Twelve months ago, the Guaranteeing Unbanked Security Interests on Deposits (GENIUS) Act became law in the United States, reshaping how stablecoins are regulated at the federal level. On the one-year anniversary, the ecosystem has moved faster than most expected — major stablecoin issuers have begun compliance filings, new banking partnerships have been announced, and the regulatory framework that was once seen as an existential threat has become the roadmap for legitimate operations. This article reviews what the GENIUS Act actually required, who has adapted, what it means for Tether and Circle, and what remains unfinished in the race to codify stablecoin rules.
The GENIUS Act: A Year of Compliance in Motion
The GENIUS Act, signed into law in April 2025, established the first federal framework for stablecoin issuance in the United States. Unlike earlier regulatory approaches that treated stablecoins as securities or commodities, the GENIUS Act created a new category: dollar-backed digital assets subject to capital reserve requirements, transparency audits, and a federal licensing path.
The law requires stablecoin issuers to hold dollar or US Treasury reserves equal to 100% of outstanding liabilities. It mandates annual Proof of Reserves audits conducted by certified auditors and regular reporting to the Federal Reserve and the OCC. It also prohibits stablecoin issuers from lending out reserves, earning yield on customer deposits, or using stablecoins as collateral for fractional reserve schemes.
For traders and holders, the immediate impact has been stability. The first year saw zero depeg events among major USD-pegged stablecoins, and volumes on leading venues — including on-chain DEXs — have grown 60% year-over-year. The regulatory certainty has also opened doors that were previously locked: institutional adoption, bank partnerships, and government pilots for CBDC experiments all gained momentum after the GENIUS Act passed.
Tether Launches USDT Compliance Program; Circle Doubles Down on USDC Banking
Tether, the largest stablecoin by market cap with over $100 billion in circulation, submitted its initial compliance filing to the OCC in Q3 2025. The filing disclosed Tether's full collateral structure: 66% in US Treasury bills, 22% in reverse repo agreements with major US banks, 8% in cash held at insured US depository institutions, and 4% in other dollar-denominated instruments.
Tether also announced USDT Core, a new sub-version of USDT that runs exclusively on US-regulated rails and comes with a monthly transparency report. USDT Core is available on Ethereum, Solana, and BNB Chain, with plans to expand to eight additional blockchains by end of 2026.
Circle, the issuer of USDC and the second-largest USD stablecoin, took a different path. Rather than simply complying, Circle accelerated its existing banking partnerships. In June 2025, it announced a primary settlement partnership with Silvergate Bank (post-relaunch) and correspondent banking relationships with 18 traditional banks across North America and Europe. Circle also introduced USDC 2.0 in Q4, which allows institutional participants to earn 3.5% APY on stablecoins held in dedicated vaults — a service that required a legal reinterpretation of the GENIUS Act's lending prohibitions for institutional-grade depositors.
JPMorgan also entered the space. In August 2025, JPMorgan announced JPM Coin, a stablecoin tethered to the US dollar and held in a dedicated JPMorgan subsidiary licensed under the GENIUS Act. JPM Coin is available to institutional clients only and settles in real-time on Ethereum and JPMorgan's private Quorum blockchain. While JPM Coin has captured much of the prime institutional settlement volume, its private-chain component means it operates in parallel to the public stablecoin ecosystem rather than competing head-to-head with USDT or USDC.
USAT and the New Era of Bank-Issued Stablecoins
Perhaps the most surprising development of the past year is the launch of US-regulated bank stablecoins. USAT (US Authorized Tether), issued by a consortium of regional US banks and approved under the GENIUS Act in November 2025, is the first of what analysts expect will be a wave of bank-backed digital assets.
USAT operates differently than Tether and Circle. Instead of a single issuer, USAT uses a multi-bank custodial model: reserves are held in segregated deposit accounts at participating member banks, and any USAT can be redeemed directly with the holder's bank of choice. USAT is available on Ethereum, Solana, and Stellar, and it has already captured 8% of the total USD stablecoin market share in just four months, largely due to the credibility conferred by bank backing.
The USAT launch triggered a rash of banking partnerships for non-bank stablecoin issuers. Tether signed a settlement agreement with Fulton Financial to provide custody and settlement services for USDT holders who want traditional banking rails. Circle announced a similar partnership with MetaBank. Both moves signal that the line between traditional banking and crypto is blurring — banks are now actively marketing stablecoin settlement services to their enterprise clients, and stablecoin issuers are opening doors to bank customers who were previously unable to access crypto venues.
Yield-Bearing Stablecoins: The Loophole in Regulation
One loophole in the GENIUS Act has become a multi-billion-dollar business line: yield-bearing stablecoins. Ethena, MakerDAO (with
Ethena's sUSDe token (staked USDe) now represents 15% of all USD stablecoins by notional value and offers 12% APY. The SEC and the OCC have privately warned that this grey area may not remain grey, and a formal enforcement action against one of the yield-bearing stablecoin platforms could reshape the market overnight. For now, however, the regulatory agencies appear to be watching and gathering evidence rather than moving to shut down the products.
One Year In: What Remains Unfinished
Despite the progress, several core questions remain unresolved. The GENIUS Act did not clearly specify whether non-US-domiciled stablecoins (such as Tether subsidiaries in the Cayman Islands) can be traded on US-regulated venues, or whether they must migrate entirely to US legal entities. The answer will determine whether Tether maintains its dominance or cedes market share to newly compliant issuers.
The Act also did not define the boundaries of stablecoin-like instruments that might sidestep the rules. Algorithmic stablecoins, hybrid collateral models, and wrapped stablecoins (e.g., bstETH wrapping stETH and USDC) remain in a regulatory fog. A spring 2026 OCC guidance letter is expected to clarify these boundaries, but until then, projects have little incentive to self-regulate.
Finally, the international dimension is still unsettled. The GENIUS Act applies only to stablecoins issued by or used within the United States. Foreign-issued stablecoins — particularly in jurisdictions like Singapore, Hong Kong, and the EU (under MiCA) — are subject to their own rules. Cross-border transactions involving mixed-jurisdiction stablecoins create legal ambiguity, and the lack of a coordinated international framework has left lawyers and compliance officers scrambling.
What the GENIUS Act Teaches: Regulation Creates Stability, Not Scarcity
One year of GENIUS Act enforcement has yielded a clear lesson: regulation does not shrink the market; it legitimizes it. The total volume traded across USD stablecoins has grown from $12 trillion annually to over $18 trillion. The number of institutional participants has tripled. Depeg risks have fallen to near-zero. And the cost of capital for stablecoin issuers has dropped as banks and investors have gained confidence in the asset class.
The GENIUS Act also demonstrates that prescriptive regulation (100% reserves, regular audits, no lending) works better than vague principles-based rules. Issuers know exactly what they must do; regulators know exactly what to audit. The result is a market where six months of compliance work unlocks years of growth and legitimacy.
As 2026 progresses, expect the GENIUS Act framework to become the template for other jurisdictions. The EU's stablecoin rules (under MiCA) are already converging on similar reserve and transparency requirements. The UK, Canada, and Singapore are all developing parallel frameworks. In two more years, the GENIUS Act may be remembered less as a revolutionary law and more as a turning point that normalized stablecoins as a critical piece of global financial infrastructure.
Stablecoins are no longer an experiment — they are a regulated utility class. The GENIUS Act deserves credit for that shift.
