Reasons the GENIUS Act Could Favor RWA Tokenization Firms Significantly

The GENIUS Act represents the initial significant piece of cryptocurrency legislation enacted by the United States Congress. This bill outlines regulatory standards for stablecoins and their issuers within the US, enabling institutions and major banks to leverage these digital assets.

However, the GENIUS Act is not solely advantageous for large financial entities. Technology firms that facilitate tokenization can now operate under the regulatory frameworks established by the GENIUS Act.

For an extended period, certain sectors and American consumers have been left uninformed.
That changes today with the GENIUS Act – a bipartisan advancement that will offer regulatory clarity for payment stablecoins. pic.twitter.com/H44W25dJzh

— U.S. Senate Banking Committee GOP (@BankingGOP) March 13, 2025

Regulatory Clarity for Tokenization Firms

Dave Hendricks, CEO and founder of Vertalo, informed Cryptonews that the enactment of the GENIUS Act grants large financial institutions the regulatory approval to adopt distributed ledger technology (DLT), but the true beneficiaries of the GENIUS Act are technology firms.

“Firms like Vertalo that empower institutions to issue and manage tokenized products and stablecoins are the genuine winners here,” Hendricks stated. “Securing a lead in the stablecoin competition will drive new investments in technology—and likely mergers and acquisitions—primarily benefiting builders rather than banks, which may need to prioritize purchasing over developing.”

Although significant focus has been placed on major banks capitalizing on stablecoins due to the GENIUS Act, Hendricks noted that Vertalo—a real-world asset (RWA) tokenization platform established in 2017—now possesses regulatory approval to implement DLT without the concern of arbitrary enforcement actions.

“Creating distributed ledger technology platforms that adhere to established and emerging securities regulations while scaling to enterprise levels is challenging and demands years of development,” Hendricks remarked. “If banks and other financial institutions seek rapid market entry, they will likely need to look externally.”

This seems to be the situation. Walter Hessert, head of strategy for Paxos—the blockchain infrastructure provider behind PayPal’s PYUSD stablecoin—shared with Cryptonews that the GENIUS Act affirms the company’s years of constructing compliant infrastructure alongside major enterprises such as Stripe, Mastercard, and PayPal.

“We can immediately utilize our existing GENIUS-compliant stablecoins like USDG and PYUSD to meet institutional demand,” Hessert stated.

He further explained that the GENIUS Act encompasses more than just stablecoins, highlighting that it establishes the regulated digital dollar infrastructure necessary for large-scale RWA tokenization.

Hessert emphasized that stablecoins act as the crucial on-chain settlement mechanism. With this aspect now regulated, institutions can confidently tokenize RWAs on a larger scale.

This represents a significant shift, particularly for technology firms like Paxos that have already introduced compliant stablecoin products. “Both our Global Dollar (USDG) and PayPal USD (PYUSD) comply with the GENIUS Act’s stipulations,” Hessert noted.

Today, @Visa announced support for Paxos‑issued USDG and PYUSD in its stablecoin settlement offering.
Honored to collaborate with one of the world’s leading payment innovators to shape the future of financial rails. pic.twitter.com/e3ReplVN0K

— Paxos (@Paxos) July 31, 2025

Collaboration Between RWA Platforms and Financial Institutions

A new opportunity has emerged, given the GENIUS Act’s influence on both technology firms and financial institutions.

For example, Hessert explained that for banks, this new legislation is equally transformative. “Banks receive regulatory clarity to custody digital assets and issue their own stablecoins through subsidiaries, all while leveraging existing relationships with corporate clients.”

However, Hessert pointed out that the true opportunity lies in partnerships. He explained that while banks possess strong client relationships and regulatory knowledge, tech companies have already established the blockchain infrastructure and compliance frameworks.

“Global Dollar Network exemplifies this, as we’re collaborating with traditional financial institutions to merge their distribution and trust with our stablecoin issuance technology,” Hessert stated. “Rather than a zero-sum scenario, GENIUS fosters a collaborative ecosystem where banks and tech firms can concentrate on their respective strengths.”

Florian Nöll, WW director at IBM LinuxONE, further informed Cryptonews that the GENIUS Act enables stablecoin issuers to officially pursue the retail payment sector.

“This is due to stablecoins’ high level of transparency in settlement, which reduces risk and significantly lowers fees compared to traditional systems. It ultimately paves the way for stablecoins to serve as a cash equivalent, but without relying on commercial bank money,” Nöll explained.

He added that while commercial banks may be expected to respond with their own digital currencies (not necessarily stablecoins), tokenization providers must be involved in the process.

“Their role is crucial in connecting traditional banking with the digital economy, ensuring compliance, interoperability, and operational efficiency,” Nöll commented.

With this perspective, Nöll shared that IBM—including IBM Research—is developing a tokenization framework for enterprise assets and bank money, addressing many existing technical and governance challenges. He noted that IBM is providing differentiated capabilities for digital asset custody infrastructure for financial institutions aiming to safeguard and manage the lifecycle of digital assets.

Challenges to Address

While the GENIUS Act has opened numerous avenues for both technology firms and financial institutions, several challenges persist that may impede progress.

Ryan Zega, head of structured finance at Aptos Labs, informed Cryptonews that a primary challenge is bridging the divide between on-chain networks and off-chain financial systems.

Zega explained that for tokenized assets and programmable money to achieve widespread adoption, integration with banks, custodians, and capital markets infrastructure must improve.

“There’s also an ongoing need to educate policymakers, financial institutions, and the public on the practical advantages of this technology beyond headlines and speculation. That understanding will be essential for long-term adoption,” Zega stated.

Hessert added that while compliant technology firms like Paxos may not encounter significant challenges, the GENIUS Act requirements will necessitate changes in how international jurisdictions approach the regulation of stablecoins.

“Part of this will involve incorporating the bill’s stablecoin reciprocity provision. This will enable stablecoins to become a global product and maximize their potential for both a modernized and inclusive global financial system,” Hessert noted.

Hendricks further remarked that while technology firms engaged in tokenization may gain the most from the GENIUS Act, he believes the legislation will not be beneficial for the broader crypto industry.

“In fact, the GENIUS Act could be perceived as a regression towards centralization. The GENIUS Act was a commendable initial step by this latest Congress if the objective was to provide cover for large financial institutions to broaden their overall offerings, not just payment stablecoins,” he stated.

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