GENIUS Act: Stablecoin Landscape - Who's In, Who's Out, and What It Means

GENIUS Act: Stablecoin Landscape

How major stablecoins are positioning for U.S. regulatory compliance

What This Means

The GENIUS Act's federal licensing framework fundamentally reshapes the stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold market. Issuers now face a binary choice: obtain federal or state-qualified licensing to maintain U.S. market access, or operate as foreign entities dependent on Treasury Department determinations of "comparable regulatory regimes."

The Winners

Circle (USDC) and Paxos (PYUSD, USDP) enter the GENIUS Act era with significant advantages. Both maintain existing relationships with New York's Department of Financial Services (NYDFS), the most stringent state-level crypto regulator. Circle has publicly announced intent to pursue an OCC-chartered national trust bank license, positioning USDC as the first federally-licensed Payment Stablecoin Issuer (PPSI). Paxos, already operating as an NYDFS-chartered trust company, can leverage existing infrastructure to qualify as a state-certified Payment Stablecoin Issuer (PSI).

The Uncertain

Tether (USDT) faces the most complex transition. As a BVI-domiciled entity without U.S. banking relationships, USDT cannot directly qualify under GENIUS Act licensing pathways. The company's reported strategy—launching a U.S.-compliant USAT stablecoin via Anchorage Digital Bank (an OCC-chartered national trust)—represents a strategic pivot to maintain access to U.S. markets while preserving USDT's offshore status for international operations.

Mountain Protocol (USDM) and First Digital (FDUSD) depend entirely on whether Treasury designates Bermuda and BVI, respectively, as "comparable regimes." Until those determinations are made, both face uncertain U.S. market access. Mountain Protocol's announced acquisition by Anchorage Digital suggests one pathway forward: onshore restructuring via U.S.-chartered partners.

The Excluded

MakerDAO's DAI sits outside the "payment stablecoin" definition entirely. The GENIUS Act targets fiat-redeemable tokens with issuer redemption obligations—characteristics DAI's algorithmic, over-collateralized model doesn't satisfy. Unless MakerDAO restructures to offer direct fiat redemption through a licensed U.S. entity, DAI remains in the unregulated crypto-native category, accessible to U.S. users but excluded from federal payment system integration.

BUSD represents the cautionary tale: an NYDFS-regulated stablecoin shut down mid-operation when regulatory priorities shifted. The 2023 enforcement action that halted BUSD issuance demonstrates that state-level approval alone doesn't guarantee long-term market access without federal clarity—precisely the problem GENIUS Act aims to solve.

The Regulatory Architecture

Three licensing pathways create different risk profiles:

1. Federal PPSI (OCC Charter): Highest regulatory burden, clearest path to institutional adoption and payment system integration
2. State-Qualified PSI (NYDFS or "Substantially Similar"): Lighter regulatory oversight if state regime meets federal standards; circular cap of $10B before federal transition required
3. Foreign PSI (Treasury-Approved Regime): Dependent on bilateral comparability determinations; subject to withdrawal if home jurisdiction's standards slip

The market is sorting itself accordingly. Established players with U.S. operations are pursuing federal pathways. Offshore issuers are either partnering with U.S. banks (TetherThe largest stablecoin by market cap, pegged 1:1 to the US Dollar and issued by Tether Limited's USAT strategy) or waiting for Treasury's foreign regime decisions. Algorithmic and crypto-native stablecoins are accepting exclusion from the "payment stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold" category, continuing operations outside federal oversight.

Next Steps

For institutions evaluating stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold counterparty risk:

• High confidence: USDC, PYUSD, USDP (existing regulatory relationships, clear compliance paths)
• Moderate confidence: USAT pending Anchorage structure, USDM if Bermuda approved or acquisition completes
• Low confidence: USDT (offshore, restricted), FDUSD (BVI comparability uncertain)
• Non-applicable: DAI, other algorithmic stablecoins (outside regulatory perimeter)

The 18-month compliance window and three-year phase-out for non-qualified issuers means the landscape will continue shifting through 2027. Treasury's foreign regime designations and OCC's federal charter approvals will determine which issuers survive with full U.S. market access—and which become offshore-only operations.