The GENIUS Act is about to take effect: the top ten stablecoins are only 26% compliant by size, and USDT and other giants are facing restructuring

According to Woofun AI, the regulatory landscape for US payment stablecoins is about to be fundamentally reshaped as the GENIUS Act is scheduled to take effect on January 18, 2027. The bill requires stablecoins issued to US users to hold highly liquid assets as full reserves, covering eligible assets such as US Treasury bonds with a term not exceeding 93 days remaining, overnight reverse repurchase agreements secured by treasury bonds, and bank deposits.

However, there is a huge gap between the current reserve structure of mainstream stablecoins in the market and this new regulation. Only two stablecoins, USDC and PYUSD, fully meet the requirements of the law, and the rest of the mainstream products face the risk of compliance restructuring or withdrawal from the US market.

In the domestic issuance compliance camp, USDC and PYUSD currently form the only duos. As of June 2026, Circle (CRCL.US) issued USDC with a circulation of over $73 billion, and its reserve structure evolved profoundly after experiencing the 2023 Silicon Valley banking crisis. Before the crisis, USDC reserves consisted of 85% treasury notes and 15% uninsured bank deposits, with more than half of those deposits held at Silicon Valley Bank; the bank's trouble caused USDC to be unanchored to 87 cents, forcing Circle to drastically adjust its strategy.

As of July 2026, about 70% of USDC reserves are reverse repurchase agreements secured by treasury bonds, and the remaining 30% is roughly equally divided between uninsured bank deposits and treasury notes. In contrast, PYUSD issued by Paxos also satisfies reserve requirements.

It is worth noting that World Liberty USD1 and Ripple USD, which are both domestically issued but have not yet met the standards, because they hold money market funds that include institutional bonds and long-term treasury bonds, do not meet the strict restrictions on asset liquidity under the GENIUS Act, and are expected to require further adjustments to the reserve structure to comply.

According to data compiled by Woofun AI, offshore stablecoins, which dominate the market, are not directly subject to the GENIUS Act, and their reserve structure shows higher complexity and risk exposure. The largest USDT operator is located in El Salvador. As of June 30, 2026, 61% of its reserves were US Treasury notes, 10% were overnight reverse repurchases guaranteed by treasury bonds, accounting for a very low share of bank deposits; the remaining 29% was composed of gold, listed stocks, Bitcoin, secured loans, and regular repurchase loans, etc., and this ratio is slowly rising. USDT has been unanchored many times in history: it fell below face value due to reserve questions in October 2018, was affected by the FTX crash in November 2022 and decanked again, and in August 2023 due to the exhaustion of exchange liquidity in the middle of the crypto winter. Global Dollar (USDG), the second-largest offshore stablecoin, is issued by Paxos entities in Singapore and Europe. Its reserves consist of 53% government money market funds, 42% treasury notes, and 5% bank deposits.

Although the assets themselves are less risky, government money market funds invest in treasury bills and federal agency securities with maturities longer than 93 days and do not meet GENIUS requirements. USDG was unanchored in November 2024 due to lack of transaction liquidity. Although the GENIUS Act leaves a channel for foreign issuers, it requires the US Treasury to determine that its domestic regulatory system is comparable to that of the US, and that issuers must prove their ability to comply with US laws and orders. This threshold is extremely high.

Crypto-backed stablecoins, on the other hand, face more serious compliance challenges. Their reserve portfolio mainly relies on cryptographic collateral loans and is not a qualified reserve asset as defined by the GENIUS Act. The combined size of USDS and DAI issued by Sky Protocol is close to $14 billion, making up the third-largest stablecoin category. USDS offers three minting paths: 1:1 exchange for USDC, lending using cryptographic collateral through DeFi lending protocols, or minting by Sky related entities.

As of June 2026, 42% of USDS reserves are crypto-collateralized loans, 38% are stablecoins, and 20% are tokenized physical assets. Nearly 90% of the physical assets are tokenized funds invested in short-term US bonds, reverse repurchase agreements, and AAA grade mortgage bonds. USdE issued by Ethena Labs on a scale of about $4 billion. It started with a base difference trading strategy, but the strategy was adjusted after experiencing severe decoupling and profit decline in October 2025. Currently, it is supported by tokenized real assets, interest-bearing stablecoins, and cryptographic collateral loans on DeFi protocols. The high-risk reserve structure of such stablecoins makes it difficult to be included in the category of payment stablecoins, and the living space in the US market will be greatly squeezed in the future.

Research by the Bank Policy Institute (BPI) indicates that the GENIUS Act's reserve requirements are aimed at improving stablecoins stability and reducing the probability of de-anchoring, but compliance does not equate to absolute safety. As of June 30, 2026, the top ten US dollar stablecoins account for 97% of total market circulation. Of these, only 26% are fully compliant, 2% are expected to reach the standard soon, and the remaining 72% (65% offshore, 7% crypto collateral) are in the regulatory grey area. BPI analysts Laurence Bristow and Eva Funaki emphasized that both compliant and non-compliant stablecoins have been unanchored in history, and future risks still exist.

The GENIUS Act attempted to lock stablecoin reserves into the most liquid assets by setting hard indicators such as a 93-day remaining period, but this did not eliminate the risk of de-anchoring caused by market liquidity shocks. With the law coming into effect on January 18, 2027, the stablecoin industry will face a new round of reshuffle. Offshore giants and crypto-collateral products will need to re-evaluate their strategic positions in the US market, and rising compliance costs may also push stablecoin issuance to a few leading institutions, further changing the competitive landscape of the global stablecoin market.