Commentary: How the GENIUS Act is Rewiring the Digital Asset Market

Background:

At DigiFT, I wrote this article as part of a commentary series, "Market Decoded", to position the firm as a thought leader and source for reliable analysis on major market movements.

Format: 

Blog article | Published 22 May 2025 here

The U.S. Senate has just passed the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act) with rare bipartisan support—marking a milestone for stablecoin regulation in the U.S.

While its focus is stablecoins, the bill could reshape the broader tokenized finance landscape—setting a precedent for how blockchain-based financial infrastructure scales globally. In this context, compliance isn’t just a feature—it’s the foundation.

What’s in the GENIUS Act?

At its core, the GENIUS Act proposes a tiered, federal framework for stablecoin issuers. It mandates 1:1 reserve backing, regular public disclosures, strict redemption rights, and AML/KYC adherence.

Both banks and qualified nonbank issuers will be eligible—provided they meet these standards. Notably, it also opens the door for foreign stablecoin issuers to operate under a regime of “equivalent” oversight.

Why It Matters for Tokenized Finance

While the GENIUS Act is focused on stablecoins, now a $250 billion market, its impact will ripple across the entire digital asset market, especially for platforms bridging TradFi and DeFi.

Stablecoins aren’t just a payment tool—they’re the lifeblood of on-chain capital markets. Whether facilitating real-time settlement, treasury access, or DeFi composability, stablecoins underpin the liquidity layer of tokenized real-world assets (RWAs). Regulatory clarity here matters.

One key area the bill highlights is the role of reserve assets—especially U.S. Treasuries—as a standard for backing trusted digital currencies. That same category of assets is also gaining traction in tokenized form, supporting everything from treasury management to collateral use cases. Platforms offering tokenized Treasuries and real-world fixed income instruments, like DigiFT, are likely to become critical infrastructure as the market shifts toward regulated, asset-backed models.

For regulated RWA platforms like DigiFT, this represents a convergence of stablecoin policy and tokenized finance—strengthening the case for high-quality, compliant products that can serve both institutions and Web3-native users.

A Real Shift is Underway

The GENIUS Act mirrors Europe’s MiCA framework in many ways—emphasizing consumer protection, reserve transparency, and operational oversight. But it lands amid a broader momentum shift.

Just weeks before the GENIUS Act advanced in the Senate, World Liberty Financial announced the launch of USD1, a fully dollar-backed stablecoin issued in partnership with BitGo. Notably, USD1 was used by MGX, Emirati state-owned investment firm, to settle a $2 billion investment into Binance, highlighting a rising appetite for compliant, transaction-ready stablecoins in major institutional deals.

Around the same time, Tether, the world’s largest stablecoin, revealed plans to issue a U.S.-compliant stablecoin backed by U.S. dollar deposits and Treasuries—a move that could expand its reach while aligning with incoming U.S. regulation.

Together, these moves suggest a rapidly forming consensus: the stablecoin market is maturing—and with it, the infrastructure needed to support regulated, composable, RWAs on-chain.

What Comes Next

As the bill heads to the House of Representatives, all eyes are on how quickly it can pass—and whether broader frameworks for tokenization will follow. Regardless of pace, the message is clear: regulated rails are no longer optional.

We’re proud to be part of this movement. By bringing regulated, institutional-grade RWAs like UBS uMINT and Invesco iSNR into DeFi ecosystems, DigiFT is working to bridge traditional and Web3 markets—making regulated, real-world yield accessible to digital-native investors.