The GENIUS Act: A Step Toward Clarity or a Catalyst for Global Confusion?

Once ignored in global finance, the crypto industry has come under intense scrutiny of late. Adoption is growing, markets are maturing and governments strive to keep up. One example of this is the GENIUS Act recently signed into law in the US, a legislative attempt to bring clarity to crypto rules, especially around stablecoins, custody and federal oversight.

At first glance, this looks like a step in the right direction. But given the fragmented regulatory backdrop we already have on the global stage, this domestic clarity may come at a cost: namely, the deepening international misalignment. Crypto moves across borders, but rules don’t. And the result is often contradiction, complexity and confusion.

This raises a question: will the GENIUS Act help companies finally “follow the rules,” or will it force them to choose which rules to break? Let’s take a closer look.

What is the new law meant to do?

First of all, let us start with what the GENIUS Act actually aims to accomplish.

To put it simply, it is designed to reduce ambiguity in the US crypto space and make compliance more accessible for both startups and incumbents. Among other things, the act seeks to:

• Clearly define who regulates what, splitting duties between the Federal Reserve, SEC and Commodities Future Trading Commission (CFTC).
• Establish a federal licensing regime for stablecoin issuers, aligning state and federal frameworks to ensure consistent regulation throughout the country.
• Bring clarity to custody arrangements and registration requirements for crypto service providers.
• Subject stablecoin issuers to the Bank Secrecy Act, obligating them to establish effective AML practices.

All of these are welcome changes in theory. But in practice, what’s considered legal, well-regulated activity under GENIUS might clash directly with requirements elsewhere — the EU, the UK, Asia and so on.

Instead of bridging the gaps, the GENIUS Act may widen them.

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Regulatory fragmentation is the real risk

For crypto companies that operate across jurisdictions, the main compliance dilemma today isn’t noncompliance, it’s the contradictory nature of rules. Following the law in one country may risk violating it in another. This is particularly true in the case of stablecoins, which are the centerpiece of the GENIUS Act.

Take the MiCA regulation in the EU, for example, passed in 2023 and having come fully into force in December 2024. The Markets in Crypto-Assets regulation sets strict requirements for stablecoin issuers, including daily caps, reserve disclosures and European licensing.

The GENIUS Act, on the other hand, would allow non-bank entities to issue stablecoins under US federal licensing, with oversight from the Fed and tailored reserve requirements. So we get two rulebooks and two completely different major operational setups.

The UK, meanwhile, is trying its own ways to close the regulatory gap. A proposal introduced in April strives to unite crypto exchanges, custodians and dealers under the formal regulatory perimeter. If adopted, it will get crypto closer to traditional finance.

Now let’s try adding Asia into the mix. In Japan, after Mt. Gox case, regulators aren’t playing around: The Financial Services Agency (FSA) has strict rules on the books: licensing, custody and asset segregation, all non-negotiable. As for stablecoins, only banks and trust companies are allowed to issue them.

Meanwhile, Hong Kong is taking the opposite approach. It wants back in the game. A 2023 licensing regime opened the door to retail crypto trading but not without strings. Platforms need to meet serious compliance standards: risk management, custody rules and KYC.

The more we look in different directions, the clearer the scope of the challenge becomes. Digital asset regulation is evolving everywhere, but it’s not happening under the same terms or at the same pace. And so we get a global industry governed by jurisdiction-specific rules that risk contradicting each other in substance.

Clarity in isolation won’t drive innovation

One of the GENIUS Act’s selling points is that it will foster innovation by providing clear rules. But innovation rarely thrives in a vacuum.

Clarity in the US alone is not enough if the rest of the world continues to pull in different directions. Crypto companies don’t just want rules; they want consistent, interoperable rules that let them grow, not just endure.

The GENIUS Act may well create a stable regulatory base in the US, but it could also lock companies into a compliance framework that’s incompatible with future developments in Europe, Asia or Latin America. That stifles not only business expansion but also product innovation.

Here is the harsh reality: Compliance costs keep growing, while regulatory certainty still remains out of reach.

Attaining multiple licenses and dealing with conflicting custody obligations, different KYC stacks and constant legal reviews is no small challenge. The more divergence there is between jurisdictions, the more talent and capital will get diverted from building better products to navigating the bureaucratic maze.

Cross-border operations become increasingly untenable if nobody knows how they’re going to adjust to the next market on their expansion list. Say you’re a licensed exchange in France, obviously fully MiCA-compliant. You’ve easily launched legally in the EU. Great, until you try to onboard clients from the UK or Singapore. You’re back to square one: new license, new KYC stack and different custody setup. Why? Because what Brussels calls a “utility token” London may call a “security.” Somewhere else, it might be banned altogether.

So, companies are forced to tailor and rewrite the same product to fit different rules. Sometimes it works. Sometimes it doesn’t. Often, it just slows everything down, which affects business planning and makes long-term strategy fragile. Do you go all-in on one market and hope it stays stable? Or hedge your bets across several, knowing you’ll bleed time and capital.

And that’s not just a startup problem; even big players have to get into weird gymnastics. And that carries a hidden tax: extra compliance hires, legal opinions or local counsel. Every hour spent chasing clarity is one not spent shipping product.

The way forward is through coordinated ambition

So what can companies actually do in such circumstances?

First, treat the GENIUS Act not as the finish line but as one of many frameworks in play. US-based entities may gain a temporary edge in stablecoin issuance or custody, but this edge only holds within the domestic market. International expansion will still require legal patchwork and smart trade-offs.

Second: make your compliance stack modular. Build systems that allow you to include new jurisdictions with minimal disruption. The more flexible the backend is, the fewer legal migraines you’ll get when the rules change. And they do change constantly. If the rules don’t align, your architecture needs to be able to.

Finally, don’t expand just to expand. Trying to be everywhere in the current conditions is careless; you need to be where your model fits. Focus on markets that share regulatory DNA. If your business is in staking, go where staking is embraced and clearly permitted. If you issue tokens, stay away from gray zones. It’s better to avoid places where your product is halfway to noncompliance.

And always think of fallback plans, because hedging legal risks is necessary. Build exits before you need them: legal, operational or reputational. Because in the end, it’s not regulation that kills but being caught off-guard.