A group of bipartisan U.S. senators recently wrote to the U.S. Treasury, urging that when it implements the operating rules for the GENIUS stablecoin law (GENIUS Act), the regulatory framework must “preserve and promote State participation.” The core dispute in the letter is this: should stablecoin issuers be regulated solely at the federal level, or should state regulators retain substantive licensing and oversight power? The GENIUS Act is the first federal legislative framework in the United States targeting payment stablecoins, and the Treasury is currently in the critical window of drafting the implementing rules. The exact wording of those rules will directly shape the future compliance path for USD stablecoin issuers such as USDC and PYUSD.
Editorial take: what this actually means for USDT card users
Bottom line first — for the vast majority of USDT virtual card users, this news will produce no perceptible change within the next 90 days.
Here’s why: the GENIUS Act regulates “the issuance of and reserves behind payment stablecoins,” targeting compliant, dollar-system issuers like Circle (USDC) and PayPal (PYUSD), and the question of whether their licenses sit at the federal or state level. Tether (USDT)‘s issuing entity is not based in the United States, and its USD reserve structure and compliance path differ from those of U.S.-domiciled issuers. So this round of “federal vs. state” power struggle does not directly touch the circulation of USDT itself in the near term.
There is, however, one indirect effect worth flagging: the “exit point” for USDT virtual cards — that is, the Visa/Mastercard settlement layer — still has to convert stablecoin into fiat. Whether state-level authority is preserved will affect which stablecoins U.S.-licensed card issuers connect to in the future, and under what reserve standards. This is exactly why we keep advising readers to separate “the card’s issuing rail” from “the stablecoin itself.”
- Asia-route virtual Visa cards (such as our editorial pick, MPCard Asia Elite) settle and are regulated entirely outside the U.S. system, and are the least exposed to this round of legislation.
- Users of Bybit Card, which relies on an exchange’s compliance framework to issue cards, are more likely to see any future changes to U.S.-region features driven by the exchange’s own licensing strategy rather than by GENIUS rulemaking.
Timeline: no change within 7 days; within 30 days, watch for whether the Treasury releases a draft implementing rule; only within 90 days might we see signals of compliance adjustments at the issuer level — and those signals would show up first in USDC, not USDT.
Historical comparison: where this resembles MiCAR and the USDC depeg — and where it doesn’t
This “battle over state-level authority” is, at its core, similar to the tug-of-war during the EU’s MiCAR legislation in 2023 — both are contests between a unified framework vs. existing fragmented regulation. MiCAR at the time had to reconcile a unified EU-level licensing regime with existing member-state oversight, and ultimately moved toward a relatively centralized EU-wide standard. The direction in the U.S. this time is the opposite: these senators are speaking up to “preserve state-level power,” leaning toward maintaining fragmented regulation — consistent with America’s long-standing “dual-track” tradition of federal-plus-state financial oversight.
This is entirely different from the USDC depeg event of March 2023. That episode was a brief de-peg triggered by Circle’s reserve exposure at Silicon Valley Bank — a reserve transparency issue. This time it’s a question of regulatory jurisdiction, with no reserve risk involved at all. Conflating the two is a common misreading — nothing in this news indicates any stablecoin facing depegging or reserve risk.
Regulatory implications: where the line currently sits
For Chinese-speaking readers, it’s worth clarifying: the GENIUS Act has no jurisdiction over the card in your hand, but it will reshape which kind of stablecoin card you’re able to obtain.
- Clearly permitted: payment stablecoins issued compliantly within the United States, backed by full USD reserves — this is exactly what the GENIUS Act is designed to regulate and legitimize.
- Legal gray zone: USDT issued offshore being used in U.S. payment scenarios, and USDT cards issued by non-U.S.-licensed institutions. This falls outside the GENIUS Act’s direct jurisdiction, but it also hasn’t received any explicit “compliant status.”
- For users in Hong Kong and Singapore, local frameworks follow a different path — see our Hong Kong compliance guide and Singapore compliance guide. This round of U.S. legislation does not change local card-issuance compliance assessments in Asia.
It’s worth emphasizing: the Treasury has not yet released final implementing rules — everything under discussion remains at the legislative-intent stage, far from the implementation stage.
Key milestones worth watching
- Treasury’s draft implementing rules: watch whether the Treasury opens public comment on GENIUS rules within the next 30–60 days — this is the first substantive signal for how the “federal vs. state” question will ultimately be resolved.
- Public responses from Circle / PayPal: as U.S.-domiciled issuers, their compliance statements will be the earliest indicator of legislative direction.
- Changes in stablecoin reserve-disclosure standards: if the rules require higher reserve standards, USDC will be affected before USDT.
- Card issuers’ supported-asset lists: which stablecoins future Visa/Mastercard-partnered stablecoin cards support is the most direct “revealed preference” signal for ordinary users.
Editorial recommendations
- Users holding Asia-route USDT cards such as MPCard or Bybit Card: no action needed. This round of legislation does not touch your day-to-day top-ups, spending, or withdrawals.
- Users primarily using USDC for U.S.-region subscriptions (e.g., USD-denominated SaaS): add the release of the GENIUS draft rules to your watchlist, but there’s no need to adjust holdings now.
- Users planning to apply for a new U.S.-route card: see our roundup of the top 5 USDT cards of 2026, and prioritize rails with a clear regulatory path that don’t depend on a U.S. issuer. To understand the basics of USDT cards first, read What Is a U Card.
Regulatory legislation is a slow-moving variable; the card-issuing rail is a fast-moving one. Keep the two separate, and you won’t be swept along emotionally by every “stablecoin regulation” headline. usdtcard.net does not conduct independent on-chain testing; every judgment in this article is based on official, publicly available information from card issuers and regulators.