Stubcoin status after act of genius: the weight of the expert

The recent US passage of the Genius Act marked a key turning point for Stablecoins and set regulatory precedents that could potentially shape digital finance globally.

Fabian Dori, Chief Investment Officer at Sygnum Bank, took part in the latest episode of Cointelegraph’s Byte-sized Insight Podcast, detailing how law affects Stablecoin adoption, institutional involvement and international regulations alignment.

Innovation and stability

The Genius Act, which introduces a clear federal regulatory framework for Fiat-supported stubcoins, requires full transparency from the issuer, including one-to-one asset support, mandatory federal licensing, and independent preliminary audits.

According to DORI, these provisions are essential to promoting responsible innovation and economic stability.

“I really think the impact of genius behavior is both short-term and long-term,” Dori said.

“By requiring Stablecoin issuers to obtain federal licenses, back Stablecoins 1-1-1 with high-quality liquid assets and disclose preliminary configurations… institutional investors can have legal confidence in using regulated steady coins.”

But one of the controversial aspects of the law, the ban on stable coins that bear yields, could effectively reshape how they are integrated within the dystopian finance (DEFI).

Related: Trump White House releases long-standing crypto report

Dori points out that the move could create a more clear market distinction between payment-focused stubcoins and yield-generating tokenized money market products.

“It’s true that it’s no longer possible to get a direct yield from holding Fiat-backed stubcoins,” he said.

“It will create a clear separation between the non-two stable coins and the tokenized money market fund.”

Europe vs. USA

Another important topic being discussed is the difference between European and US regulations.

Europe, particularly cautious about the regulatory stance of the Digital Euro initiative, could face pressure to accelerate innovation due to the US stance taken through the genius law.

“While Europe is primarily focused on risk management, it seems like the US is focusing on the frameworks that enable and drive innovation,” Dori said.

“The act of genius actually attracts both new publishers, but also new use cases to the US. This could lead to Europe being required or forced to open up.”

For a complete interview with Cointelegraph’s podcast page, Apple Podcasts and Spotify, listen to the complete episode of Byte Size Insights. And don’t forget to check out the full lineup of other shows on Cointelegraph!

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