Stablecoin regulation is evolving—it’s time for the builders to step in | Opinion

Crypto isn’t a stranger to debate, and recent developments on the regulatory front have intensified the conversation, as governments accelerate efforts to regulate the digital asset economy. In the U.S., the bipartisan GENIUS Bill, which passed the Senate floor, will, upon full implementation, become the first comprehensive federal framework regulating stablecoins. The UK is drafting legislation to bring digital assets under the same rules as traditional finance, while Europe’s MiCA framework is now being rolled out.

We know that regulation of digital assets is inevitable, but today’s issue isn’t about when—it’s about how and whether those building the technology will have a seat at the table. Without talking to the builders of tomorrow’s financial technology, regulation in this space will continue to run into roadblocks and be hampered by frameworks that fail to reflect how digital assets actually operate.

Rethinking regulation for digital finance

While digital assets offer a range of benefits, including lower transaction costs, global accessibility, and increased financial autonomy, they also introduce new risks that traditional regulatory frameworks are not equipped to address. Unlike traditional banks, which provide safeguards such as deposit insurance, most stablecoin legislation, including what is laid out in the GENIUS Bill, lacks equivalent consumer protections. Issues like loss of private keys for non-custodial wallets, use of smart contracts and DeFi pools in different jurisdictions, and irreversible transactions remain unresolved. Plus, the complexity of managing multiple blockchain networks and wallets still deters mass adoption, particularly among less tech-savvy users.

These concerns highlight a broader issue: regulatory frameworks are often developed in isolation from the technologies they aim to govern. To build policies that are both effective and forward-looking, lawmakers must engage more closely with the innovators who understand the nuances of blockchain systems. Regulation shouldn’t be about forcing new technologies into old models; it should be about designing new models that reflect how these technologies work.

Signs of that evolution are already emerging in the private sector. Mastercard’s partnership with MoonPay, which allows consumers to make purchases using stablecoins, exemplifies how traditional finance and web3 can move forward together. Several large banks, including JPMorgan, Citigroup, and Wells Fargo, are reportedly exploring joint stablecoin initiatives. These developments signal that traditional finance is not resisting digital assets but actively seeking ways to integrate with them. As regulatory sentiment shifts in Washington, institutions are positioning themselves to shape and lead this new phase of financial innovation.

Innovation demands cooperation

While technology may spark innovation, only cooperation can turn it into real-world solutions. The challenges surrounding the GENIUS Bill’s progress highlight the growing friction between innovation and regulation. Developers warn that rigid, bank-centric frameworks risk stifling blockchain-based innovation. Lawmakers, meanwhile, are rightly concerned about consumer safety and the potential for misuse, from money laundering to sanctions evasion.

The World Economic Forum in the past highlighted the need for governments to have a more coordinated approach to address the risks associated with digital assets. It calls for greater collaboration with private entities, including crypto firms, developers, exchanges, and other innovators, to shape effective, future-ready policy. Innovators and lawmakers would benefit from working together to help lawmakers understand the full scope of today’s digital asset ecosystem.

Today, it could be argued that, though positive for the industry, the GENIUS Bill doesn’t actually go far enough. Many policymakers associate crypto with stablecoins and bitcoin, overlooking the broader innovation happening across decentralized networks. Digital assets have evolved beyond a single asset or use case. From NFTs to real-world asset tokens to decentralized applications, developers are building systems with real-world utility that don’t conform to standard regulatory models.

For digital asset regulation to be effective, lawmakers must understand what’s being built today and implement regulation that reflects modern financial models. Those same lawmakers need to work with those leading the industry, as that understanding can only come through direct engagement with the people creating these technologies.

A blueprint for partnership

Blockchain’s very nature is rooted in decentralization and collective input, qualities that should also define how it’s regulated. Policymakers and innovators each bring strengths to the table. Regulators can help foster public trust and enable stability and adaptation, while builders bring the technological understanding and knowledge of how these technologies are evolving. By working together, they can design rules that are not only put into law but are also adaptable to this fast-moving space.

Education is also going to play a heavy role in making this partnership effective. Sharing knowledge on what is developing in the decentralized finance space and flagging where this might need regulatory attention. Establishing a foundational but agile layer of knowledge between the ever-evolving industry itself and those tasked with its regulation is the ultimate pillar of effective real-world implementation.

Engaging developers early can help governments better assess technical risks, improve regulatory design, and avoid frameworks that inadvertently stifle innovation. Whether through formal consultation, regulatory sandboxes, shared research initiatives, or joint problem-solving forums, structured collaboration is the clearest path to creating a balanced, effective policy environment for digital assets.

Marcos Viriato

Marcos Viriato is the co-founder and CEO of Parfin, a leading fintech company providing digital asset custody and blockchain infrastructure for traditional financial institutions, and a co-founder of Rayls. Under his leadership, Parfin has attracted backing from industry giants such as Accenture Ventures and Framework Ventures. Previously a partner at BTG Pactual, one of Latin America’s largest investment banks, he is a recognized leader at the intersection of finance and crypto. He has played a pivotal role in advancing blockchain adoption in institutional contexts, most notably by spearheading the development of Rayls—a permissioned, EMV-compatible blockchain designed to bridge TradFi and DeFi. Rayls is currently being tested as the privacy layer for Brazil’s central bank digital currency, Drex.