Only USDC and PayPal USD (PYUSD) among the 10 largest dollar-pegged stablecoins would meet the GENIUS Act's reserve-asset standards if the rules applied to their June 30, 2026 balance sheets, according to an assessment based on issuer disclosures and on-chain supply data. Together, the two tokens accounted for 26% of the circulating supply held by the top-10 group, leaving most of the market either outside the law's direct jurisdiction or backed by assets that do not fit its permitted reserve categories.
The reserve requirements are scheduled to take effect on Jan. 18, 2027. Payment stablecoin issuers covered by the law will need to maintain full reserves in specified liquid assets, including U.S. Treasury securities maturing in 93 days or less, Treasury-backed overnight reverse repurchase agreements, bank deposits, and other qualifying instruments.
The findings point to a more complicated transition than a simple split between regulated and unregulated tokens. Large offshore issuers would not automatically fall under the U.S. reserve test, while several U.S.-linked or U.S.-issued stablecoins may need to alter portfolios that currently include money market funds, longer-dated government debt, corporate credit exposure, crypto loans, or tokenized assets.
Usdc and pyusd meet the stated reserve test
USDC, with $73.7 billion in circulation as of June 30, and PYUSD, with $2.7 billion, were the only stablecoins classified as already compliant in the assessment. Their combined $76.4 billion supply represented just over a quarter of the circulating supply among the 10 largest dollar stablecoins, a group that accounted for 97% of the overall market.
USDC's reserve composition has changed substantially since the March 2023 failure of Silicon Valley Bank. Circle disclosed at the time that a portion of USDC's reserves had been held at the bank, contributing to redemption pressure that pushed the stablecoin as low as $0.87 before it recovered its dollar peg.
By July 2026, later reserve disclosures showed roughly 70% of USDC's backing in Treasury-backed reverse repos. The remaining 30% was split approximately evenly between uninsured bank deposits and Treasury bills. That allocation fits the GENIUS Act's emphasis on assets that can be converted rapidly into cash during large redemptions.
PYUSD, issued by Paxos for PayPal, was also categorized as compliant under the assessment's interpretation of the qualifying-asset rules.
Two smaller U.S.-issued stablecoins — USD1, with $4.7 billion in circulation, and Ripple USD, with $1.6 billion — were classified as likely to become compliant rather than compliant already. Both were described as holding money market funds, which may contain corporate debt or Treasuries with maturities beyond the law's 93-day limit.
That distinction could force issuers to move away from broadly diversified cash-management funds and toward narrower portfolios of short-dated government securities, overnight repos, and deposits. Such changes would reduce flexibility in reserve management but give holders a clearer claim on assets designed for immediate redemption.
Offshore tokens account for most of the non-compliant supply
The assessment placed 72% of top-10 stablecoin supply outside the compliant category: 65% was issued offshore and 7% consisted of crypto-backed stablecoins. Offshore issuance accounts for the largest part of that figure, led by USDT.
USDT had $186.1 billion in circulating supply as of June 30 and was identified as the largest offshore stablecoin. Its operating entity is located in El Salvador. The assessment described its reserves as 61% U.S. Treasury bills, 10% Treasury-backed overnight reverse repos, a small portion of bank deposits, and 29% in other holdings.
Those other holdings included gold, publicly listed equities, bitcoin, secured loans, term reverse repos, and other investments. While a large majority of USDT's reserves were therefore connected to U.S. government debt or cash-like instruments, the portfolio would not match the GENIUS Act's permitted reserve list for a domestic payment stablecoin issuer.
USDT has also experienced temporary price dislocations during periods of market stress. The assessment cited reserve-related concerns in October 2018, contagion from the collapse of FTX in November 2022, and reduced exchange liquidity alongside reported redemption frictions in August 2023. It also said the non-Treasury portion of USDT's reserves had risen gradually over time.
USDG, a $3 billion stablecoin issued by Singapore and European entities associated with Paxos, was also placed outside the compliant group. Its reserves were reported as 53% government money market funds, 42% Treasury bills, and 5% bank deposits. The government money market fund allocation was treated as inconsistent with the 93-day maturity restriction.
Foreign issuers are not necessarily shut out of the U.S. market under the GENIUS framework. The law provides a route for foreign payment stablecoin issuers if the U.S. Treasury determines that their home regulatory regime is comparable and if the issuer can comply with U.S. legal orders. That process places the largest offshore stablecoins in a regulatory category that remains unresolved rather than automatically prohibited.
Crypto-backed designs face a separate constraint
The reserve rules also create a divide between payment stablecoins backed by traditional liquid assets and tokens that use crypto collateral, lending positions, or structured defi strategies.
USDS and DAI, associated with Sky Protocol, had a combined supply near $15 billion in the assessment. USDS can be created by swapping USDC, borrowing against crypto collateral through Sky's lending system, or through affiliated entities drawing on credit lines for activities that include crypto-backed lending and tokenized real-world assets.
As of June 2026, USDS reserves were described as 42% crypto-backed loans, 38% stablecoins, and 20% tokenized real-world assets. Almost 90% of the real-world asset allocation was held in tokenized funds containing short-term Treasuries, reverse repos, and AAA-rated mortgage-backed securities. Those holdings may be relatively liquid, but the overall structure does not match a regime requiring direct reserves in specifically named asset categories.
Ethena's USDe, listed at roughly $4 billion in June 2026, was similarly categorized as crypto-backed. The token initially relied on a basis-trade strategy, combining crypto holdings with hedging positions. After lower basis-trade returns and a severe de-pegging event in October 2025, its backing shifted toward tokenized real-world assets, yield-bearing stablecoins, and crypto-backed loans on defi protocols.
Falcon USD, with $1.4 billion in circulation, was also included in the crypto-backed category.
The GENIUS Act's reserve rules are designed to lower the risk that a stablecoin loses its dollar peg when holders seek rapid redemption. The assessment also noted that compliance with a reserve formula cannot eliminate that risk entirely: both compliant and non-compliant stablecoins have traded away from $1 during past market disruptions.
For issuers seeking access to U.S. users after January 2027, the immediate challenge is less about the stablecoin label than the precise assets behind it. A portfolio dominated by short-dated Treasuries, overnight repos, and deposits would fit the new framework. Structures built around money market funds, crypto lending, tokenized collateral, or offshore reserve mandates face a more demanding path to the same market.
Want the bigger policy picture behind these reserve rules? Read why the GENIUS Act could be the turning point for stablecoins next.
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