HCS Score
Red Line Violations
Research Opinion, Not a Fatwa
These are absolute prohibitions in Islamic finance. If any red line is triggered, the asset is automatically classified as HARAM.
Ecosystem Riba Exposure
Not directly or indirectly connected to interest generating mechanisms
Gambling / Betting
No gambling or betting mechanism
Haram Industry
Not involved in haram industry
Based on Red Line Screening and HCS Scoring.
Haram / Non Compliant
This cryptocurrency is evaluated as Haram for investment and use because the asset demonstrates material Sharia compliance concerns within the CoinStudy HCS framework.
Explanation
This asset shows significant concerns related to Sharia compliance, financial structure, or speculative design.
Reviewed by
CoinStudy Shariah Board
The United States Congress spent years debating what to do about stablecoins.
The GENIUS Act, signed into law on July 18, 2025, resolved that debate by establishing the first comprehensive federal framework governing payment stablecoins in the United States. It required 1:1 dollar backing, monthly public reserve disclosures, and oversight mechanisms for anti-money laundering compliance. It prohibited stablecoin issuers from offering yield to users. It required reserves to be held in cash, Treasury bills, repos, or central bank deposits.
This framework was designed to make dollar-backed stablecoins safer, more transparent, and more regulated than their offshore predecessors like USDT. From a conventional financial regulation perspective, the GENIUS Act represents genuine progress in consumer protection, systemic risk management, and regulatory oversight.
From an Islamic finance perspective, the GENIUS Act's reserve requirement is a precise and legally mandated specification of the Riba-generating reserve structure that CoinStudy has identified as the compliance failure in every dollar-backed stablecoin. The Act does not create a new type of halal stablecoin. It creates a regulated version of the same T-Bill backed reserve model that has failed CoinStudy's screening in USDT, USDC, AUSD, and every other stablecoin in the category.
On January 27, 2026, Tether launched USAT, its US-regulated dollar stablecoin built specifically to comply with the GENIUS Act framework. According to Tether's official press release, USAT is issued by Anchorage Digital Bank, N.A., a federally chartered crypto bank, with Cantor Fitzgerald serving as reserve custodian and preferred primary dealer. Bo Hines, former executive director of the White House Crypto Council, leads the USAT operation as CEO of Tether USAT.
For Muslim investors who have been following CoinStudy's stablecoin analyses and who hoped that GENIUS Act regulation might produce a genuinely halal dollar stablecoin, the USAT analysis produces the same conclusion as every other T-Bill backed stablecoin before it. The regulatory compliance is genuine and meaningful in conventional financial terms. The Islamic finance compliance failure is equally genuine and equally unavoidable given the GENIUS Act's mandated reserve composition.
We ran USAT through the full CoinStudy Halal Crypto Standard (HCS) methodology. Here is the complete picture.
USAT fails the CoinStudy HCS Sharia red-line screening. The Ecosystem Riba Exposure red line is triggered by the GENIUS Act-mandated reserve composition requiring 100% backing in cash, Treasury bills, repos, or central bank deposits. US Treasury bills generate interest income. Overnight repos generate interest income. The GENIUS Act's reserve mandate is a regulatory specification of the interest-bearing reserve structure that makes every T-Bill backed stablecoin fail CoinStudy's screening. Regulatory compliance with the GENIUS Act confirms and formalizes the Riba concern rather than resolving it. The automatic Haram classification follows.
USAT, officially written as USA₮, is Tether's US-regulated dollar-backed stablecoin launched January 27, 2026. According to Tether's official press release, USAT was developed specifically to operate within the United States' federal stablecoin framework established under the GENIUS Act signed into law July 18, 2025.
The structural architecture of USAT is deliberately and explicitly different from USDT. According to Eco research, USAT is a separate token from USDT with separate reserves, separate issuance, separate redemption rails, and operation under a different regulatory regime. Tether did not migrate USDT to GENIUS Act compliance. It created an entirely new product specifically designed for the US regulated market.
According to Eco research, USAT's economic arrangement is straightforward. A regulated counterparty such as an exchange, market maker, payments company, or corporate treasury wires US dollars to Anchorage Digital Bank. Anchorage mints USAT on Ethereum and credits the counterparty's on-chain wallet. To redeem, the counterparty burns USAT and Anchorage wires dollars back. The actual custodian of the reserves is Cantor Fitzgerald, which acts as the preferred primary dealer for settling into Treasury bill positions.
The GENIUS Act's reserve requirement is the most important regulatory specification to understand for the compliance assessment because it is both the source of USAT's regulatory legitimacy and the source of its Islamic finance compliance failure.
According to Inside Bitcoin's research on USAT, the GENIUS Act requires stablecoin issuers to maintain 1:1 dollar backing, conduct monthly audits, and hold reserves in cash or short-term US Treasury bills. The Act explicitly prohibits stablecoin issuers from offering yield to users.
This dual requirement creates an interesting regulatory architecture that must be carefully analyzed from an Islamic finance perspective.
The no-yield-to-users provision removes the most direct Riba distribution mechanism. When a stablecoin cannot distribute yield to its holders, the interest income generated by the T-Bill reserves flows to the issuer and custodian rather than to token holders directly. USAT holders do not receive interest income from the T-Bill reserves. This is a meaningful distinction from yield-bearing stablecoins like Falcon Finance's sUSDf, which explicitly distributes T-Bill income to depositors.
However the elimination of direct yield distribution to holders does not eliminate the Riba-generating reserve structure. Every USAT token in existence is backed by US Treasury bills and cash that generate interest income. That interest income flows to Anchorage Digital Bank and Cantor Fitzgerald rather than to USAT holders. The Riba is committed by the issuing entities through the operation of the interest-bearing reserve fund that backs every USAT token.
Our Shariah Board Chairman Dr. Usman Quddus reviewed the USDT and structurally similar fiat-backed stablecoin category and confirmed that the backend structure involving interest-based transactions requires caution. He confirmed that the use as a medium of exchange for permissible transactions is conditionally permissible. He did not confirm that the interest income generated by the reserve fund becomes permissible because it flows to the issuer rather than to token holders.
The Islamic finance concern is not exclusively about who receives the interest income. It is about whether the asset that backs the stablecoin generates interest income at all. A stablecoin backed by T-Bills is backed by interest-bearing government bonds regardless of who receives that interest.
USAT is not the first GENIUS Act-compliant stablecoin and understanding how it compares to others in the category helps Muslim investors evaluate the entire regulatory compliance framework.
USDC by Circle is backed by cash and short-dated US Treasury bills. Circle keeps the interest income from reserves. USDC passed the GENIUS Act reserve requirements in its existing form. CoinStudy classifies USDC as Haram at the structural level for the same T-Bill reserve concern, with the Chairman's conditional permissibility for medium of exchange use.
PYUSD by PayPal is backed by cash equivalents and Treasury bills. Same structural compliance failure in CoinStudy's framework. Same Chairman's conditional permissibility for medium of exchange.
USAT is backed by cash and Treasury bills per GENIUS Act mandate. Issued by a federally chartered bank. Monthly attestations required. No yield distributed to holders. Same structural compliance failure as USDC and PYUSD in CoinStudy's framework.
The pattern is consistent and important: GENIUS Act compliance mandates the reserve structure that triggers CoinStudy's Ecosystem Riba Exposure red line. Every GENIUS Act-compliant stablecoin, by regulatory design, has T-Bill backed reserves that generate interest income. GENIUS Act compliance and CoinStudy Halal compliance are structurally incompatible for the same reason that every other T-Bill backed stablecoin fails CoinStudy's screening.
This is not a critique of the GENIUS Act as financial regulation. The Act genuinely improves transparency, accountability, and consumer protection for conventional financial users of dollar stablecoins. It is a factual observation that GENIUS Act-compliant reserve requirements mandate interest-bearing instrument backing that triggers CoinStudy's Ecosystem Riba Exposure red line.
Muslim investors who have been using USDT under the Chairman's conditional permissibility ruling for medium of exchange purposes need to understand how USAT compares to USDT from both a compliance and a practical perspective.
The core reserve structure is identical in its compliance implications. Both USDT and USAT are backed by US Treasury bills that generate interest income. The interest income flows to Tether in USDT's case and to Anchorage Digital Bank and Cantor Fitzgerald in USAT's case. Neither distributes yield directly to token holders. Both fail CoinStudy's Ecosystem Riba Exposure red line for the same structural reason.
The regulatory architecture differs significantly. USDT is issued offshore by a non-US entity and has faced regulatory uncertainty in the US market. USAT is issued by a federally chartered US bank under direct GENIUS Act oversight with monthly attestation requirements and Cantor Fitzgerald as reserve custodian. This regulatory difference matters for conventional financial risk assessment but does not change the Islamic finance compliance classification.
The transparency difference is meaningful. USAT's monthly attestation requirement under the GENIUS Act means its reserve composition is publicly documented more frequently and with greater regulatory accountability than USDT's quarterly attestations. Greater transparency about an interest-bearing reserve confirms the Riba concern more clearly and more frequently. It does not resolve it.
For Muslim investors who need a dollar stablecoin for medium of exchange purposes, the Chairman's conditional permissibility ruling applies to USAT in the same way it applies to USDT. Use as a medium of exchange for permissible transactions is conditionally permissible with caution. The caution the Chairman identified, specifically the presence of interest-based transactions in the backend structure, is not reduced by GENIUS Act compliance. The T-Bill interest is documented more clearly under GENIUS Act attestation requirements rather than being less present.
Muslim investors who have been following CoinStudy's stablecoin series will have noticed that USAT, like every T-Bill backed stablecoin before it, fails the Ecosystem Riba Exposure red line.
The only dollar stablecoin CoinStudy has ever verified as Halal in its preliminary analysis is UNIT by Ducat Protocol. UNIT is backed exclusively by overcollateralised Bitcoin with no T-Bills, no repos, no bank deposits, and no interest-bearing financial instruments of any kind in the reserve structure. The fee structure question is currently under active discussion between CoinStudy, Ducat Protocol, and our Shariah Board Chairman, with the Chairman providing a path to permissibility through restructuring the fee as a minting service charge rather than a loan origination condition.
USAT's launch, despite its regulatory sophistication and genuine institutional backing, does not provide Muslim investors with a halal alternative to UNIT. The GENIUS Act's reserve requirements specifically mandate the interest-bearing instruments that make dollar stablecoins fail Islamic finance screening.
USAT has a documented connection to XAUT, Tether's gold-backed token, that Muslim investors should understand separately from the USAT compliance assessment.
According to Cryptonews research, Ledn announced in June 2026 that it would add XAUT as eligible collateral on its platform with gold-backed loans denominated in USDT and USAT. XAUT holders can pledge their tokenized gold as collateral and receive USAT-denominated loans from Ledn.
This lending arrangement using XAUT as collateral for USAT loans involves interest income on the outstanding loan balance, which is Riba. The XAUT-to-USAT lending mechanism is Haram regardless of XAUT's own compliance status as a gold-backed instrument. Depositing XAUT as collateral to borrow USAT at interest is the same Riba structure as any other collateral-backed interest-bearing loan.
CoinStudy's assessment of XAUT as a gold-backed token is a separate analysis addressing whether tokenized physical gold ownership is permissible in Islamic finance. The compliance of XAUT as a holding does not extend to the interest-bearing lending product that uses XAUT as collateral. Muslim investors who want to assess XAUT specifically should refer to CoinStudy's dedicated XAUT analysis.
Ecosystem Riba Exposure — ❌ Failed. GENIUS Act mandates 100% reserves in cash, Treasury bills, repos, or central bank deposits. US Treasury bills and repos generate interest income. GENIUS Act compliance confirms and formalizes the interest-bearing reserve structure that triggers this red line. Regulatory documentation of the reserve structure makes the Riba concern more transparent rather than less present.
Gambling and Betting — ✅ Passed. No gambling mechanism.
Haram Industry — ✅ Passed. Payment stablecoin infrastructure at classification level.
Guaranteed Interest — ✅ Passed at token holder level. GENIUS Act explicitly prohibits stablecoin issuers from offering yield to users. Interest flows to issuers not token holders. Structural Riba in reserves acknowledged but does not trigger this specific red line at the holder level.
Synthetic Interest Products — ✅ Passed at core USAT token level.
One red line failed definitively. Layer 2 scoring skipped entirely.
Overall Result: Haram — Red Line Violation
Our Shariah Board Chairman Dr. Usman Quddus reviewed the USDT and T-Bill backed stablecoin category and issued a ruling that applies directly to USAT as a structurally identical instrument.
Scholars have differing opinions regarding USDT and other fiat-backed stablecoins. Some scholars consider it impermissible and some consider it permissible. According to our research, its use is permissible. Its backend structure and currency leveling method is not interest in totality, however caution is necessary due to the presence of interest-based transactions within it. If it is used in halal means the profit will be halal, and if it is used in haram dealings it will be haram.
This ruling applies to USAT with the same conditional permissibility for medium of exchange use. The Chairman's caution about the presence of interest-based transactions in the backend structure applies identically to USAT because the GENIUS Act mandates the same interest-bearing reserve instruments that the Chairman identified as the source of concern in USDT.
USAT as a medium of exchange for permissible transactions is conditionally permissible under the Chairman's ruling framework. USAT as a yield-generating instrument through any future DeFi integration would be impermissible. USAT as collateral in the XAUT-backed lending arrangement would be the instrument through which interest-bearing loans are denominated, which is impermissible.
CoinStudy has now analyzed eleven dollar-backed stablecoins. Ten received Haram classifications. One, UNIT by Ducat Protocol, received a preliminary Halal classification subject to ongoing Chairman review of the fee structure.
USDT by Tether: Haram. T-Bill interest reserves.
USDC by Circle: Haram. T-Bill interest reserves.
DAI by Sky Protocol: Haram. Lending protocol backing.
PYUSD by PayPal: Haram. Treasury instrument reserves.
USDG by Global Dollar: Haram. Treasury instruments and bank deposits.
RLUSD by Ripple: Haram. Same reserve structure as USDC.
USDD by Tron: Haram. Synthetic stabilization with yield programs.
United Stablecoin U: Haram. Standard fiat-backed reserve model.
AUSD by Agora Finance: Haram. T-Bill reserves with partner revenue sharing.
TrueUSD TUSD: Haram. Bank deposits and Treasury instrument reserves with documented reserve mismanagement.
USAT by Tether: Haram. GENIUS Act-mandated T-Bill and repo reserves.
UNIT by Ducat Protocol: Preliminary Halal under active Chairman review.
The pattern across eleven Haram classifications is definitive. No T-Bill backed stablecoin can achieve Halal classification under CoinStudy's framework because T-Bills are interest-bearing instruments by definition. GENIUS Act compliance mandates T-Bill backing. GENIUS Act-compliant stablecoins therefore fail CoinStudy's screening by regulatory design.
Before using USAT in any capacity beyond simple medium of exchange transactions, ask yourself honestly.
Do I understand that the GENIUS Act explicitly mandates that USAT's reserves consist of US Treasury bills and cash equivalents, and that these instruments generate interest income that triggers CoinStudy's Ecosystem Riba Exposure red line regardless of the Act's conventional financial benefits? Am I aware that GENIUS Act compliance makes USAT more regulated and more transparent than USDT but does not make it more compliant with Islamic finance principles because the Act specifically mandates the interest-bearing reserve instruments that fail CoinStudy's screening? Do I understand that the GENIUS Act's prohibition on distributing yield to USAT holders means that T-Bill interest income flows to Anchorage Digital Bank and Cantor Fitzgerald rather than to me, but that this does not eliminate the Riba embedded in the reserve structure that backs every USAT token? Am I aware that the XAUT-to-USAT lending arrangement announced with Ledn in June 2026 involves interest charged on outstanding loan balances and is Haram regardless of XAUT's gold-backed status? If I need a dollar stablecoin for medium of exchange purposes, do I understand that UNIT by Ducat Protocol represents the only stablecoin CoinStudy has found with a potentially Halal reserve structure, backed by Bitcoin only with no interest-bearing instruments?
USAT (Tether USA₮) is classified as Haram / Non-Compliant under the CoinStudy Halal Crypto Standard.
The Ecosystem Riba Exposure red line is triggered by the GENIUS Act's explicit mandate that USAT reserves consist of cash, Treasury bills, repos, or central bank deposits. US Treasury bills are interest-bearing government bonds. Overnight repos are short-term interest-bearing instruments. The regulatory mandate that creates USAT's conventional financial legitimacy simultaneously mandates the interest-bearing reserve structure that fails CoinStudy's Islamic finance screening.
The institutional credibility of USAT's structure is genuinely acknowledged. Issuance by a federally chartered US bank, custody by Cantor Fitzgerald as a primary dealer, monthly attestation requirements under the GENIUS Act, appointment of a former White House Crypto Council director as CEO, and availability on major regulated exchanges are all genuine marks of institutional quality in conventional financial terms.
None of these conventional financial quality markers change the Islamic finance compliance classification because the GENIUS Act's reserve mandate specifies the interest-bearing instruments that trigger the red line. USAT is a more regulated, more transparent, more institutionally credible version of the same T-Bill backed reserve model that makes USDT, USDC, and every other dollar stablecoin in CoinStudy's analysis library fail the Ecosystem Riba Exposure check.
For Muslim investors who need dollar stable value for medium of exchange purposes, the Chairman's conditional permissibility ruling applies to USAT with the same guidance as USDT: use as a medium of exchange for permissible transactions is conditionally permissible with caution. Participate in no yield-generating or lending products using USAT. The only structurally different option remains UNIT by Ducat Protocol, whose Chairman review is ongoing.
Read detail analysis and concepts here:
Is USDT Halal?
Is Ducat Protocol Halal?
Is Crypto Lending Halal?
Is USD Coin Halal?
Disclaimer: This analysis is provided for educational and research purposes only based on guidance from CoinStudy's HCS Shariah Board members including the Chairman's ruling on fiat-backed stablecoins applied to USAT as a structurally similar instrument. The scholarly disagreement noted in CoinStudy's stablecoin analyses reflects genuine differences among qualified Islamic finance scholars on the medium of exchange permissibility question. CoinStudy does not issue personal fatwas or financial advice. Please consult a qualified Islamic scholar for individual guidance.
Guaranteed Interest
No guaranteed interest obligations
Synthetic Interest Products
No synthetic interest instruments
1 Red Line Failed
This asset is automatically classified as HARAM.
