How the GENIUS Act Is Revolutionizing Stablecoin Strategy – Foresight Ventures Partner Explains

The crypto world just got a regulatory curveball—and it might actually be a home run.

Foresight Ventures' latest analysis reveals how the GENIUS Act is forcing stablecoin issuers to rethink their playbooks. No more 'move fast and break things'—this is chess, not checkers.

The New Rules of the Game

Suddenly, compliance isn't just a speed bump for growth—it's becoming the foundation. The Act's framework turns stablecoins from wild west tokens into financial instruments with guardrails (and yes, the banks are furious).

Liquidity vs. Legitimacy

Tether's dominance faces its first real threat as regulated alternatives gain traction. The twist? Institutions care more about audit trails than 20% yields when real money's on the line.

The GENIUS effect: turning crypto's 'fake dollars' into the most transparent part of finance—now there's a plot twist Wall Street didn't see coming.

“The GENIUS Act makes clear that any issuer aiming for scale must meet bank-level regulatory standards,” said Li, whose investment focus spans stablecoin infrastructure, payment rails, and Web3 applications.

“Applying for a bank charter doesn’t guarantee approval—but it signals long-term compliance intent to regulators and partners.”

Stablecoin Shakeout: Institutional Integration vs. DeFi Independence

Li expects the stablecoin sector to split into two camps over the next 12 to 18 months: institutional-focused players pursuing full licensing and banking integration, and DeFi-native or offshore issuers targeting niche use cases.

As U.S. regulatory clarity solidifies, banks and traditional financial rails will face growing pressure to integrate stablecoins, not out of ideological alignment, but due to user demand for faster, cheaper, programmable financial products.

Licensing Is the New Moat—and the New Barrier

As the stablecoin market matures, Li says the ability to secure a U.S. banking license is quickly becoming the sector’s defining edge—and an operational filter for investors.

“We no longer evaluate infrastructure startups purely on technical sophistication. Regulatory readiness and ability to integrate with licensed issuers are now critical,” she notes.

While Ripple’s and Circle’s path toward becoming full U.S. banks may crowd out direct USD stablecoin competition, Li sees fertile ground for certain technologies. These include on-chain compliance tools, real-time risk monitoring systems, tokenization middleware, and fiat-crypto bridge infrastructure. Startups able to plug into the evolving regulated stack—rather than compete head-on—will be well positioned.

Still, licenses come at a cost. “Licenses are both a moat and a constraint,” Li explained.

“For U.S. dominance, they’re non-negotiable. Agility is reduced, but large-scale adoption requires regulatory alignment.” For new entrants, distribution is key—but without regulatory credentials, major partners won’t engage.

Global Divergence and the Rise of Hybrid Models

While U.S. bank charters may offer a long-term edge domestically and with institutional clients, Li believes global stablecoin competition will remain multi-speed. Offshore players like Tether will continue to dominate in DeFi and cross-border use cases due to flexibility and fewer compliance demands.

“In the short term, Tether and similar issuers won’t lose dominance in DeFi,” she said. “But as regulated players integrate into fintech apps and banking stacks, they’ll gradually absorb more institutional and retail flows—especially in treasury and on/off-ramp applications.”

International jurisdictions are already reacting. “The UAE, Singapore, and Hong Kong are actively offering lighter-touch frameworks to attract issuers,” Li said.

Paradoxically, issuers regulated under the GENIUS Act may even find it easier to integrate into these emerging hubs, as U.S. oversight lends legitimacy to cross-border deals.

Li concludes that real-world asset (RWA) tokenization—already gaining traction—could become the bridge between traditional finance and crypto.

“Just like Robinhood democratized equities, hybrid models will drive compliant, user-centric financial products,” she said. The GENIUS Act, rather than killing innovation, may accelerate bank-crypto collaborations, reshaping the financial system at its core.