NYDIG Raises Concerns Over USD1 Stablecoin
New York Digital Investment Group (NYDIG), a Bitcoin-oriented fintech firm, has expressed concerns over the stablecoin USD1’s lack of comprehensive reserve reporting. Industry analysts share this concern as it seems unusual for a stablecoin launched by the family of a U.S president to be primarily held outside America.
The NYDIG Report
In their report, NYDIG highlights the peculiar structure of USD1 that appears incompatible with the upcoming GENIUS Act. The lack of reserve reports by USD1 since July has drawn deep concerns within the industry. Furthermore, NYDIG spotted potential issues due to USD1’s relationship with Binance, as approximately 79% of USD1 Stablecoins operate on the BNB blockchain. Moreover, it became known that 78% of USD1 tokens are held offshore, primarily within the digital wallets of foreign exchange entities.
The Structural Makeup of USD1 Applied in the Legislation Context
The USD1 stablecoin is acknowledged as a World Liberty Financial project, a company largely owned by the Trump family. However, a more in-depth look reveals that BitGo Technologies LLC, which is a money transmitter licensed with FinCEN, is responsible for issuing and redeeming the tokens. World Liberty Financial acts more like a figurehead of the project, while the crucial tasks of reserve management and infrastructure maintenance are mainly carried out by BitGo.
This fact is particularly significant as BitGo’s current responsibilities will become illegal as soon as the GENIUS Act is implemented. It’s important to note that this regulatory bill was enacted by President Donald Trump on July 18, 2025, but its effective implementation date is January 18, 2027, which is 18 months after its formal signing into law.
The Impact of the GENIUS Act on the Stablecoin Ecosystem
The GENIUS Act restricts stablecoin issuance to specific approved entities, which do not match BitGo’s current legal status. These specific approved entities include insured depository institutions, federal-qualified issuers such as Office of the Comptroller of the Currency-approved non-banks, uninsured national banks, federal branches of foreign banks, and state-qualified issuers. As per NYDIG, this discrepancy doesn’t pose an existential threat to USD1, but the project will likely need considerable structural modification to comply with the new law.
Interestingly, despite Donald Trump advocating for semi-annual reporting instead of quarterly reports for public companies, USD1 has already adopted this pattern. The concern here lies in USD1’s failure to provide reserve reports since July. For a fair comparison, it is worth noting that Circle, unlike USD1, releases reserve attestations on a monthly basis.
USD1’s Connection to Offshore Holdings And the Global Economy
NYDIG analysts have found that a significant portion of USD1 tokens, around 78%, is held in offshore wallets, most of which belong to foreign cryptocurrency exchanges. There’s also a possibility that the project has some level of connection with Binance due to the majority of USD1 tokens being based on the BNB Smart Chain. Additionally, Binance was rumored in July to have close ties with USD1.
Questions arose when it was discovered that the stablecoin supported by the U.S. President’s family was mostly held outside the country. At the same time, World Liberty Financial plans to tokenize real-world assets and pair them with USD1. World Liberty Financial representatives asserted that dollarization of the world is a patriotic mission that carries general universal benefits.
A Closer Look at the Global Impact of Stablecoins
NYDIG analysts have highlighted the confusing role of dollarizing the world through stablecoins. While this action could cement the dollar’s position as the world’s reserve currency, it appears to contradict Trump’s intentions of weakening the USD to enhance US-made products’ export potential.
This ambitious step to explore the stablecoin space and tokenized RWAs could potentially open a gigantic market. Currently, the stablecoin market aims to hit $2 trillion, and the securities market is valued at a staggering $257 trillion.
