The stablecoin positioning battle escalates: When compliance is just a ticket to entry, will USD1 become the biggest winner?

Author: momo, ChainCatcher

It has been almost a year since the "GENIUS Act" was officially signed into law.

According to regulations, regulatory agencies must complete the formulation of most final rules by next month on July 18, 2026. The overall formal implementation of the act will occur 120 days after the final rules are published or before January 18, 2027.

As compliance regulations enter the final sprint phase, the competitive landscape of stablecoins is also undergoing significant changes. Among the top five stablecoins by market capitalization, aside from USDT and USDC firmly holding the top two positions, the rankings of the others are shifting significantly, and a new player has emerged—USD1, backed by the Trump family. Since the beginning of this year, USD1's market capitalization has grown rapidly, increasing by 50% from about $3 billion at the end of last year to around $4.5 billion now, making it the fifth largest stablecoin by market capitalization, and at one point surpassing USDe to rise to fourth place.

As compliance becomes the ticket to entry, where will the focus of competition for stablecoins shift? Who will become the biggest winner?

I. After the GENIUS Act, the Logic of Stablecoin Competition Has Changed

First, let's look at the progress of the GENIUS Act's regulatory details.

The Office of the Comptroller of the Currency (OCC) was the first to release proposed rules related to stablecoins in February 2026, followed by the FDIC, FinCEN, OFAC, and other regulatory agencies that have successively introduced supporting frameworks. The public comment period for anti-money laundering and sanctions rules has recently concluded, and the final version is about to be released.

From an overall structural perspective, a unified federal regulatory framework for stablecoins is taking shape, showing a clear trend of standard convergence. Under this framework, issuers of payment stablecoins are uniformly included in a standardized constraint system:

• Reserve Asset Requirements: Must be backed by 100% highly liquid U.S. dollar assets, including cash, short-term U.S. Treasury securities, and repurchase agreements.

• Information Disclosure and Audit Mechanism: Requires regular disclosure of reserve structures and acceptance of audits or attestations by registered accounting firms.

• Financial Crime Compliance System: All issuers must be included under the Bank Secrecy Act (BSA) framework, establishing a complete risk control system covering anti-money laundering and sanctions screening.

• Risk Control and Business Restrictions: Must establish capital buffers, liquidity management, and risk control mechanisms, and fulfill obligations for timely redemption at face value. The business scope of issuing institutions is strictly limited, and they are generally prohibited from engaging in high-risk activities such as lending, re-hypothecation, and paying returns to token holders.

As the regulatory framework and details gradually unify, stablecoins essentially become a type of "bank-like currency," and compliance requirements are rapidly standardizing, shifting from competitive advantages to industry entry thresholds.

Once compliance becomes a unified threshold, the next focus of competition naturally shifts to who can more deeply connect with the core regulatory and enforcement layers of the U.S. financial infrastructure.

In other words, after the GENIUS Act, the logic of stablecoin competition has shifted from "who is more compliant" to "who is closer to the center of power." Compliance is merely a ticket to entry; whether one can obtain a federal license, access the clearing system, and embed into the balance sheets of mainstream financial institutions will be the key variables determining the long-term landscape.

II. Will USD1 Become the Biggest Winner?

With the change in competitive logic, the landscape of leading stablecoins is expected to undergo significant restructuring. Let's first look at who will be more affected after compliance becomes the entry threshold.

From the current structure, aside from USDC and USD1, most leading stablecoins are facing varying degrees of adjustment pressure under the GENIUS framework. Taking USDT as an example, its reserves include about $20 billion in gold and several billion dollars in Bitcoin assets, which do not meet the act's whitelist reserve requirements. Tether's response has been to launch a compliant version, USAT, separating the compliant market from offshore USDT. Data shows that in the first quarter of 2026, the net supply of USDT decreased by about $3 billion, marking a significant contraction for the first time in recent years, reflecting that funds are migrating towards the compliant system.

If this migration continues, who will be able to absorb this new compliant capital?

An important signal is that leading stablecoin issuers are aligning themselves with the federal regulatory system.

Circle has received conditional approval for a national trust bank license from the OCC at the end of 2025, while WLFI officially submitted its application for a national trust bank license in early 2026. For the stablecoin industry, the significance of this license is not just an additional compliance qualification; it means that issuers are beginning to enter the U.S. federal banking regulatory system and gain higher-level institutional recognition.

If the approval goes smoothly, with the full implementation of the GENIUS Act, both USDC and USD1 are expected to be among the first to complete the core puzzle under the federal regulatory framework. At that time, reserves, audits, information disclosure, and regulatory systems will tend to unify, and compliance itself may no longer be the main dividing line between the two.

What will truly determine the competitive landscape in the next phase may be institutional networks, financial infrastructure, and who is closer to the center of power in the U.S.

Currently, USDC still occupies a first-mover position. After years of development, it has deeply embedded itself in the U.S. financial system and established a mature institutional network and channel advantages.

However, in the new round of regulatory restructuring, USD1 is forming another kind of latecomer advantage. This advantage does not come from scale but from timing.

USDC grew in an era when regulatory rules were not yet unified, and its structure and market network were gradually formed while adapting to rule changes. In contrast, USD1 was born when the GENIUS Act and federal regulatory framework were already taking shape, meaning it could design its structure in accordance with future rules from day one. In other words, USDC is more like an upgrade within the old system, while USD1 is more like a rebuild according to the new system.

For large institutions, this "latecomer" advantage may not be a disadvantage. Because when rules tend to unify, the market may not need the earliest products but rather those that have the least friction with future systems and the lowest access costs.

In addition, USD1 has another variable that other stablecoins find difficult to replicate—political resources.

Compared to purely relying on market competition, it has a stronger correlation with the U.S. political cycle and regulatory direction. When regulatory details still have flexibility and policy directions have not yet fully solidified, a project deeply tied to the ruling cycle can often sense regulatory winds earlier and is more likely to gain institutional support.

Previously, the Middle Eastern sovereign fund MGX chose USD1 as a settlement tool for its $2 billion investment in Binance, which serves as a real-world example. Institutions may value not only USD1's current liquidity but also the regulatory certainty it represents and its potential position within the future institutional framework.

If USDT won on the globalization dividends of the past decade, and USDC won on the traditional financial system, then USD1 is betting on the regulatory dividends of the U.S. over the next decade.

If the GENIUS Act ultimately lands according to the current path, then in this reshuffling of stablecoins driven by institutional reconstruction, USD1 may become one of the biggest beneficiaries, even having the opportunity to grow from a latecomer into a core variable in the next phase of stablecoin competition.

III. Behind the Surge in USD1's Scale

If the political resources and regulatory cycle advantages mentioned earlier give USD1 a regulatory tailwind, the rapid growth over the past few months also comes from a very pragmatic growth strategy.

Since the beginning of this year, USD1 has quickly entered the ranks of leading stablecoins, with its scale growing from about $3 billion to nearly $5 billion, resembling a proactive "market-making expansion" around liquidity rather than a natural diffusion.

WLFI has launched a series of systematic incentive investments around USD1. Among them, exchanges are the most critical traffic entry points, while ecological assetization serves as its long-term support:

• Exchange Traffic Tilt: Represented by Binance, WLFI has promoted the use of USD1 through a large-scale subsidy mechanism in recent months, including token airdrops, yield incentives, trading rebates, and margin usage rewards, directly reducing the costs for users to hold and use USD1. At the same time, with the launch of USD1 spot trading pairs and the first USD1-denominated perpetual contracts, USD1 has been embedded into the trading matching and derivatives settlement systems. Platforms like Bybit and Gate have further amplified USD1's circulation depth in the contract and spot markets through joint activities, trading task incentives, and margin discounts.

• On-chain Ecological Cooperation: WLFI continuously promotes on-chain ecological cooperation. Whether Aster uses USD1 as the exclusive settlement asset for TradFi perpetual contracts, or lending protocols like Dolomite provide yield incentives, as well as the $100 million liquidity plan launched by TownSquare, all essentially increase the usage scenarios for USD1, allowing it to be used not only for trading but also for lending, settlement, and earning yields.

• Building Internal Financial Infrastructure: WLFI has also begun to build internal financial infrastructure. As products like WLFI Markets gradually go live, lending, yield, and fund management scenarios are starting to concentrate within its own ecosystem. Compared to relying entirely on third-party protocols, this means USD1 can not only gain liquidity but also retain more funds within its own system, forming an internal cycle between stablecoins, lending, and yield products.

• Locking in Users Early: WLFI is also locking in users and liquidity early through community whitelist programs and other methods, combining stablecoin issuance, ecological participation, and community building to further expand USD1's user base.

When looking at these factors together, it becomes clear that USD1's recent growth is not just the regulatory dividends brought by political resources; it also relies on continuously expanding ecological cooperation and self-built financial infrastructure to seek more long-term growth momentum.

In fact, this is also a pattern observed in the competition of stablecoins over the past few years; the stablecoins that can truly grow large are never just a "dollar token," but a complete financial network. From the current development path, USD1 is attempting to replicate this model. By expanding simultaneously across exchanges, ecology, and financial scenarios, it aims to accumulate network effects in a short period.

Conclusion: The Stablecoin War Has Just Entered the Second Half

If we look at the stablecoin market over a longer cycle, we will find that different projects are moving toward different positions.

USDT represents globalization and the offshore dollar network. The liquidity advantages and network effects accumulated over the past few years still allow it to hold the largest market share. However, as the U.S. regulatory framework gradually takes shape, it is also actively stratifying the market by launching compliant versions to distinguish between the U.S. market and the global market.

USDC represents an extension of the existing U.S. financial system. Relying on the institutional network, payment channels, and compliance foundation established by Circle over the years, it remains the most mature and stable choice for traditional financial institutions entering the stablecoin space.

Beyond this, a new variable is rapidly rising.

Compared to scale and first-mover advantages, USD1's greatest characteristic is that it has almost hit several key windows of this round of industry reconstruction: the rebuilding of the regulatory framework, changes in the political cycle, and the expansion of the stablecoin ecosystem.

More importantly, compared to the already formed stock pattern, USD1 is competing for the new market.

With the full implementation of the GENIUS Act, more and more traditional institutions, payment networks, and cross-border funds will enter the compliant stablecoin system. For a market still in a phase of rapid expansion, the allocation of new shares may not depend solely on scale and first-mover advantages, but on who can adapt to the new rules more quickly and gain institutional-level credit support.

The future stablecoin market may not simply be a case of one company dominating, nor just a duopoly between USDT and USDC. Beyond the offshore dollar system and traditional financial system, a new incremental market is gradually emerging, centered around the U.S. regulatory framework, policy resources, and institutional capital.

And USD1 happens to stand at the entrance of this new market. As the final rules are gradually implemented in July 2026, and the GENIUS Act is fully implemented in early 2027, the stablecoin industry may usher in the fastest reshaping since its inception. In the past, stablecoins competed on who could first bring dollars onto the chain; in the future, the competition may be about who is closer to the power center behind the dollar system.