In 2028, Stablecoin Reserve Regulation Will Be Rewritten — Are USDC and PYUSD the Winners?

3-Point Summary

• $184B USDT faces potential delisting from all U.S. exchanges by July 2028 under the GENIUS Act.
• USDC and PYUSD are structurally aligned with the Act’s reserve requirements, while USDT holds ~25% non‑compliant assets.
• Algorithmic stablecoins cannot meet the “cash + Treasuries only” rule and are effectively positioned for U.S. market removal.

The GENIUS Act signals a structural reset for stablecoins, placing USDT at risk while USDC and PYUSD gain regulatory advantage.

※ This article is published in its current version first and will be updated to the final Daily Crypto Time (DCT) format in two days.

$184 Billion USDT Faces 2028 Delisting Risk in the U.S. — What the GENIUS Act Really Means

Bitcoin was originally designed as an “electronic cash system,” but with the rise of smart contract platforms, the actual payment layer has effectively been taken over by stablecoins. As a result, Bitcoin has shifted from a medium of exchange to a store of value, while stablecoins have become the practical heirs of Bitcoin’s philosophy and the core infrastructure of onchain finance.

The essence of a stablecoin is its stable linkage to real-world fiat currency. In this context, recent analysis delivers a critical warning: Tether’s $184 billion USDT could be delisted from all U.S. exchanges by July 2028 if it fails to fully comply with the GENIUS Act. Around 25% of its reserves are held in non‑compliant assets such as gold, loans, and BTC, while the Act restricts reserves to cash and U.S. Treasuries only. This is not just a regulatory footnote, but a signal of structural change in the stablecoin market.

1) Reserve requirements for stablecoins under the GENIUS Act

The GENIUS Act requires stablecoin reserves to consist only of “the safest assets.” This framework structurally conflicts with the current USDT model and represents a strategic attempt by the U.S. to standardize stablecoin stability at a legal level. The transformation of reserve reporting, verification, and custody is explored in detail in the earlier article The Stablecoin Transformation: How the Genius Act Opens a New Financial Order . The core requirements of the GENIUS Act are as follows:

• Eligible assets: Cash and U.S. Treasuries
• Prohibited assets: Gold, loans, cryptocurrencies, corporate bonds, and similar instruments
• Full reserve: Mandatory 1:1 full reserve
• Independent audit: Regular verification by third‑party accounting firms
• Custody: Reserves held at regulated U.S. financial institutions

In short, the GENIUS Act goes beyond “what to hold” and defines “how reserves are verified and where they are kept,” setting a new regulatory benchmark for stablecoins.

2) Comparing USDT, USDC, and PYUSD reserve structures

USDT, USDC, and PYUSD all aim to maintain a dollar peg, but their reserve structures differ significantly. Notably, USDT supply has continued to grow even amid recent market corrections, highlighting a deeper structural shift in the stablecoin landscape. This dynamic is analyzed in the earlier article The Stablecoin Surge and the Native Token Crisis: The Future of Blockchain Security . Their current regulatory alignment can be summarized as follows:

• USDT: 70–75% Treasuries + cash + ~25% non‑compliant assets → does not meet GENIUS Act standards
• USDC: 100% cash and Treasuries → highest regulatory friendliness
• PYUSD: Primarily Treasuries and cash‑like assets → high likelihood of regulatory compliance

In the regulatory era, USDC and PYUSD are structurally advantaged, while USDT faces a significant risk of U.S. market exit unless it removes its non‑compliant reserve components.

3) The outlook for algorithmic stablecoins

Algorithmic stablecoins rely on market mechanisms rather than collateral to maintain their peg. However, they cannot satisfy the GENIUS Act’s “100% cash + Treasuries” requirement and are therefore likely to be effectively banned from the U.S. market. The collapses of UST and USDN exposed the fragility of purely algorithmic models, while FRAX has shifted toward a reserve‑based hybrid structure in response to the evolving regulatory environment.

• United States: Algorithmic stablecoins effectively pushed out of the market
• Global: Convergence toward reserve‑backed models
• DeFi: Strengthening of USDC‑centric architectures

Ultimately, algorithmic stablecoins must evolve from “algorithm‑centric” to “reserve‑centric” hybrids if they are to survive in a regulatory‑driven era.

4) The GENIUS Act’s rules on audits, disclosure, and custody

The GENIUS Act is not limited to reserve composition; it also defines audit, disclosure, and custody standards in a comprehensive framework. This is part of a broader global trend. Canada’s financial regulator, OSFI, has been developing a formal framework for regulated “fiat‑backed stablecoins” between 2023 and 2025, contributing to the emergence of international norms. This trajectory aligns with the integration of onchain finance into traditional financial infrastructure discussed in Ethereum’s $8B Tokenized Treasuries Breakthrough: How L1 and L2 Are Shaping the Future of Onchain Finance . The key elements of the GENIUS Act’s framework include:

• Independent audits: Third‑party verification
• Reserve disclosure: Detailed reporting of composition, maturity, and custodial institutions
• Real‑time reporting: Real‑time or near‑real‑time monitoring when requested by regulators
• Custody: Segregated client asset protection for reserves

Under this regime, stablecoins are no longer merely promises made by issuers; they are redefined as independently verifiable digital dollars.

Conclusion — 2028 as a structural turning point for stablecoins

The GENIUS Act will fundamentally reshape the stablecoin market. Without a restructuring of its reserve composition, USDT may struggle to remain in the U.S. market. In contrast, USDC and PYUSD are positioned to expand their presence thanks to their regulatory‑aligned frameworks. Algorithmic stablecoins are expected to disappear from the U.S., and global markets will face growing pressure to shift toward reserve‑backed models.

2028 is set to become a pivotal year in the regulatory reorganization of the stablecoin ecosystem. USDC and PYUSD hold structural advantages in this new environment, while USDT risks exclusion from the U.S. unless it removes non‑compliant reserve assets.

Younchan Jung
Researcher exploring structural shifts in AI, blockchain, and the on‑chain economy.

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