Web3 Compliance • Roundtable Discussion | Can Three U.S. Crypto Bills Really Change the Game?
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Web3 Compliance • Roundtable Discussion | Can Three U.S. Crypto Bills Really Change the Game?
Clashing perspectives, five questions and five answers!
Navigating Web3 tides with focused insightsAuthors: Luke, Sam, Li Zhongzhen, Pang Meimei
TechFlow launches its inaugural roundtable series on Web3 compliance!
【Web3 Compliance · Roundtable】is a monthly dialogue series focusing on key industry topics. Each session invites 4 to 6 members of the TechFlow Web3 Compliance Research Group from diverse backgrounds in law, technology, projects, and finance to respond and debate core issues. Their multifaceted perspectives are systematically organized to deliver deep, well-rounded, and practical compliance insights.
Recently, the U.S. House of Representatives passed three crypto-related legislative bills by overwhelming majority votes: the GENIUS Act, the CLEAR Act, and the Anti-CBDC Surveillance State Act. The GENIUS Act—hailed as “a crucial step in cementing America’s global leadership in financial and cryptographic technologies”—was officially signed into law by President Trump on the 18th and widely reported by Chinese media outlets including CCTV and financial news platforms.
In this edition, we posed five questions to outstanding members of the TechFlow Web3 Compliance Research Group: "What does the GENIUS Act aim to achieve?", "How should we interpret the regulatory division between the SEC and CFTC under the CLEAR Act?", "Why is the U.S. opposing CBDCs?", "Will these three bills influence other countries’ crypto regulations?", and "How will they affect the operations of crypto startups?"
Let’s dive in!
Q1: Can you explain in plain terms what the GENIUS Act aims to do? Do stablecoins from countries outside the U.S. still have competitive opportunities?
Luke:
The GENIUS Act essentially establishes a strict legal framework for stablecoins (like USDT and USDC) and their issuers. It defines stablecoins legally, granting them formal recognition, and thereby protects both issuers and consumers who use stablecoins.
It mainly consists of three parts.
First, the bill defines stablecoins as “payment stablecoins,” explicitly stating that they are not securities or commodities. This means stablecoins themselves lack investment or appreciation characteristics.
Second, it mandates that stablecoin issuers maintain consumer-redeemable reserves at a 1:1 ratio using highly liquid assets. Issuers must publish their ledgers monthly to prove this 1:1 backing. Moreover, if a stablecoin issuer reaches a market cap above $50 billion, it must submit annual audit reports and be subject to dual state and federal oversight—preventing collapses like Terra/Luna due to de-pegging.
Third, it ensures that in the event of an issuer’s bankruptcy, users have priority claim over their funds—effectively providing a safety net. It also includes anti-money laundering (AML) and Know Your Customer (KYC) requirements similar to those for banks, ensuring transaction transparency and preventing misuse.
Sam:
The GENIUS Act regulates the issuance and trading of stablecoins with what appears to be very strict standards. Any stablecoin aiming to be issued or circulated in North America must obtain either federal or state licenses—such as becoming a chartered bank or regulated financial institution. This means anyone wanting to operate in the stablecoin space must ensure full reserve backing, full disclosure, and AML compliance.
This move is clearly targeting Tether. With a market cap around $160 billion, Tether has faced near-collapse risks during previous industry cycles, primarily due to opaque reserves and audits conducted by affiliated parties. As a result, it's often mocked within the industry—the annual KPI being to spark rumors of insolvency and then buy back tokens cheaply.
As the dominant stablecoin holding over 70% of the market, Tether’s success despite instability has undoubtedly attracted interest from powerful financial groups. But for these groups to enter the market, clear rules must first be established so they can legally capture profits. Thus, the essence of the GENIUS Act is to issue entry tickets to new players—or rather, Old Money.
For stablecoins outside North America, the fundamentals remain the same. Most mainstream stablecoins are fiat-pegged: strong fiat currencies lead to strong stablecoins, while weak ones offer little competitive chance—think Nigeria’s Naira, which stands no chance. However, anyone with sufficient USD reserves can issue a dollar-backed stablecoin. Ultimately, trust in foreign exchange reserves and migration costs determine competitiveness. Stablecoins require high user education and switching costs, giving crypto-friendly jurisdictions a stronger edge.
Attorney Li Zhongzhen:
① The GENIUS Act introduces the concept of “payment stablecoins” and details requirements and regulatory systems for issuing such stablecoins in the U.S. It requires issuers to hold at least 1:1 reserves composed solely of U.S. dollars or highly liquid U.S. Treasury securities with maturities of 93 days or less. What the GENIUS Act ultimately achieves is siphoning global capital into highly liquid dollar-denominated assets, further enhancing dollar liquidity, establishing the dominance of on-chain USD, and reinforcing U.S. dollar hegemony.
② Do stablecoins from non-U.S. countries still have competitive opportunities? This depends on the real-world comprehensive strength of those nations and regions. I believe China, the EU, and Japan still have opportunities. Other countries and regions do not.
Pang Meimei:
In recent years, there was no clear consensus on what exactly a stablecoin is, what thresholds apply to issuers, who should regulate them, or how to handle failures. The GENIUS Act ends this regulatory vacuum and resolves these issues.
Of course, by mandating stablecoin reserves in U.S. Treasuries and dollar assets, the GENIUS Act further strengthens the U.S. dollar’s dominance in global reserves and payment systems, consolidating its international monetary hegemony. However, stablecoins primarily serve cross-border payments and settlements, enabling greater flexibility and efficiency in trade settlement without altering national monetary policies. Many countries are now advancing stablecoin development. As the world’s largest goods trader, China has a natural strategic need to optimize cross-border settlement efficiency and cost. We have a major opportunity—and it lies in Hong Kong.
On May 21st this year, Hong Kong’s Legislative Council passed the “Stablecoin Conditions Draft,” making it the first jurisdiction globally to implement full-chain regulation on stablecoins. In driving the development of stablecoins, Hong Kong plays a pivotal role, and China possesses unique advantages and strong competitiveness.
Q2: How should we understand the CLEAR Act’s regulatory division between the SEC and CFTC? What impact will the definition of “mature blockchain” have on the industry?
Luke:
In simple terms, the CLEAR Act addresses the “gray areas” in digital asset regulation by clearly dividing responsibilities between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), avoiding regulatory overlap or gaps and allowing the crypto industry to develop more orderly. Essentially, the SEC oversees digital assets that resemble stocks with expected investment returns (e.g., certain tokenized securities), while the CFTC handles assets more akin to “commodities,” such as Bitcoin or Ethereum, whose value stems from utility rather than dividends. This clarifies the legal classification and positioning of the entire cryptocurrency market. It also reduces regulatory burdens on DeFi, encouraging innovation and project deployment.
One key point worth noting is the definition of “mature blockchain.” The bill defines a “mature blockchain” as a network that undergoes certification submitted to the SEC, proving it meets statutory conditions—such as decentralized governance, distributed ownership, and absence of control by any single entity. The SEC may also establish additional rules to refine these criteria. Certification involves demonstrating the network’s decentralization level, market adoption, openness, and interoperability. If approved (typically default-effective after submission unless the SEC objects), the blockchain is deemed “mature.”
Sam:
Dividing responsibilities and regulating separately—this is classic power separation. The SEC oversees security tokens, POS algorithms, and DeFi projects; decentralized networks meeting the “mature blockchain” definition fall under CFTC as commodities.
The “mature blockchain” definition particularly benefits POW-based projects, as POW represents the original form of cryptocurrency—fully decentralized. These projects focus on technical excellence, optimizing algorithms and performance, and embodying “Code Is Law.” Historically, the industry believed technical stack success didn’t guarantee chain success, and frequent securities-like regulations discouraged technical talent from entering. Skilled developers feared being unfairly targeted. Now, developers can code in peace without worrying about an SEC knock on the door. Miners can scale production freely, easing pressure on the chip industry and lowering hardware prices. The POW payback period, which doubled from the last cycle to the past year, now shows signs of improvement.
From here on, each side plays its own game: the SEC leads POS into financial markets chasing APY, while the CFTC brings POW back to blockchain’s original vision.
Attorney Li Zhongzhen:
① The CLEAR Act resolves the long-standing confusion over regulatory jurisdiction between the SEC and CFTC in the crypto space, clearly assigning digital commodities to CFTC oversight and restricted digital assets to SEC regulation. This further refines the U.S. crypto regulatory framework. A clear and predictable environment benefits industry growth. Emerging industries don’t fear regulation—they fear uncertainty caused by unclear regulatory responsibilities.
② The “mature blockchain” definition provides the industry with a relatively objective standard, such as no single holder owning more than 20% of supply and no individual or entity having unilateral control over the blockchain or its applications. Projects initially launched as securities can transition to commodities once they meet “mature blockchain” criteria, shifting from SEC to CFTC oversight. This is highly favorable for the crypto industry. Being classified as a security under SEC regulation incurs prohibitively high compliance costs, unaffordable for most startups. But under CFTC oversight as a commodity, compliance costs are significantly lower.
Pang Meimei:
In short, this act labels digital assets. The CLEAR Act clearly categorizes digital assets and delineates the regulatory scopes of the SEC and CFTC. The CFTC regulates commodity-like products, which face higher and stricter requirements, while the SEC’s oversight is much looser. Therefore, I believe this regulatory division offers genuinely blockchain-focused projects a more lenient compliance path. The bill’s most brilliant design is creating an evolution pathway for digital assets—from securities to digital commodities—providing a “graduation route” for projects transitioning from “security” to “digital commodity.”
The concept of a mature blockchain system is mainly used to assess whether a blockchain has achieved sufficient decentralization to qualify its tokens for reclassification from “security” to “digital commodity.” As blockchain technology becomes more widespread, the industry is undergoing paradigm formation—defining reliable, mature blockchains through specific standards and dimensions. The bill provides precise definitions, clarifying details and evaluation metrics, helping entrepreneurs better understand how to meet these benchmarks and offering greater certainty for ICOs and IDOs.
Q3: The U.S. Anti-CBDC Act contrasts sharply with some countries actively promoting CBDCs. Why oppose CBDCs? Any further thoughts?
Luke:
The U.S. opposes CBDCs for several key reasons. First, concerns over increased Federal Reserve power over individual financial privacy. Second, risks to financial system stability. Third, fears of global monetary centralization.
First, privacy and surveillance risks are the core objections. A CBDC is essentially a digital banking system directly issued by a central bank (similar to a stablecoin issuer, but at the national level), capable of tracking every transaction in real time. This could be abused for government surveillance or vulnerable to human errors, infringing on personal financial privacy and freedom. Supporters argue it would create a “surveillance state,” akin to China’s digital yuan, which enhances central bank transaction monitoring despite its convenience. In contrast, the U.S. emphasizes constitutional rights and personal privacy, avoiding excessive government intrusion into private finances.
Second, CBDCs could cause “disintermediation,” undermining commercial banks. Direct central bank access for individuals would weaken traditional banks, potentially causing deposit outflows, intensified competition, or even bank failures, disrupting the existing economic structure. A 2022 Federal Reserve report warned that such changes are too radical and could amplify systemic risks. While CBDCs aim to improve payment efficiency and financial inclusion, the U.S. believes these benefits don’t outweigh potential harms.
Third is concern over centralized power and global competition. Opponents fear CBDCs would strengthen central banks’ control over monetary policy and potentially foster digital hegemony internationally—if one nation’s CBDC dominates global trade, it threatens sovereignty. The U.S. chooses to oppose CBDCs to preserve the dollar’s traditional status and promote private-sector stablecoins (like USDC) as alternatives, encouraging market-driven innovation.
Sam:
The Federal Reserve isn’t tied to any political party and doesn’t receive political donations, so it will always protect those who’ve paid their “protection fees.” If the Fed enters the retail space, everyone else gets pushed out. At least stablecoins retain some degree of decentralization—algorithmic stablecoins, crypto-collateralized stablecoins—there’s room for future technological or algorithmic innovations. But CBDCs are fully centralized, fundamentally contradicting crypto principles. Privacy, financial freedom, and censorship resistance are core demands. Releasing CBDCs would disrupt the entire ecosystem.
Simply put, the Fed issuing a CBDC is like pulling your pants down to fart—pointless. These three acts would become meaningless.
Attorney Li Zhongzhen:
The U.S. government does not have the authority to issue dollars—the Federal Reserve does. A major reason the government supports the GENIUS Act is to bypass the Fed and expand dollar circulation. Allowing CBDCs would greatly benefit the Fed but offer little practical gain to the government. Only by limiting the Fed can the government achieve fiscal autonomy.
In contrast, countries pushing CBDCs typically have currency issuance power directly under government control, so launching CBDCs doesn’t create internal conflicts.
Pang Meimei:
In China, we’re all familiar with the digital yuan, which the state continues to promote—this is a prime example of a CBDC. CBDCs do offer clear advantages, such as convenient and efficient payment settlement. Given these benefits, why oppose them? We must look at this from a broader perspective. Individuals generally cannot directly interact with central banks—commercial banks play a vital intermediary role. A CBDC is a blockchain-based online banking system operated by the central bank. If individuals could directly store and borrow from the central bank, commercial banks would gradually become obsolete. Many would likely be forced to shut down, directly threatening economic and financial stability.
Moreover, CBDC systems aren’t truly decentralized. Even with KYC and AML requirements, how different would they really be from today’s online banking? It’s essentially adding blockchain technology to an already digitized banking system—offering no fundamental improvements. The outcome might be neither gaining benefits nor solving problems, but instead creating numerous hidden risks. Isn’t that a case of losing more than gaining? I personally favor steady progress—avoid blind, large-scale CBDC rollout. Instead, consider approaches like Hong Kong’s “sandbox” model.
Q4: Will this prompt regulatory emulation in regions like the EU or Asia? How will U.S. actions reshape the global Web3 regulatory landscape?
Luke:
The U.S.’s 2025 passage of the GENIUS Act, CLEAR Act, and Anti-CBDC Act may inspire regulatory emulation in the EU and Asian nations. The EU’s MiCA regulations may be refined to align with U.S. standards. Japan and Singapore may emulate stablecoin regulations. India may balance innovation with compliance. China could leverage opposition to CBDCs to expand the digital yuan’s influence—or follow the U.S. by aggressively promoting RMB-backed stablecoins.
The global Web3 regulatory landscape will trend toward standardization, encouraging private stablecoins and DeFi. However, the U.S.’s anti-CBDC stance may leave it “behind” in CBDC payment systems, simultaneously elevating the status of other private crypto asset platforms. This could trigger global regulatory competition, redirect capital to more crypto-friendly jurisdictions, intensify geopolitical friction, and test U.S. leadership in the digital economy.
Sam:
The EU may not follow suit, but parts of Asia have a real need to learn from this. Germany became the first country to accept Bitcoin as currency back in 2014, followed by the Netherlands, France, and others. Last year’s statistics show Europe has over 2,700 crypto licenses, while Canada’s licensing and regulation predate and exceed North America’s. Asia, however, lags far behind—fewer licenses than Poland alone. These figures reveal that in terms of crypto regulation or friendliness, the U.S. is merely keeping pace—it’s a large ship, hard to turn quickly.
But stablecoin regulation will likely reference North American models to achieve compliance alignment, especially since mainstream stablecoins are predominantly dollar-pegged, and the dollar tightly controls trade. This wave of North American regulation will accelerate global regulatory implementation, particularly around stablecoins and possibly crypto taxation. Major countries and regions will soon converge on unified standards, making the industry more standardized and transparent. The era of 100x coins is over. Web3 is no longer a get-rich-quick scheme, but it will evolve sustainably.
Attorney Li Zhongzhen:
① On stablecoin regulation, Hong Kong is ahead. But beyond stablecoins, the U.S. is the fastest in establishing a detailed crypto regulatory framework. Other countries can adapt the U.S. model based on their own conditions—such as implementing tiered classification of crypto assets and clarifying regulators and systems.
② The U.S. fired the first shot. Others will likely follow swiftly. Global Web3 regulation will continue improving, possibly leading to mutual regulatory recognition.
Pang Meimei:
The GENIUS Act establishes a robust regulatory framework for stablecoins. The CLEAR Act clearly defines digital asset categories, corresponding regulators, and their respective responsibilities. The Anti-CBDC Act explicitly prohibits the Federal Reserve from issuing central bank digital currencies to individuals, preventing excessive financial surveillance and preserving commercial banks’ role in the financial system.
Previously, U.S. regulation was fraught with uncertainty—both due to inconsistent state-level enforcement and ongoing debates over whether cryptocurrencies are securities or commodities. This ambiguity drove many entrepreneurial projects to relocate to more crypto-friendly regions. The enactment of these three acts may help the U.S. reclaim leadership in digital asset innovation. The regulatory framework could become a global reference, prompting other countries to accelerate the development of crypto-related laws. The digital asset ecosystem in the U.S. and globally may undergo significant transformation.
Q5: These three acts are seen as a turning point for the U.S.—and perhaps the entire crypto industry—from “wild west” growth to “rules-driven” maturity. How will they affect the compliance costs and operational models of Web3 startups?
Luke:
Clearly, these three acts shift the U.S. crypto industry from “wild west” to rules-driven, significantly impacting Web3 startups’ compliance costs and operational models. In the short term, compliance costs will rise due to stablecoin disclosures, audits, and KYC/AML requirements, increasing startup expenses (legal costs may consume up to 40% of funding). Smaller projects may flee due to the burden. But long-term, clearer regulations reduce litigation risks and attract VC investment. Operational models will shift from ambiguous to compliant. Projects will emphasize decentralized governance and RWA tokenization to gain exemptions (e.g., ICOs capped at $75 million), shifting from rapid iteration to innovation within legal boundaries.
This may squeeze small projects in the short run, but long-term, it will enhance industry maturity, attract global resources, and help establish internationally recognized regulatory frameworks—potentially influencing other regions’ crypto compliance legislation (such as EU’s MiCA, Singapore’s DTSP, etc.).
Sam:
This marks, to some extent, a new era where Web3 startups transition from “chaotic innovation” to “compliance-first.”
Several trends are foreseeable: startup barriers will rise significantly—token launches won’t be allowed arbitrarily, and licenses will become standard. Compliance costs will skyrocket, with legal counsel, audits, and KYC/AML becoming mandatory budget items. The industry will accelerate the elimination of uninnovative, unprofitable, or gray-market projects. But POW miners—especially Bitcoin miners—will benefit the most. Only compliant businesses can scale sustainably. Only compliant ventures endure. This also prevents bad money from driving out good.
But for the native ‘Crypto Native’ community, Web3 is Web3—a business. Crypto is crypto—a technology. Native crypto means permissionless. True crypto will find its way, regardless.
Attorney Li Zhongzhen:
With the implementation of the GENIUS Act, CLEAR Act, and Anti-CBDC Act, project teams must determine their compliance pathways based on project type:
① Stablecoin issuers must invest heavily to obtain required licenses, build independent audit systems, and establish bankruptcy isolation mechanisms. Particularly regarding reserve assets, the 1:1 reserve requirement imposes high capital demands on issuers.
② For non-stablecoin projects, teams must clearly understand whether their project qualifies as a security or a commodity. In the unregulated past, teams might only need technical, security, and marketing teams to craft narratives, raise funds, and launch chains. Now, that’s impossible. From the outset, teams must build professional compliance units to navigate SEC or CFTC oversight. Compliance costs may even exceed R&D expenses, making it extremely difficult for under-resourced small projects to survive.
Pang Meimei:
Yes, these three acts collectively establish clear “rules of the game” for the crypto industry. In recent years, the lack of clarity left legitimate entrepreneurs vulnerable to unpredictable regulation, while speculators exploited legal ambiguities for profit. These three acts will reverse that situation.
The acts impose detailed requirements on stablecoin issuers, exchanges, and DeFi projects, and list numerous prohibited activities. Reserve and fund segregation requirements increase capital and management costs. Financial disclosure and auditing raise operating costs. For digital assets previously in gray areas, determining regulatory status requires additional resources, increasing compliance burdens. Additionally, countries or institutions planning CBDCs may need to revise strategies, adding compliance costs and uncertainty. Rising compliance costs may force smaller projects unable to bear the burden out of the market. Yet, they also provide clear paths for high-quality projects to build sustainable, long-term operational models under the rule of law.
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