deemed "substantially similar" to federal standards. The leading candidate: New York's Department of Financial Services (NYDFS), which has supervised BitLicense holders and trust companies since 2015. Paxos Trust Company, issuer of PYUSD ($1.35 billion) and USDP, already holds an NYDFS-chartered trust license. If NYDFS qualifies as "substantially similar," Paxos transitions seamlessly into the new framework. Gemini Trust Company (GUSD issuer, $50.4 million market cap) sits in the same position. The determination process for "substantially similar" status remains undefined—NYDFS qualification seems likely given its decade-long track record, but the timeline and formal criteria are still being developed by the U.S. Treasury and OCC.

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"British Virgin Islands, home to TetherThe largest stablecoin by market cap, pegged 1:1 to the US Dollar and issued by Tether Limited (USDT, $183 billion) and First Digital (FDUSD, $1.1 billion), faces greater scrutiny given historical opacity concerns."

Foreign PSI is the pathway for offshore issuers—if their home jurisdiction makes the U.S. Treasury Department's "comparable regime" list. Three months post-enactment, this list hasn't been published. That uncertainty creates strategic limbo. Bermuda, home to Mountain Protocol's USDM (supervised by the Bermuda Monetary Authority with a structured stablecoin framework), has a plausible case for comparability. British Virgin Islands, home to Tether (USDT, $183 billion) and First Digital (FDUSD, $1.1 billion), faces greater scrutiny given historical opacity concerns. Until Treasury publishes the list, offshore issuers are executing contingency plans—restructuring, partnering with U.S.-licensed entities, or launching compliant alternatives.

The Players: Positioning for Compliance

The stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold market has evolved dramatically since the law's passage. Total market capitalizationThe total value of a cryptocurrency, calculated as price multiplied by circulating supply reached $300-304 billion in October 2025—a 67% increase from January. TetherThe largest stablecoin by market cap, pegged 1:1 to the US Dollar and issued by Tether Limited's USDT commands 58% market share ($183.2 billion), Circle's USDCA fully-reserved stablecoin pegged 1:1 to the US Dollar, issued by Circle and backed by regulated financial institutions holds 24.5% ($74-76 billion), and everyone else splits the remaining 17%. But market share and regulatory compliance are diverging.

The Winners: Clear Compliance Pathways

Circle (USDC) is betting on federal licensing. As a U.S. entity with existing NYDFS supervision and money transmitter licenses across 46 states, Circle is pursuing the most direct path: an OCC national trust bank charter. Circle filed its application June 30, 2025, proposing to operate as First National Digital Currency Bank, N.A. (FNDCB). The OCC opened a 30-day public comment period, which closed July 30. If granted, USDC becomes the first major stablecoin operating under federal PPSI status—a compliance moat that institutional treasurers will recognize immediately. Circle's public statements emphasize alignment with GENIUS Act principles, and its compliance infrastructure already reflects federal banking standards.

Paxos (PYUSD, USDP) is positioned for state-qualified status. As an NYDFS-chartered trust company, Paxos operates under one of the strictest state regimes in the U.S. Both PayPal USD (PYUSD, launched August 2023, now $1.35 billion in circulation) and Pax Dollar (USDP) are supervised by NYDFS, with regular reporting, reserve audits, and consumer protection provisions. If NYDFS receives "substantially similar" certification—the likely outcome given NYDFS's role as the first state regulator to approve stablecoins in 2018—Paxos products transition without restructuring. This positions PYUSD particularly well for institutional adoption, given PayPal's existing enterprise relationships and Paxos's established regulatory credibility.

The Adapters: Contingency Strategies in Motion

Gemini (GUSD) shares Paxos's regulatory posture. As another NYDFS-chartered trust company since 2015, Gemini Dollar ($50.4 million) sits in the "waiting for state certification" category. The firm's compliance infrastructure meets current NYDFS standards, but with a significantly smaller market cap than PYUSD or USDC, GUSD faces questions about commercial viability even if regulatory pathways clear.

Mountain Protocol (USDM) operates under Bermuda Monetary Authority (BMA) supervision with a digital asset business license. USDM's path depends on the U.S. Treasury's "comparable regime" determination for Bermuda. But in May 2025, Anchorage Digital Bank (the only OCC-chartered national trust bank in crypto) announced its intent to acquire Mountain Protocol. If the acquisition clears regulatory review, USDM transitions to federal PPSI status through Anchorage's existing charter. This demonstrates one clear adaptation strategy for offshore issuers: merge with or get acquired by U.S. federally-licensed entities rather than waiting for comparable regime determinations.

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"Offshore financial centers like Bermuda and the British Virgin Islands are watching the Treasury's 'comparable regime' determination closely—designation could position these jurisdictions as regulatory gateways for stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold issuers seeking U.S. market access."

Tether (USDT → USAT) represents the most significant market repositioning. USDT, issued by Tether Limited (British Virgin Islands), dominates global stablecoin liquidity with $183.2 billion in circulation. Tether holds $135 billion in U.S. Treasury securities—making it the 17th largest holder of U.S. debt globally, larger than South Korea, Germany, or Saudi Arabia. Tether currently geo-restricts U.S. retail access on its platform, acknowledging regulatory complexity.

But in September 2025, TetherThe largest stablecoin by market cap, pegged 1:1 to the US Dollar and issued by Tether Limited announced USAT—a U.S.-compliant stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold launching in December 2025 via Anchorage Digital Bank's OCC trust charter. Tether America, a joint venture between Tether and Anchorage, will issue USAT, with former White House crypto advisor Bo Hines as CEO. This creates a two-tokenA digital asset built on an existing blockchain, often representing utility or value strategy: legacy USDT for offshore markets, compliant USAT for U.S. institutions. Whether DeFiFinancial systems built on blockchain that operate without intermediaries like banks protocols and exchanges treat USAT as fungible with USDT for liquidityThe ease with which an asset can be bought or sold without affecting its price purposes will determine whether Tether maintains its market dominance or fragments its liquidity baseCoinbase's Ethereum Layer 2 network using Optimism's OP Stack, designed for low-cost, high-speed transactions with Coinbase ecosystem integration.

The Outsiders: Structural Mismatches

First Digital (FDUSD) migrated its issuance from Hong Kong to a BVI entity in 2024. With $1.1 billion in circulation, FDUSD's U.S. access depends entirely on Treasury designating BVI as a "comparable regime." Given BVI's historical association with corporate opacity and the jurisdiction's lack of published stablecoin-specific regulation, that designation is uncertain. If BVI doesn't make the list, FDUSD faces restructuring (moving issuance to a compliant jurisdiction), partnering with a U.S. entity, or accepting restricted access to U.S. markets.

MakerDAO (DAI) presents a different challenge: structural incompatibility. The GENIUS Act targets "payment stablecoins" with centralized issuers and fiat redemption obligations. DAI ($5.0-5.4 billion) is algorithmically managed, collateralized by a basket of crypto assets and real-world assets, and governed by MakerDAO token holders—not a single issuer with redemption obligations. While DAI maintains a dollar peg, its decentralized structure doesn't fit the GENIUS Act's issuer-focused framework. This doesn't prohibit DAI's operation, but it places the token outside the Act's regulatory perimeter, creating uncertainty for DeFi protocols integrated with DAI as core liquidity. Could MakerDAO restructure to appoint a compliant issuer entity? Would the Act's definition of "payment stablecoin" expand in future guidance? Or does DAI operate permanently in a separate category? Three months post-enactment, these questions remain unanswered.

BUSD (Binance USD) is in wind-down. NYDFS halted new BUSD issuance in February 2023 following regulatory concerns over Paxos's relationship with Binance. Existing tokens remain redeemable, but BUSD is effectively legacy infrastructure.

The Stablecoin Landscape: A Visual Breakdown

Why This Matters Now: Institutional Adoption Accelerating

Three months post-enactment, institutional adoption is accelerating. PayPal's PYUSDA stablecoin issued by PayPal and Paxos, pegged 1:1 to the US Dollar and designed for payments and transfers crossed $1.35 billion in circulation. BlackRock's BUIDL fund (tokenized treasury fund using USDCA fully-reserved stablecoin pegged 1:1 to the US Dollar, issued by Circle and backed by regulated financial institutions) reached $2.49-2.9 billion AUM, gaining $600 million in just two weeks in late September. Visa and Mastercard continue expanding stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold settlement pilots. The infrastructure is being built for a regulatory-compliant stablecoin ecosystem.

But the GENIUS Act also addresses a decade-old regulatory gap. Since BitcoinThe first decentralized cryptocurrency, created in 2009 by Satoshi Nakamoto's launch in 2009, stablecoins evolved from niche crypto infrastructure to systemically important payment railsInfrastructure and networks that enable money transfer between parties handling billions in daily volume. In the U.S., oversight remained fragmented: 50+ different state money transmitter licenses, occasional SEC enforcement actions, and no federal framework. TerraUSD's $40 billion collapse in May 2022—which triggered $400 billion in broader crypto market losses—made regulatory clarity urgent. The U.S. Congress debated for three years. On June 17, 2025, the U.S. Senate passed the GENIUS Act 68-30. On July 17, the U.S. House passed it 308-122. President Trump signed it into law July 18.

The Act's passage reflects converging forces. First, institutional demand required regulatory certainty. Second, bipartisan U.S. Congressional momentum: stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold regulation is one of few crypto policy areas with cross-party support, given the U.S. dollar's role in global finance. Third, competitive dynamics: the EU's MiCAAn EU regulatory framework standardizing crypto rules for issuers and service providers (Markets in Crypto-Assets) regulation took effect June 30, 2024, with full application by December 30, 2024. U.S. policymakers didn't want to cede stablecoin innovation to European or offshore jurisdictions.

But the Act also creates friction. Offshore issuers dominate current liquidityThe ease with which an asset can be bought or sold without affecting its price. TetherThe largest stablecoin by market cap, pegged 1:1 to the US Dollar and issued by Tether Limited's USDT provides the primary trading pair for most crypto exchanges globally—accounting for over 82% of DEXA platform where users can buy, sell, or trade cryptocurrencies trading volume. DeFiFinancial systems built on blockchain that operate without intermediaries like banks protocols like Aave ($4.5B TVLTotal assets deposited in DeFi protocols), Uniswap ($3.2B TVL), and Curve build on USDT and DAIA decentralized, algorithmic stablecoin pegged to the US Dollar and backed by crypto collateral through the MakerDAO protocol liquidity. If either faces restricted U.S. access without seamless alternatives, DeFi liquidity could fragment: compliant stablecoins (USDCA fully-reserved stablecoin pegged 1:1 to the US Dollar, issued by Circle and backed by regulated financial institutions, PYUSDA stablecoin issued by PayPal and Paxos, pegged 1:1 to the US Dollar and designed for payments and transfers, USAT) dominating U.S.-accessible protocols and offshore stablecoins serving international markets.

The Strategic Subtext: Treasury Demand and Geopolitical Leverage

There's a deeper strategic layer to the GENIUS Act that separates sophisticated analysis from surface-level regulatory coverage: it's also a debt financing mechanism disguised as consumer protection.

TetherThe largest stablecoin by market cap, pegged 1:1 to the US Dollar and issued by Tether Limited holds $135 billion in U.S. Treasury securities—making it the 17th largest holder of U.S. debt globally, larger than South Korea ($112-124 billion), Germany ($102 billion), or Saudi Arabia ($117 billion). The entire stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold market, now at $300+ billion with mandatory 1:1 reserve requirements in U.S. Treasuries and cash equivalents, represents hundreds of billions in structural Treasury demand. As the market grows—McKinsey projects $2 trillion by 2028—that demand compounds.

Now consider the geopolitical context. China holds $730.7 billion in U.S. Treasuries as of July 2025—down 45% from its peak of $1.32 trillion in November 2013. This isn't panic selling; it's strategic de-risking. China has systematically reduced its U.S. debt exposure from 14% of outstanding Treasuries in 2011 to less than 3% today, diversifying into European bonds, gold, and other currencies. Russia executed a more dramatic selloff post-2014 Ukraine sanctions, dumping holdings from $176 billion in 2010 to $15 billion by May 2018—an 85% reduction achieved in part through not rolling over maturing securities.

Foreign sovereigns holdA misspelling of 'hold,' used to mean holding onto cryptocurrency for long-term gains $9.159 trillion in U.S. debt—still substantial, but declining as a share of the total market. The U.S. Treasury needs new, structurally committed buyers.

Stablecoins create precisely that: a captive buyer class. Unlike China, which can sell Treasuries as a geopolitical signal, stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold issuers must holdA misspelling of 'hold,' used to mean holding onto cryptocurrency for long-term gains Treasuries to maintain their peg. If USDCA fully-reserved stablecoin pegged 1:1 to the US Dollar, issued by Circle and backed by regulated financial institutions grows to $150 billion in circulation, Circle must hold $150 billion in reserves—permanently, as long as the stablecoin circulates. If TetherThe largest stablecoin by market cap, pegged 1:1 to the US Dollar and issued by Tether Limited's combined USDT + USAT reach $250 billion, that's $250 billion in Treasury demand. If the market reaches McKinsey's $2 trillion projection by 2028, that's potentially $1-1.5 trillion in structural, non-discretionary Treasury demand.

This isn't hot money that exits during diplomatic tensions. It's infrastructure financing tied to payment railsInfrastructure and networks that enable money transfer between parties. Every dollar of stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold growth becomes a dollar of Treasury demand, channeling private crypto capital into government debt at scale.

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"The U.S. Treasury faces persistent rollover risk. With a federal deficit of $1.8-2.0 trillion annually and $38 trillion in total national debt, diversified buyer classes are strategic."

The GENIUS Act's reserve requirements don't just protect consumers—they mobilize private capital to finance public debt while simultaneously diluting the leverage foreign creditors holdA misspelling of 'hold,' used to mean holding onto cryptocurrency for long-term gains over U.S. monetary policy. As Brookings Institution research notes, stablecoins represented approximately 4.6% of new foreign purchases of U.S. Treasury securities in 2024, and at current growth rates could account for 7% of the total Treasury market by 2028—comparable to the Federal Reserve's current holdings category.

This doesn't make the GENIUS Act wrong—consumer protection and systemic risk management are legitimate regulatory goals. But it's naive to view it purely through a crypto-regulation lens. It's also fiscal policy: turning stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold regulation into a Treasury demand engine that reduces dependence on foreign sovereign buyers whose geopolitical interests may not align with U.S. policy.

Whether this was the primary legislative intent or a welcome side effect, the outcome is the same. That's why Treasury Department involvement in "comparable regime" determinations isn't just about consumer protection—it's about controlling who gets access to this Treasury-demand mechanism and under what terms. It's strategic debt financing meeting regulatory oversight, with the stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold market as the vehicle.

The Barriers: Implementation Challenges

U.S. Treasury's "Comparable Regime" List Remains Unpublished

Three months post-enactment, the U.S. Treasury hasn't published the "comparable regime" list determining which foreign issuers can operate in U.S. markets. This creates planning uncertainty for Bermuda-based USDM (pending Anchorage acquisition), BVI-based USDTThe largest stablecoin by market cap, pegged 1:1 to the US Dollar and issued by Tether Limited and FDUSD, and any other offshore issuers. Whether BVI qualifies depends on factors difficult to predict: BVI's willingness to adopt stricter reporting standards, U.S. geopolitical considerations, and the U.S. Treasury's tolerance for regulatory arbitrageBuying and selling an asset across different platforms to profit from price differences. Bermuda has better odds—the Bermuda Monetary Authority published a structured stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold framework in November 2024—but nothing is guaranteed. Until the list appears, offshore issuers can't finalize compliance strategies.

Decentralized Models in Regulatory Limbo

DAIA decentralized, algorithmic stablecoin pegged to the US Dollar and backed by crypto collateral through the MakerDAO protocol's algorithmic, collateralized model challenges the Act's assumptions. GENIUS Act provisions focus on issuers with redemption obligations, reserve requirements, and consumer protection responsibilities. MakerDAO, governed by tokenA digital asset built on an existing blockchain, often representing utility or value holders and smart contractsSelf-executing code on a blockchain that automates transactions, doesn't map to that structure. Could MakerDAO appoint a compliant issuer entity while preserving decentralized governance? Would the Act's definition of "payment stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold" expand in future regulatory guidance? Three months post-enactment, these questions remain unanswered. DeFiFinancial systems built on blockchain that operate without intermediaries like banks protocols like Curve, Aave, and Maker-integrated platforms need clarity on DAI's regulatory treatment to assess long-term liquidityThe ease with which an asset can be bought or sold without affecting its price risk.

U.S. State-Federal Coordination Process Undefined

The "substantially similar" determination for U.S. state regimes is critical for Paxos, Gemini, and other NYDFS-supervised issuers. But the process isn't defined. Who makes the determination—U.S. Treasury, OCC, a multi-agency committee? What are the specific criteria beyond general alignment with federal standards? How long does evaluation take? NYDFS has supervised stablecoins since 2018, making qualification likely, but "likely" isn't "certain." Compliance officers planning 2026 budgets need timelines and criteria, not assumptions.

The Scenarios: What Could Happen

Scenario 1: USDC and PYUSD capture institutional share. If Circle receives U.S. OCC approval for its trust bank charter and NYDFS qualifies as "substantially similar," both issuers gain a compliance moat. Institutional treasurers prioritizing regulatory certainty shift to federally-supervised or state-qualified stablecoins. USDC and PYUSD could grow from a combined 25% market share today to 40-50% by late 2026, driven by institutional adoption, bank integration, and DeFi protocol compliance requirements. Tether maintains offshore dominance with legacy USDT but captures U.S. institutional share through USAT if liquidity migration succeeds.

Scenario 2: Tether's USAT executes seamlessly. Anchorage Digital Bank issues USAT in December 2025 under U.S. OCC supervision. DeFi protocols, centralized exchanges, and payment platforms treat USAT as fungible with USDT for liquidity purposes. Tether maintains market position with a two-token model: compliant USAT for U.S. markets, legacy USDT for international markets. This scenario depends on rapid USAT adoption—if exchanges and protocols don't integrate USAT quickly, liquidity fragments and Tether loses U.S. institutional share to USDC/PYUSD.

Scenario 3: Fragmentation and liquidity bifurcation. The U.S. Treasury's "comparable regime" list excludes BVI and Bermuda (or delays publication for 12+ months). Legacy USDT and FDUSD face restricted U.S. access. DAI operates in regulatory limbo. DeFi protocols serving U.S. users consolidate around USDC, PYUSD, and USAT, while offshore protocols maintain USDT/DAI liquidity. This creates bifurcated markets: compliant stablecoins for U.S.-accessible platforms, non-compliant stablecoins for international or decentralized venues. Liquidity becomes geographically siloed, increasing friction for cross-border operations and arbitrage.

Compared to the Status Quo and International Models

The pre-GENIUS Act fragmented state-by-state system in the U.S. created compliance complexity without delivering clarity. A stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold issuer needed money transmitter licenses in 40+ different U.S. states, each with different requirements, renewal cycles, and reporting standards. Circle held licenses across states; TetherThe largest stablecoin by market cap, pegged 1:1 to the US Dollar and issued by Tether Limited didn't. That gave Circle a compliance advantage in theory, but in practice, state-level oversight didn't prevent Tether's 58% market share dominance. The GENIUS Act changes the calculus: federal or state-qualified licensing becomes table stakes for U.S. market access, and offshore issuers face an explicit decision—restructure, partner with U.S. entities, or accept restricted access.

Internationally, the EU's MiCAAn EU regulatory framework standardizing crypto rules for issuers and service providers regulation provides a useful comparison. MiCA classifies stablecoins as "e-money tokens" (EMTsCrypto token under MiCA that maintains stable value by referencing a single fiat currency), requiring issuers to holdA misspelling of 'hold,' used to mean holding onto cryptocurrency for long-term gains EMT licenses, maintain 1:1 reserves, and meet capital requirements. The framework is prescriptive and centralized, reflecting the EU's regulatory philosophy. The GENIUS Act takes a more federated approach, allowing U.S. state regimes to qualify if "substantially similar." That flexibility could be an advantage—states can innovate within federal guardrails—or a complication if state-federal coordination bogs down in bureaucracy. MiCA's centralized model delivered clarity faster (June 2024 for stablecoins, December 2024 for full application). GENIUS Act's federated model preserves U.S. state authority but risks slower implementation as the U.S. Treasury and OCC work through "comparable regime" and "substantially similar" determinations.

What Professionals Should Do Now

If you're managing crypto treasury, evaluating stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold vendors, or operating DeFiFinancial systems built on blockchain that operate without intermediaries like banks infrastructure, the action list is clear:

1. Audit stablecoin exposure immediately. Map which stablecoins you hold, which DeFi protocols you use, and which vendors you rely on. Identify dependencies on potentially non-compliant assets (legacy USDT without USAT migration plans, FDUSD, DAI). Switching costs increase as compliance windows close over the next 12-18 months.

2. Prioritize vendors with visible compliance pathways. Circle (USDC) with its OCC application and Paxos (PYUSD/USDP) with NYDFS supervision have the clearest pathways. They're the safest bets for U.S. institutional use. If you're using offshore stablecoins, ask vendors directly about GENIUS Act adaptation plans. Tether's USAT strategy launching December 2025 is promising, but execution risk remains until liquidity migration is proven.

3. Monitor U.S. Treasury guidance closely. The "comparable regime" list, when published, determines which offshore issuers can serve U.S. markets. If BVI doesn't make the list, legacy USDT and FDUSD face restricted access. If Bermuda qualifies, USDM (pending Anchorage acquisition) gains a clearer path. DeFi protocols with heavy USDT integration need liquidity migration plans ready.

4. Plan for DeFi liquidity shifts. If DAI operates in regulatory limbo and legacy USDT faces restricted U.S. access without seamless USAT adoption, DeFi protocols may consolidate around USDC, PYUSD, and USAT for U.S.-compliant liquidity. This affects yield strategies, liquidity provision, and collateral management. Run scenarios now for protocol integrations that depend on USDT or DAI liquidity.

5. Track NYDFS "substantially similar" determination. If NYDFS qualifies, Paxos and Gemini products transition seamlessly. If the determination delays or criteria prove stricter than expected, those issuers may face restructuring. Compliance officers should monitor U.S. Treasury, OCC, and NYDFS announcements for guidance.

What We Don't Know Yet

Intellectual honesty requires acknowledging the gaps. Three months post-enactment:

U.S. Treasury's "comparable regime" list hasn't been published. We don't know if BVI, Bermuda, or other offshore jurisdictions qualify. Timeline for publication is undefined. This is the single biggest uncertainty for Tether (legacy USDT), Mountain Protocol (if Anchorage acquisition delays), First Digital (FDUSD), and any other offshore issuer.

The "substantially similar" determination process for U.S. state regimes lacks formal criteria, timeline, and procedural clarity. NYDFS seems likely to qualify given its decade-long track record and first-mover status in stablecoin oversight, but assumptions aren't certainty. Compliance planning for Paxos, Gemini, and other NYDFS-supervised issuers requires guesswork until formal guidance appears.

DAI's regulatory treatment remains undefined. Could MakerDAO appoint a compliant issuer entity? Would that compromise its decentralized governance model? Does DAI operate permanently outside the "payment stablecoin" definition, or could future regulatory guidance bring it into scope? DeFi protocols integrated with DAI face strategic uncertainty.

USAT adoption dynamics are unproven. When Tether launches USAT in December 2025, will DeFi protocols, exchanges, and payment platforms treat it as fungible with legacy USDT? Will liquidity migrate seamlessly, or will the market fragment between compliant USAT (U.S. institutional) and offshore USDT (international)? Execution risk is real.

Circle's U.S. OCC application timeline is undefined. Public comment period closed July 30, 2025, but OCC decision timeline hasn't been announced. If approval takes 12+ months, USDC operates in a compliance gray zone—aligned with GENIUS Act principles but lacking federal PPSI status—while competitors potentially move faster through state-qualified pathways.

The Bottom Line

Three months after the GENIUS Act became law, the stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold market is repositioning. The winners are issuers with clear compliance pathways: Circle executing its U.S. OCC application strategy, Paxos leveraging NYDFS supervision, TetherThe largest stablecoin by market cap, pegged 1:1 to the US Dollar and issued by Tether Limited launching USAT to maintain U.S. market access. The uncertain cases are offshore issuers awaiting U.S. Treasury determinations (FDUSD), decentralized models that don't fit the framework (DAIA decentralized, algorithmic stablecoin pegged to the US Dollar and backed by crypto collateral through the MakerDAO protocol), and smaller players questioning commercial viability even if compliant (GUSDA regulated stablecoin pegged 1:1 to the US Dollar, issued by Gemini Trust Company and approved by NYDFS).

For institutions navigating this, the calculus is straightforward: evaluate vendor compliance roadmaps now, before switching costs increase. Treasury managers, compliance officers, and DeFiFinancial systems built on blockchain that operate without intermediaries like banks operators making vendor decisions today are making bets on 2026 regulatory outcomes. The smart money is on federally-supervised or NYDFS-qualified issuers with visible execution plans. The risk is on offshore entities whose pathways depend on U.S. Treasury determinations we still don't have.

Stablecoins are crypto's bridgeA connection between two blockchains that allows the transfer of assets or data to traditional finance—and to U.S. Treasury markets. The GENIUS Act determines which bridges remain open, which close, and which get rebuilt under federal oversight. The reshuffle is happening. Position accordingly.

Up Next

While the U.S. implements its GENIUS Act framework, the rest of the world isn't waiting. On October 27, 2025—just two days before this article's publication—Japan launched JPYC, the world's first regulated yen-pegged stablecoin, firing the opening shot in what analysts are calling the "stablecoin wars."

Coming next: The International Stablecoin Race: Japan, EU, and the Battle for Digital Currency Supremacy - Japan's JPYC launch signals a broader shift away from U.S. dollar monopoly in digital finance. The EU's MiCA framework is already operational. Singapore, Switzerland, and the UAE are positioning as regulatory safe havens. And China's digital yuan continues expanding across BRICS nations. Discover how the global stablecoin landscape is fragmenting, which jurisdictions are winning the regulatory arbitrage game, and what this means for the future of cross-border payments and monetary sovereignty.