Note: The original text is from Crypto.news, written by Selva Ozelli, published on August 7, 2025!
This is a sequel to the trilogy series of interviews with William Quigley. William Quigley is an investor in the cryptocurrency and blockchain space, as well as a co-founder of WAX and Tether. The interview is conducted by Selva Ozelli, who is a lawyer, CPA, and the author of 'Sustainable Investment in Global Digital Assets'. The interview will be exclusively released by Crypto.news in 2024.
In this follow-up interview, Selva Ozelli asked industry thought leader William Quigley about the impact of the 'Guiding and Establishing the National Innovation Act for U.S. Stablecoins' (Genius Act). The act was signed into law by President Donald Trump on July 18 and became the first federal law regulating non-yield-bearing stablecoins pegged to the dollar. On July 17, 2025, the act was approved by Congress, passing with record voting times. After the act was passed, the market capitalization of the digital asset industry surpassed $4 trillion for the first time. The Genius Act is a significant initiative for the U.S. to consolidate its dominance in the global financial and digital asset technology field, imposing federal and state-level regulations on dollar-pegged stablecoins, covering reserve requirements, regulations on foreign stablecoin issuers, and penalties for violations, which will permanently change the landscape of the financial sector and make President Trump the de facto 'Cryptocurrency President.'
However, will the Genius Act accelerate the process of cryptocurrency adoption in global financial markets? Here are William Quigley’s views expressed during the complete Q&A session:
Selva Ozelli (SO): How do you view the role of the Genius Act in promoting the cryptocurrency adoption of the global financial system? We discussed this topic in part two of your interview series with Crypto.news in 2024.
William Quigley (WQ): The Genius Act is already urgent and essential for the cryptocurrency adoption of the global financial system, including the issuance of stablecoins for dollar payments, which can strengthen the use of the dollar globally. However, the act mainly focuses on regulating the issuance and management of stablecoins, regardless of whether they are based on blockchain technology, providing a framework for the regulated operation of stablecoins. However, the act does not explicitly require that the creation or use of stablecoins must be based on blockchain technology; it simply acknowledges that many stablecoins have been issued using blockchain technology.
For instance, the world's first and most widely used stablecoin, Tether, was initially launched in 2014 under the name 'Realcoin' on the Bitcoin blockchain using Omni Layer Protocol technology. Later, Tether expanded to operate on several other blockchain platforms, including as an ERC-20 cryptocurrency on Ethereum, as a TRC-20 cryptocurrency on Tron, and on platforms like Solana, Avalanche, Algorand, and Polygon. This means that USDT's transaction records are on a public distributed ledger, making the transactions more transparent and potentially faster.
Due to the lack of a mandatory requirement to use blockchain technology, the Genius Act effectively allows financial institutions to continue using existing digital payment systems and refer to them as 'stablecoin' systems without adopting blockchain technology. This may lead to financial institutions charging customers higher payment transfer fees, and payment transactions do not need to be recorded on a public distributed ledger, which means that transaction transparency and potentially faster transactions cannot be achieved.
However, the good news is that 11 years after the first stablecoin USDT was issued, a coalition of several major financial institutions in the U.S. has finally begun to actively explore and may even develop a joint stablecoin project. This is mainly driven by intensified competition from existing stablecoin companies like Tether and the simplification of payment processes (whether based on blockchain or not).
I believe that the process of cryptocurrency adoption in global financial markets has been hindered because, for many years, leaders of many large U.S. financial institutions viewed Bitcoin and its underlying blockchain technology as tools or indicators of money laundering and tax evasion, and they do not understand this technology.
For example, as early as 2018, Larry Fink, CEO of BlackRock, the world's largest asset management company, stated in a panel discussion at the Institute of International Finance: 'Bitcoin merely shows you how much demand there is for money laundering in the world; it is a money laundering index.' Fink's views on digital assets align with those of an official from the IRS Criminal Investigation Division, who, after completing a cross-jurisdictional investigation and shutting down a $6 billion digital asset exchange suspected of money laundering, said: 'If Al Capone were alive today, this is how he would hide his money.'
I hope that financial institutions around the world will have a deeper understanding of blockchain technology today.
SO: The Genius Act establishes rules for reserve requirements and redemption procedures, and prohibits issuers of dollar-pegged stablecoins from paying interest or returns to holders, while blockchain technology can be used to achieve these goals. What impact will this have on the process of cryptocurrency adoption in global financial markets?
WQ: The Genius Act emphasizes the transparency and auditability of reserves, and blockchain technology can enhance these characteristics, but the act does not mandate the use of blockchain technology. Furthermore, the act prohibits stablecoin issuers from paying interest or returns on stablecoins. This means that if you hold a stablecoin regulated by this act, you will not earn any interest or returns simply by holding it. Essentially, the act focuses on regulating dollar-pegged stablecoins as payment instruments rather than investment products.
Therefore, the act may not drive the cryptocurrency adoption in global financial markets as quickly as I hoped. Because blockchain technology can not only revolutionize cross-border payments but also transform commercial bank deposits, payments, government and corporate bonds, money market fund shares, gold and other commodities, real estate, and the ownership of other assets and liabilities recorded on blockchain and other distributed ledgers, thus enabling a wide range of new functionalities.
SO: How will Tether, as a foreign issuer of the USDT stablecoin, be affected by the Genius Act?
WQ: Tether, as the issuer of the USDT stablecoin, has historically registered in the British Virgin Islands and Hong Kong, and its parent company, Tether Holdings Limited, was incorporated in the British Virgin Islands. Earlier this year, the company established a physical headquarters in El Salvador to operate as a licensed digital asset service provider (DASP), and its CEO and co-founder has also moved to El Salvador.
El Salvador has a digital asset legislation called the 'Digital Asset Issuance Act' (LEAD), which incorporates stablecoins into a broader regulatory framework for digital assets. This law provides tax exemptions for activities related to the development of digital assets, including the benefits that may arise from the issuance and trading of stablecoins.
Although Tether is a foreign stablecoin issuer based in El Salvador, by complying with the foreign issuer rules of the Genius Act, it can now legally offer USDT in the U.S. market.
The act allows foreign stablecoin issuers to operate in the U.S. under specific and stringent conditions, including having a regulatory framework comparable to that of the U.S., registering with the Office of the Comptroller of the Currency (OCC), and holding sufficient reserves in U.S. financial institutions to meet redemption demands from U.S. customers. Additionally, the issuer's home country must not be subject to U.S. sanctions or be viewed as a major money laundering risk country, and it must have the technical capability to comply with the requirements of this act. El Salvador has not been subject to broad U.S. sanctions and has made progress in improving its AML/CFT framework.
Violating the provisions of this act may result in severe penalties, including hefty fines, and in some cases, possible imprisonment. The act also grants regulatory authorities the power to prohibit the trading of non-compliant stablecoins and impose daily fines for violations.
SO: What are your thoughts on the potential impact of the Genius Act on corporate finance departments adopting blockchain technology?
WQ: I believe that many large multinational companies, especially customer-facing tech companies, will establish digital asset finance departments and issue stablecoins with the help of the Genius Act. This could drive broader adoption of stablecoins and indirectly promote the application of blockchain technology supporting stablecoin issuance. However, I want to point out that Facebook (now Meta)'s project, originally named Libra and later renamed Diem, aimed to create a stablecoin for global payments and financial inclusion, tracing back to 2018, for which I produced a video:
https://youtu.be/Sb0n6yEjw - g
Mark Zuckerberg, founder and CEO of Meta, has been a strong advocate for the Diem stablecoin project, which includes members such as Shopify and Uber, viewing it as a means to empower the unbanked and promote U.S. financial leadership. However, the initiative faces substantial regulatory scrutiny and concerns about its potential impact on monetary sovereignty, privacy, and financial stability.
Ultimately, Meta abandoned the Diem project, and its assets were sold to Silvergate Bank in early 2022. Silvergate Bank is a California-based bank that specializes in serving the digital asset industry, and it closed in March 2023 after experiencing turmoil and significant customer deposit losses, primarily due to the collapse of the major cryptocurrency exchange FTX mentioned in part one of our interview series last year.
Although the Diem project has not been formally launched since 2018, it has prompted legislative action that ultimately led to the passage of the Genius Act and enhanced the recognition of digital assets at mainstream and institutional levels.
Reportedly, Meta is exploring the feasibility of using stablecoins for creator revenue payments across its various social media platforms, which cover half of the global population, although large companies face challenges in innovation. Despite having vast resources and talent, large corporations often struggle to drive innovation among W-2 employees. However, for large organizations like Meta, overcoming these obstacles is crucial to remain competitive and adaptable in the rapidly evolving market driven by digital assets and artificial intelligence, thus utilizing the Genius Act to provide stablecoin services to nearly 4 billion creator users.
SO: Payments made using stablecoins may be subject to federal tax, state tax, sales tax, and value-added tax (VAT), depending on how they are used and the tax jurisdiction they are in. In cross-border payment scenarios, will these tax consequences hinder the adoption of stablecoins?
WQ: In the U.S., stablecoins are generally subject to federal tax when traded, exchanged, or received as income, despite their relatively stable value. The IRS considers them property rather than currency. This means that transactions involving stablecoins may trigger federal and state tax obligations, even if the price fluctuations are minimal. Therefore, using stablecoins for payments must be recorded and reported to the IRS and state tax authorities.
In cross-border situations, stablecoin users should consult tax treaties and be aware that in many jurisdictions (including the UK), stablecoins are not considered legal tender or currency for VAT purposes. Although stablecoins themselves are not subject to sales tax, the underlying goods or services purchased with stablecoins may be subject to sales tax or VAT, depending on the jurisdiction. This distinction has significant implications for VAT applicability.
For example, if users in EU countries use stablecoins to purchase meme coins considered services, the VAT is generally levied based on the value of those goods or services rather than the stablecoin itself. VAT rules can vary significantly between countries, even within the EU.
Therefore, for stablecoin users, it is crucial to understand the specific tax and other regulations of each operating jurisdiction and to track the costs and taxes associated with such payment transactions.
SO: The regulatory environment for digital assets is constantly changing. The proposed 'Digital Asset Market Clarity Act of 2025' (referred to as the CLARITY Act) in the U.S. aims to clarify the regulatory framework for digital assets. We discussed this act in part three of our 2024 interview series. If this legislation is ultimately passed, may I contact you for your professional insights?
WQ: Of course.
*Note: This article is for informational purposes only and does not constitute any investment advice!
