WASHINGTON, November 12, 2026 – Only two of the 10 largest dollar stablecoins would meet the reserve requirements set by the GENIUS Act as of June 30, 2026, according to a Bank Policy Institute analysis. That is a sobering scorecard for an industry preparing for federal rules that take effect in January 2027.
What the law requires
Under the provisions of the GENIUS Act, stablecoins must be supported by highly liquid assets, including U.S. Treasury securities having maturity less than 93 days, overnight reverse repo transactions collateralized by Treasuries, bank deposits, and other similar assets. The underlying aim is obvious – to make sure that the stable coin doesn’t break off its $1 peg.
As per BPI, the USDC of Circle and the PYUSD of Paxos both met the criteria as of June 2026. The two tokens formed 26% of the total tokens issued by 10 of the largest dollar stablecoins.
The other two onshore issuers, which were expected to come under the provisions of the Act, failed to meet the standards for reserve assets. Their respective stablecoins had been backed by money market funds having investments in agency securities and longer-term Treasuries.
The offshore problem
Here’s the rub: the law may not cover all tokens out there. In fact, most of the dollar-stable coins in existence are either issued from offshore countries or backed by crypto assets, making them noncompliant with the new legislation and exposing them to more volatile reserves, per news.
This will create a two-tier system. While domestic issuers who decide to comply will have to follow more stringent reserve requirements, offshore coins and those backed by crypto assets can continue to operate, but without as much assurance of being able to redeem them at face value in a market crisis.
De-pegging is a possibility in this case. The entire concept behind a stablecoin is predicated on one coin being worth one dollar. When faith is lost, there will be a run, and the only way the issuer can deal with the situation is to sell its reserves.
Why it matters
In the case of the consumer, the discrepancy could be in the fine print. A compliant stablecoin will supposedly have reserves that are immediately convertible; those that are backed by assets with a long duration could be hard to liquidate in a situation where the market becomes volatile.
As far as the bank and payment processors go, the issue is more pragmatic. Stablecoins are being employed in the process of settlement, cross-border transactions, and trading, but in a way that requires trust. Should a major stablecoin decouple from its peg, the ramifications could be fast-tracked through the exchanges and the companies accepting the coin as a payment method.
The BPI report doesn’t predict failure for each of the non-compliant coins. The reserve structure only increases the risk of de-pegging—a notable caveat, but not a reason to downplay the warning.
The compliance countdown
The Act goes into effect in January 2027, giving issuers a small window in which to restructure their reserves, receive approval, or otherwise change their business models. Four out of the top 10 stablecoins are issued onshore and will likely fall under the regulation.
This creates a familiar regulatory conundrum. On one hand, stringent regulations may make compliant tokens safer; on the other hand, stringent regulations may drive investors to offshore issuers who operate under less strict standards. Those who object to stringent regulations are concerned about competitiveness, while proponents believe that weaker regulations simply invite disaster.
What to watch
Look for reserve disclosures, redemptions, and issuer shifts to Treasuries, bank deposits, and qualifying repos. That’s how you’ll find out if the GENIUS Act is shaping up markets or just playing along with a compliant corner as the riskier coins keep booming offshores.
For now, the BPI analysis provides a hard reality check. The stablecoin market is not short of vision—it is short of the reserves that fit the federal definition of safe.
