GENIUS Act Passed, But Crypto Payments Still Need This One Fix

There's a certain delicious irony in watching an industry that spent its first decade trying to replace the Federal Reserve finally figure out that maybe, just maybe, it should try doing payments.

And not with Bitcoin. Rather the real action is in stablecoins, digital assets designed to maintain a steady value against the dollar.

Pat White, CEO of Bitwave, put it perfectly on a recent Wall Street Blockchain Alliance podcast: "There's a great quote that Winston Churchill said about America which is… America can always be counted on to do the right thing after exhausting all other options, and I kind of feel that way for crypto when it comes to payments." After fifteen years of arguing about whether anyone would ever buy coffee with Bitcoin, trying to replace lending protocols, and yes, our brief but memorable foray into monkey pictures, the crypto industry has arrived at a startling conclusion: what if we just tried to make payments better?

But here's where it gets interesting. Mr. White makes a bold argument that could determine whether crypto payments actually scale or whether they remain a niche curiosity forever. His thesis is simple and urgent: for crypto payments to truly scale, yield-bearing stablecoins cannot be classified as securities—otherwise, innovation will stall.

It's a regulatory classification that sounds technical and boring. It's also the difference between crypto payments becoming obviously superior to traditional payments, or watching the entire revolution fizzle out in regulatory quicksand.

The Hidden Tax You're Already Paying

Let's start with a number that should make you angry: 15%. That's the percentage of revenue that companies like Bill.com make from float—the money they hold between when they take it out of your account and when they actually send it to your vendor. 

Think about that for a moment. You're not just paying transaction fees for the privilege of moving your own money around. You're also paying an invisible tax while traditional payment companies earn interest on your funds for days at a time. It's a feature, not a bug, of a system designed around friction and delay.

White envisions something radically different with crypto payments: "Not just are you not paying bips for movement of transactions but... I'm earning interest until the second I send you the money and then you're earning interest the second you get that money." Imagine earning yield on your money right up until the moment you send it, then the recipient immediately starts earning yield the moment they receive it. No gaps, no float capture, no invisible taxes.

That's the promise of yield-bearing stablecoins. It's also why the current regulatory approach might accidentally kill the most compelling use case for crypto.

The Securities Classification Trap

Here's where things get weird. If yield-bearing stablecoins are classified as securities, they suddenly face a maze of regulations designed for investment products, not payment systems. Think complex registration requirements, investment company regulations, restricted distribution channels, and compliance costs that would make your head spin.

The result? Innovation stops before it starts. No rational company would try to build a payment system under securities regulations. It's like trying to run a taxi service under airplane safety rules.

The irony is thick. Traditional payment companies capture float from your money with zero securities issues. But crypto trying to return that value to users? That might be a security. Outdated regulatory frameworks are accidentally protecting incumbent monopolies by making the superior alternative legally radioactive.

The GENIUS Act is a Great Start, but Misses the Point

The recent passage of the GENIUS Act represents real progress. It establishes the first comprehensive federal framework for stablecoins and includes important consumer protections and reserve requirements. Crucially, payment stablecoins would be excluded from the definition of "security" under federal securities laws.

But here's the gap: the GENIUS Act also recognizes that payments products are different from banking products and therefore bans issuers from offering yield or interest on payment stablecoins. The legislation recognizes that legislating a workable legal framework for similar yield-bearing products would require separate legislation.

The GENIUS Act solved the easy problem—basic stablecoins that just sit there maintaining their peg. But it punted on the hard problem—the yield-bearing stablecoins that could actually make crypto payments superior to traditional alternatives.

Why This is the Make-or-Break Moment

The infrastructure is finally ready. As White observes: "We're at our Excel moment where the killer use case for digital assets is worldwide payments." The technical rails exist, enterprise adoption is growing, and White believes "every business will have digital assets on their balance sheet in the next five years."

But timing matters. Other jurisdictions are moving aggressively on innovation-friendly frameworks. The EU's MiCA regulation is providing regulatory clarity for stablecoins across Europe. Meanwhile, the UAE Central Bank has approved the issuance of regulations for licensing and overseeing stablecoin arrangements, with the bank having oversight of a UAE dirham-backed stablecoin. AE Coin, the first regulated digital currency in the UAE, was granted final approval by local authorities, and the country is positioning itself as a global hub for regulated stablecoin innovation.

The risk is real: the US could lose payments innovation leadership to regulatory hesitation while other jurisdictions race ahead with clearer frameworks.

Here's White's Churchill analogy in action: we've exhausted our options with DeFi experiments, NFT speculation, and various attempts to replace traditional finance wholesale. The "right thing"—using crypto to make payments obviously better—is finally clear. Don't make people wait another decade while we figure out whether improving payments counts as a security.

Without yield capability, crypto payments remain a niche for the crypto-curious. With yield capability, they become obviously superior for anyone who does math. The choice isn't subtle: lead the payments revolution or watch others do it.

Advice for Enterprises Watching This Unfold

Don't wait for perfect regulations. Start building the infrastructure now. When yield-bearing stablecoins get regulatory clarity—and they likely will—be ready to capitalize immediately.

This is where solutions like Bitwave come in, helping enterprises navigate crypto accounting, tax compliance, and payment operations.

The technology is ready. The market is ready. Crypto has political momentum and the GENIUS Act has shown that sensible crypto regulation can pass with bipartisan support.The question is whether your business will be ready when the regulatory pieces fall into place. Request a demo to see how Bitwave can position you for the payments revolution that's coming.

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