---
title: "What the GENIUS Act means for USDT and other foreign-issued stablecoins"
seoTitle: "GENIUS Act and USDT: rules for foreign stablecoin issuers"
description: "Can USDT stay available in the US under the GENIUS Act? The foreign issuer path, the 2027 and 2028 deadlines, and what payment companies should ask now."
date: "2026-10-02"
updated: "2026-10-02"
category: "compliance"
author: "BlindPay Team"
faq:
  - q: "Will USDT be banned in the US under the GENIUS Act?"
    a: "Not automatically. USDT is issued by a foreign issuer, so from July 18, 2028 US platforms can offer it to people in the US only if Treasury finds the issuer's home regime comparable and the issuer registers with the OCC. If that never happens, platforms must stop offering it to US persons. Holding it in a self-custody wallet or sending it peer to peer is exempt."
  - q: "What is the difference between USDT and USAT?"
    a: "They are separate tokens. USAT launched on January 27, 2026 and is issued by Anchorage Digital Bank, N.A., a federally chartered bank under OCC oversight, to fit the US framework. USDT is issued by Tether outside the US, so the GENIUS Act treats it as a foreign-issued payment stablecoin. One doesn't convert into the other automatically on any chain."
  - q: "What changes on January 18, 2027 for foreign-issued stablecoins?"
    a: "From the effective date, a digital asset service provider may not offer, sell, or make available in the US a stablecoin from a foreign issuer unless that issuer has the technological capability to comply, and will comply, with lawful orders, such as freezes. Treasury's August 2026 proposal lets platforms rely on the issuer's representation, but only after reasonable due diligence."
  - q: "How does a foreign stablecoin issuer qualify under the GENIUS Act?"
    a: "Section 18 sets four conditions. Treasury must find its home regime comparable to the US one, the issuer must register with the OCC, it must hold enough reserves at a US financial institution to meet US customers' liquidity needs, and its home country can't be under full US economic sanctions or flagged for primary money laundering concern."
  - q: "Do payment companies outside the US need to care about the GENIUS Act?"
    a: "Yes, if they serve people in the US. The offer and sale rules have extraterritorial effect when the buyer is located in the US. Treasury's proposal says a provider isn't offering to US persons if it reasonably believes the customer is outside the US, has controls to keep US persons out, and doesn't market to them. Flows with no US customers sit mostly outside these rules."
  - q: "Is USDT a cash equivalent for accounting under the GENIUS Act?"
    a: "Section 3(g) says a payment stablecoin not issued by a permitted payment stablecoin issuer shall not be treated as cash or a cash equivalent for accounting purposes. A foreign issuer is, by definition, not a permitted issuer. If your finance team books USDT balances as cash equivalents, ask your auditor how they read this before the Act takes effect."
---

Under the GENIUS Act, USDT is a foreign-issued payment stablecoin. From January 18, 2027, US platforms can only make it available if its issuer can and will comply with US lawful orders. From July 18, 2028, they can only offer it to people in the US if Treasury finds the issuer's home regime comparable and the issuer registers with the OCC.

That path exists in the statute, but nobody has walked it yet. So the real question for a payments team is what happens to your USDT flows in each scenario.

*This article summarizes the law and Treasury's proposed rules as of October 2, 2026. It is general information, not legal advice. Confirm your obligations with qualified counsel.*

**Key takeaways**

- The GENIUS Act treats any stablecoin issued outside the US by a non-permitted issuer as foreign-issued. That covers USDT.
- Two dates matter. January 18, 2027 brings the lawful-order test. July 18, 2028 brings the permitted-issuer test for offers to people in the US.
- Section 18 is the foreign issuer path: a comparability finding, OCC registration, US reserves, and a clean sanctions profile.
- Tether runs a separate US token, USAT, issued by a federally chartered bank. It is not USDT.
- Self-custody wallets and peer-to-peer transfers are exempt. Platforms and payment providers serving US persons are not.

For the wider law, the [GENIUS Act explained for businesses](/resources/more/genius-act-for-businesses) covers reserves, yield, and the full rulemaking timeline. This page zooms in on the foreign issuer rules. To see which kind of provider sits where in a payment flow, start with the [types of stablecoin APIs](/resources/more/types-of-stablecoin-apis).

## Is USDT a foreign payment stablecoin under the GENIUS Act?

Yes. Section 2(12) of the [GENIUS Act](https://www.congress.gov/bill/119th-congress/senate-bill/1582/text) defines a foreign payment stablecoin issuer as one organized or domiciled outside the US (or in a US territory) that is not a permitted payment stablecoin issuer.

Tether says it [moved to El Salvador](https://tether.io/news/tether-licensed-in-el-salvador-strengthening-focus-on-emerging-markets-and-innovation/) after obtaining licenses there. USDT is not issued by a US bank subsidiary, a federal nonbank issuer, or a state-approved issuer. That puts it squarely in the foreign category.

Tether's answer for the US market is a second token. [Anchorage Digital and Tether introduced USA₮ (USAT)](https://www.anchorage.com/insights/anchorage-digital-tether-introduce-usat) on January 27, 2026. Anchorage Digital Bank, N.A. issues it under the oversight of the Office of the Comptroller of the Currency. USAT and USDT are different contracts with different issuers. A balance in one isn't a balance in the other.

## What are the two GENIUS Act deadlines for foreign-issued stablecoins?

The Act has two separate prohibitions, and they start on different dates. Treasury spells this out in its [August 18, 2026 proposal](https://www.federalregister.gov/documents/2026/08/18/2026-16796/genius-act-regulations-on-payment-stablecoin-issuance-offer-and-sale), with comments due October 19, 2026.

| Date | Rule | Who it binds | What it means for USDT |
| --- | --- | --- | --- |
| January 18, 2027 | Section 3(b)(2): no offering, selling, or making available in the US a foreign-issued stablecoin unless the issuer can and will comply with lawful orders | Digital asset service providers | Platforms need a basis to believe Tether can freeze and comply on a US order |
| July 18, 2028 | Section 3(b)(1): no offering or selling to a person in the US unless the stablecoin comes from a permitted issuer or a foreign issuer that meets section 18 | Digital asset service providers | USDT stays available to US persons only if Tether qualifies under section 18 |
| Any time after a designation | Section 8: Treasury can designate a noncompliant foreign issuer and ban secondary trading of its token in the US | Digital asset service providers | A separate enforcement track, independent of the 2028 date |

On the first rule, the proposal lets a platform rely on the issuer's own representation that it can and will comply with lawful orders. Two conditions apply. The platform must do reasonable due diligence on that representation, and it can't rely on it if it knows or should know the claim is false.

The full GENIUS timeline, including the January 18, 2027 effective date, is in the [business guide](/resources/more/genius-act-for-businesses).

## How can a foreign issuer qualify under section 18?

A foreign issuer escapes the section 3 prohibitions only if all four section 18(a) conditions hold:

1. **Comparable regime.** Its home regulator runs a stablecoin regime that Treasury determines is comparable to the GENIUS Act, in particular the reserve and redemption rules in section 4(a).
2. **OCC registration.** The issuer registers with the Comptroller of the Currency.
3. **US reserves.** It holds reserves at a US financial institution sufficient to meet US customers' liquidity demands, unless a reciprocal arrangement says otherwise.
4. **Clean jurisdiction.** Its home country isn't under a full US economic sanctions program or designated a jurisdiction of primary money laundering concern.

The process has its own clock:

- Treasury can make a comparability finding only on a recommendation from each other member of the Stablecoin Certification Review Committee, and must publish its justification in the Federal Register first.
- Once a foreign issuer or regulator files a substantially complete request, Treasury must decide within 210 days.
- An OCC registration is deemed approved 30 days after filing, unless the OCC rejects it in writing.
- Treasury keeps a public list of comparable countries, and the OCC keeps a public list of approved foreign issuer registrations.
- If Treasury later rescinds a comparability finding, platforms get 90 days before offering that issuer's token breaks the law.

Treasury may also sign reciprocal arrangements with comparable jurisdictions, and the Act says it should complete them within two years of enactment. We found no published comparability determination as of October 2, 2026. Check Treasury's list before you assume one exists.

## What happens if a foreign issuer won't comply with a US order?

Section 8 gives Treasury a faster lever than the 2028 deadline. It can designate a foreign issuer as noncompliant, and the token loses US secondary trading.

The sequence:

1. Treasury identifies a foreign issuer whose token trades in the US and that won't comply with a lawful order.
2. Within 30 days, Treasury may designate it noncompliant and notify it in writing.
3. If the issuer doesn't comply within 30 days of the notice, Treasury publishes the determination and a prohibition on facilitating secondary trading in the Federal Register.
4. The trading ban takes effect 30 days after that notice.

Penalties are steep. A platform that knowingly keeps facilitating trading faces up to $100,000 per violation per day. A foreign issuer that keeps offering the token after the determination faces up to $1,000,000 per violation per day. Treasury can grant waivers, for example if a ban would hurt the US financial system or the issuer is taking real steps to fix the problem.

## What does this mean for companies that move USDT?

It depends on whether you serve people in the US and whether you act as a platform or use one.

The Act's rules bind digital asset service providers: firms that, for compensation, exchange digital assets for money or other digital assets, transfer them to third parties, or custody them, for people in the US. Exchanges, custodians, and most payout providers fit that description. A company that just pays its suppliers through such a provider is a customer, not the regulated party. [Which license a stablecoin flow needs](/resources/more/stablecoin-payment-licenses-msb-mtl-vasp-emi) covers the separate money transmission question.

Section 3(h) also exempts three cases: direct transfers between two individuals with no intermediary, an individual moving funds between their own US and foreign accounts at the same parent company, and transactions through software or hardware wallets that keep the individual's own custody.

| Your situation | Exposure | What to plan |
| --- | --- | --- |
| US company paying LatAm contractors, funded from USDT | Your provider must still be allowed to accept USDT from you after 2028 | Ask the provider; keep a USDC route ready |
| US company holding a USDT treasury balance | Off-ramp and exchange access in the US may narrow after 2028; accounting treatment may change | Plan a conversion path and ask your auditor about section 3(g) |
| Non-US fintech with no US customers, paying out in LatAm | Mostly outside the offer and sale rules if controls keep US persons out | Document location controls; watch section 8 designations |
| US platform collecting USDT from US customers | Directly in scope from January 18, 2027 | Run due diligence on the issuer's lawful-order capability now |

One line in the statute deserves a finance team's attention. Section 3(g) says a payment stablecoin not issued by a permitted issuer shall not be treated as cash or a cash equivalent for accounting purposes. A foreign issuer is, by definition, not permitted. [USDC vs USDT for payments](/resources/more/usdc-vs-usdt-for-payments) compares how the two issuers report reserves today.

## What should you ask your providers before 2027?

Use this checklist with every exchange, custodian, and payout provider that touches USDT for you:

1. Which stablecoins will you support for US customers after January 18, 2027, and after July 18, 2028?
2. How do you confirm a foreign issuer can comply with lawful orders, and what due diligence backs that?
3. Do you treat our flows as offers or sales to a person in the US? Why?
4. What location controls do you run to keep US persons out of non-US flows?
5. If a token loses US eligibility, how much notice will we get, and what is the conversion path?
6. Which networks will you keep for each token?
7. Do you support USAT, USDC, or other permitted-issuer tokens as a fallback?
8. Who bears the cost if a balance must be converted on short notice?

Treat it as an addendum to [30 due diligence questions for a stablecoin payments provider](/resources/more/stablecoin-payments-provider-due-diligence). Ask for answers in writing.

## What is still uncertain?

Several pieces are open as of October 2, 2026:

- **Final rules.** Treasury's section 3 proposal is still in its comment period, and agencies missed the July 18, 2026 statutory deadline for final rules.
- **Comparability.** We found no published comparability finding for any country, and the process for requesting one is new.
- **Tether's plans for USDT.** Tether launched USAT for the US. We found no section 18 registration for USDT as of this writing.
- **Other regimes.** In the EU, USDT already lost ground under MiCA. [MiCA stablecoin rules explained](/resources/more/mica-stablecoin-rules-explained) covers why.

## How does BlindPay fit?

BlindPay is a payout and conversion layer, not a stablecoin issuer. It converts USDC and USDT into local currency and pays out over Pix, SPEI, ACH, and SWIFT (POBO/COBO), with KYC, KYB, and sanctions screening inside the payment flow. USDT payouts run on Ethereum, Polygon, Tempo, Solana, and Tron, per the [supported chains reference](/docs/kb/supported-chains).

Both tokens go through the same payout quote, with the token set per request, so a team that keeps a USDC route ready doesn't need a second integration.

Start with question 1 this week. Send it to every provider that holds or moves USDT for you, and write down who answers in writing.