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Cryptocurrencies have long existed in a legal and financial gray zone — praised as disruptive innovations, dismissed as speculative bubbles and often relegated to the periphery of serious capital markets. That era is over. New US federal regulation of digital assets, especially stablecoins, signals a shift from speculation to mainstream investment. Legislation known as the Genius Act is one of three cryptocurrency bills currently advancing in Washington with President Donald Trump’s support.

This is not merely a regulatory footnote. It is a structural turning point. For the first time since the publication of Satoshi Nakamoto’s white paper in 2008, the debate in Washington is no longer about whether to regulate crypto, but how — and, more importantly, who gets to define the rules. With bipartisan momentum and political backing from figures such as Trump, the US is stepping decisively into a global contest over digital financial infrastructure.

The implications are material, especially for investors and financial institutions recalibrating their exposure to a space once seen as fringe. Since the collapse of FTX, the crypto industry has not only recovered market capitalization but has also ramped up lobbying efforts, poured capital into US elections and achieved a legislative milestone that provides regulatory clarity for dollar-backed stablecoins. The new framework mandates full reserve backing with short-term, Treasury-like instruments and places oversight in the hands of state or federal regulators. What was once dismissed as internet play money is now being granted legal standing and policy legitimacy.

This clarity matters. It creates a regulatory perimeter in which US-based issuers like Circle can scale and in which institutional finance can enter without reputational or compliance risk. The regulatory moment resembles the Telecommunications Act of 1996, which sought to modernize laws for an internet-driven world. Like that law, today’s crypto framework is racing to catch up with technological reality — aiming to open the gates to competition while preserving systemic resilience.

Major players such as Citigroup and JPMorgan are not just taking notice, they are moving in. Citigroup CEO Jane Fraser has pointed to rising client demand for “multi-asset, multi-bank, cross-border, always-on” payment solutions — characteristics that programmable, blockchain-based money can deliver. JPMorgan and Citibank are developing deposit tokens: bank-backed digital instruments designed to retain institutional control while mimicking the benefits of stablecoins.

These moves underscore a deeper truth: stablecoins are not just a crypto niche — they are fast becoming a parallel infrastructure for global payments. Settling instantly, operating continuously and increasingly functioning outside legacy banking rails, these instruments resemble nothing so much as the Eurodollar markets of the 1960s — offshore dollar liquidity that reshaped global finance while evading domestic regulatory control.

Stablecoins are already testing the limits of monetary sovereignty, with the potential to rival traditional payment networks in speed and reach. And like the Eurodollar, their evolution may define a generation of financial innovation — unless they are absorbed by the incumbents first.

Yet crypto-native firms are outpacing the banks. Circle has soared in valuation. Coinbase, benefiting from its stablecoin partnership, has seen record highs. The market is voting with capital. The era of programmable money is not coming — it is already underway.

For serious investors, this presents both an opportunity and a challenge. Regulation is no longer a threat to crypto. It is a prerequisite for scale. Just as the Securities Acts of the 1930s laid the foundation for modern capital markets, today’s digital asset legislation seeks to institutionalize a new financial layer — without stifling its underlying dynamism. That historical moment transformed Wall Street; this one could do the same for the blockchain economy.

Still, this will not be a clean transition. A single token can be a governance tool, a medium of exchange and a speculative asset — simultaneously. Decentralized exchanges mimic brokerages but lack centralized accountability. Applying legacy legal frameworks to these hybrids is like regulating aviation with maritime law.

Critics, especially among Democrats like Elizabeth Warren and Maxine Waters, have raised red flags. They worry about insufficient consumer protections, the potential for systemic risk and — should stablecoin issuers fail — the possibility of future taxpayer bailouts. Their skepticism is not without merit. But their remedy — regulatory inaction or outright prohibition — risks pushing innovation into unregulated offshore zones and ceding global leadership to more agile jurisdictions. Critics argue the legislation introduces more risk than reward. After all, the US already has a functioning payment system — it is called the dollar and, for most purposes, it works just fine. So why reinvent the wheel?

For much of crypto’s existence, its real-world use case — beyond underground transactions and speculative fervor — has remained elusive. While tokenization promises faster, more efficient payments, the volatility of most cryptocurrencies has made them a poor substitute for fiat money. They are not reliable stores of value and, thus, not viable as everyday currency.

Stablecoins attempt to square this circle by pegging themselves to the dollar, offering price stability without sacrificing speed. Most do so by backing their tokens with low-risk reserves like Treasury bills, effectively functioning as digital wrappers for existing US assets.

Europe’s Markets in Crypto-Assets framework is more than consumer protection. It is strategic industrial policy. By offering a unified regulatory passport across the EU, it provides clarity, scale and first-mover advantage. While the US squabbled over jurisdiction, Europe built the infrastructure. Other jurisdictions — Singapore, the UAE and even Hong Kong — have embraced similar clarity. China has gone its own route with a state-backed digital yuan. The US, long caught in agency turf wars, is finally catching up — but only just.

This is not merely a new asset class. It is an emerging economic architecture. In countries like Argentina and Nigeria, crypto offers escape from monetary dysfunction. In Ukraine, it became a wartime financing tool. In the US, stablecoins increasingly serve as the foundation for faster, cheaper and programmable transactions.

This is not peripheral experimentation. It is foundational infrastructure.

What was once dismissed as internet play money is now being granted legal standing and policy legitimacy.

Dr. John Sfakianakis

Congress’ move signals a shift in political perception: crypto is no longer an anarchic subculture but a matter of financial strategy and sovereign control. But this shift is not without its complications. Trump’s vocal support of crypto — and financial ties to digital asset ventures — raises uncomfortable questions about transparency and influence. The intersection of public policy and private gain in the digital asset space will require vigilant scrutiny.

Nonetheless, the legislation, despite its imperfections, marks a belated but necessary leap forward. Without regulatory clarity, the US risks becoming a bystander to innovations it helped pioneer. With it, it has a credible chance to shape — not just respond to — the financial infrastructure of the 21st century.

As of now, the total crypto asset market exceeds $4 trillion, driven by altcoin gains and positive regulatory developments. Options markets suggest growing investor confidence in continued upward movement.

For institutional investors, this is no longer a niche curiosity or a speculative side bet. It is a rapidly institutionalizing frontier. The verdict on crypto is not yet settled. But the idea that it can be ignored has been definitively laid to rest.

The law has entered the ledger. The market has taken note.

• Dr. John Sfakianakis is chief economist at the Gulf Research Center.