Countdown to the GENIUS Act: Only USDC and PYUSD Pass Among the Top Ten Dollar Stablecoins

The original text is from the Bank Policy Institute (BPI; authors Laurence Bristow, Eva Funaki)

Editor’s Note: This article is a compilation of BPI research notes. BPI is a research institution representing the U.S. banking industry, and its conclusions are unfavorable to offshore stablecoins and crypto-collateralized stablecoins; readers should be aware of this stance. The data is as of June 30, 2026, sourced from disclosures by various issuers and Dune Analytics.

The GENIUS Act will officially take effect on January 18, 2027. According to this act, "payment stablecoins" issued in the U.S. or offered to U.S. users must be fully backed by highly liquid assets—namely, U.S. Treasury securities with a remaining maturity of no more than 93 days, overnight reverse repurchase agreements backed by Treasury securities, bank deposits, and other qualified assets.

However, based on circulation volume, among the ten largest dollar stablecoins in the U.S., currently only two have a reserve structure that meets the GENIUS requirements, accounting for 26% of the total circulation. Two more are expected to meet the standards soon, accounting for 2%. The remaining 72% do not meet the standards: 65% are offshore-issued stablecoins, and 7% are crypto-collateralized.

This is the conclusion drawn from BPI's latest research notes.

Sample and Scope

BPI selected the ten largest dollar stablecoins by circulation volume, which accounted for 97% of the total market circulation as of June 30, 2026. The reserve composition data typically comes from monthly disclosures by issuers, with the largest stablecoin, USDT, disclosing only quarterly; the crypto-collateralized USDS and DAI are sourced from on-chain data via Dune Analytics.

These ten stablecoins are divided into three groups: those subject to GENIUS constraints after the act takes effect, those not subject to constraints due to offshore issuance, and those not subject to constraints due to being backed by crypto-collateralized loans.

The ten largest dollar stablecoins grouped by category (circulation volume and compliance status)

The Compliant 26%: USDC and PYUSD

Among the ten, four are issued within the U.S. and will be subject to GENIUS constraints after the act takes effect. As of June 2026, Circle's USDC and Paxos' PYUSD have met the reserve asset requirements; World Liberty's USD1 and Ripple's USD do not meet the requirements—both hold money market funds that contain institutional debt and longer-term U.S. Treasury securities.

USDC is the largest domestic stablecoin, with a circulation exceeding $73 billion. As of July 2026, approximately 70% of its reserve assets are backed by reverse repurchase agreements secured by Treasury securities, with the remaining 30% roughly split between uninsured bank deposits and Treasury bills.

Time series of USDC reserve asset composition (noting changes before and after the 2023 Silicon Valley Bank incident)

USDC's reserve structure was rewritten following the Silicon Valley Bank crisis in early 2023. Initially, its reserves were 85% Treasury bills and 15% uninsured bank deposits, with over half of the deposits held at Silicon Valley Bank. After the bank faced difficulties, USDC holders began to question its solvency, leading to a depeg, with the price dropping to as low as 87 cents. Subsequently, Circle reduced the proportion of Treasury bills and shifted to investing in reverse repurchase agreements backed by Treasury securities to improve liquidity.

The Non-Compliant Majority: 65% Offshore

Major stablecoins issued offshore are not under the jurisdiction of GENIUS, and their reserve structures do not align with the act's requirements.

The largest is USDT, currently the top circulating stablecoin, with its operating entity located in El Salvador. As of June 30, 2026, 61% of USDT's reserves are U.S. Treasury securities, 10% are overnight reverse repos backed by Treasury securities, and bank deposits make up a very small portion. The remaining reserve assets consist of gold, listed stocks, Bitcoin, secured loans, term repurchase loans, and other investments, which have risen to 29%, and these proportions have been slowly increasing over time.

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Changes in USDT reserve asset composition

USDT has experienced multiple depegs: in October 2018, it fell below par as the market questioned its reserve assets; in November 2022, it depegged again amid the FTX collapse and contagion fears; in August 2023, during the "crypto winter," liquidity on exchanges dropped, and Tether faced redemption issues, leading to another depeg.

The second-largest offshore stablecoin, Global Dollar (USDG), is issued by Paxos' entities in Singapore and Europe. As of June 30, 2026, its reserve composition is 53% government money market funds, 42% Treasury bills, and 5% bank deposits. While these assets are not inherently high-risk, government money market funds may invest in Treasury bills and federal agency securities with maturities exceeding 93 days, thus not complying with GENIUS requirements. Shortly after USDG launched, it experienced a depeg in November 2024 due to insufficient trading liquidity.

The GENIUS Act also provides a pathway for foreign issuers of payment stablecoins: if the U.S. Treasury determines that their domestic regulatory framework is comparable to that of the U.S., and the issuer demonstrates its ability to comply with U.S. legal mandates, they may offer payment stablecoins to U.S. users.

Crypto-Collateralized 7%: USDS, DAI, and USDe

The reserve composition of crypto-collateralized stablecoins carries higher risks, primarily due to crypto-collateralized loans, which do not qualify as eligible reserve assets under GENIUS, and thus are not expected to become payment stablecoins under the act.

The most notable among them are USDS and DAI, both issued by Sky Protocol, collectively constituting the third-largest stablecoin, with a scale approaching $14 billion.

Unlike payment stablecoins backed by real assets at a 1:1 ratio, USDS has three minting pathways: directly exchanging 1 USDC for 1 USDS; borrowing USDS from Sky's DeFi lending protocol using crypto collateral; and minting by Sky's affiliated entities—Sky provides USDS credit lines to affiliated entities for strategies such as crypto-collateralized loans or tokenized real assets.

USDS reserve asset composition (July 2025 to June 2026)

As of June 2026, 42% of USDS's reserves are crypto-collateralized loans, 38% are stablecoins, and 20% are tokenized real assets. Nearly 90% of the real assets are tokenized funds invested in short-term U.S. Treasury securities, reverse repurchase agreements, and AAA-rated mortgage-backed securities.

Another crypto-collateralized stablecoin is USDe from Ethena Lab, which had approximately $4 billion as of June 2026. USDe started with a hedge fund-style basis trading strategy but adjusted its strategy after a significant depeg in October 2025, currently supported by tokenized real assets, yield-generating stablecoins, and crypto-collateralized loans on DeFi protocols.

Conclusion: Compliance Does Not Equal No Depeg

The reserve asset requirements of GENIUS are aimed at enhancing the stability of payment stablecoins and reducing the likelihood of depegging. However, under the current status, only two of the ten largest dollar stablecoins, representing 26% of global circulation, have reserves that comply with the act's requirements. The majority of offshore stablecoins and crypto-collateralized stablecoins remain outside the new legal framework, holding significantly riskier reserve compositions.

Of course, meeting the GENIUS reserve requirements does not guarantee that stablecoins will maintain their value—both compliant and non-compliant stablecoins have previously depegged and may do so again in the future.