September 29, 2025

Since 2009, blockchain-based digital assets have grown into a trillion-dollar industry transforming global finance. Much like the internet revolution decades earlier, digital assets are scaling fast, expected to reach $4T by the end of 2025. From Bitcoin to stablecoins, tokenized assets to network tokens, blockchain is enabling digital-native ownership, instant value transfer, and decentralized exchange. Blockchain innovation challenges the limitations of fiat currency and centralized banking, opening the door to faster, cost effective, and more transparent systems while sparking new waves of innovation alongside AI and frontier tech.

Given the rapid growth and systemic implications of digital assets, the question is no longer if they will reshape global finance, but how governments will respond. Around the world, regulators are now prioritizing frameworks to protect users, preserve market integrity, and foster responsible innovation, setting the stage for the next phase of growth.

Exhibit A: Technology is Driven By Major Waves of Innovation

Source: Coatue EMW/2025 as of June 2025. For illustrative purposes only.

The digital assets industry remains in its infancy, and as such, regulatory frameworks are beginning to develop across the globe to ensure the protection of users and industry growth, tackling concerns about its potential misuse in illicit activities such as money laundering and tax evasion. Foreign governments are slowly starting to implement regulatory frameworks, particularly around custodial services, oversight, tax reporting, and fund inclusion. These regulations remain far less strict than those applied to traditional currencies, aiming to preserve industry core principles and encourage innovation. Global markets have been far more responsive to the changes in technology as the industry progresses, adopting new regulatory regimes in waves.

Select Regulatory Frameworks Introduced Globally

• Hong Kong published discussion for the need of a full regulatory regime as early as 2019, with adopting a framework in 2020, and continues to amend and introduce new rules for technology developments in tokenization.

• The European Union for example published MiCA as their regulatory regime in 2023, coming to varying degrees of effect in 2024.

• The UAE has adopted VARA as their regulatory regime in 2022, coming into force in 2023.

• Brazil applied some previous laws for transmitting money using the internet, then supplemented with a new law published in 2022, and enforced starting in 2023. Brazil continues to adopt ad hoc regulations as its use increases.

Similarly, the current United States administration has brought the digital assets industry into focus, introducing key legislation and proposing new regulatory frameworks aimed to help boost US industry relevance. While foreign governments have adopted regulatory regimes over the past decade, the United States is at long last laser-focused on defining its own industry regulations to accommodate cryptocurrencies and blockchain technologies, and thus, facilitating the integration with traditional financial markets. Since its inception in 2009, the total value of virtual currencies is tracked to be as high as 4-trillion dollars in 2025. Yet in these years little progress has been made to address this industry by federal lawmakers. Until now.

Currently, the United States Securities and Exchange Commission, or “SEC” is seeking to adopt a regulatory regime that will create consumer protection and encourage industry growth in the United States. The SEC is encouraging legal scholarship through their SEC Crypto Task Force Roundtable discussions and is now publishing guidance on issues of limited scope, periodically. This marks a shift from the previous administration of Gary Gensler, former SEC Chairman, who is credited with using a style of regulation by enforcement. The SEC under Gensler refused to work proactively with crypto companies and provide regulatory guidance, instead electing to initiate enforcement actions pursuant to, at times, dubious legal theories, which caused many crypto projects to avoid the United States.

There have been several bills introduced to address the lack of regulatory framework for digital assets. Specifically, to outline compliance requirements, at what stage compliance requirements come into effect, and what digital assets can be categorized as securities. There have been some attempts to introduce legislation to tackle some of these overarching issues, such as FIT21 (H.R.4763), which was introduced to the House July 2023 but was ultimately put on hold, and the Market Structure bill (H.R.5745) which was introduced in September 2023 and was also been put on hold. Most recently, new legislation establishing a broad regulatory framework has garnered greater popularity like the CLARITY Act (H.R.3633) which was introduced in May 2025, passing the House, and is currently awaiting review by the Senate. Most notably, the Genius Act (S. 1582) was introduced in May 2025 and passed July 2025, establishing a comprehensive federal regulatory framework for payment stablecoins and relevant disclosures.

Source: Summary compiled using congress.gov. For illustrative purposes only.

Bit License: (State - Passed and in Effect)

• Overview: The New York Bit License, considered New York’s landmark crypto regulation, is a regulatory oversight regime set up by the New York State Department of Financial Services (“NYSDFS”) to oversee the registered and licensed virtual currency businesses (“VCB”) operating in New York.

• When: Introduced Jul 23, 2014, with a 45-day discussion period after its publication, and passed the following month on August 8, 2015.

• Main highlights:

  1. Defined Jurisdiction: Defines VBC as those businesses that on behalf of a consumer hold, transmit, exchange, maintain custody or control over cryptocurrency. Any business defined as a VBC falls under the jurisdiction.

  2. Licensing Requirement: Firms must obtain a BitLicense to legally operate in New York’s crypto market.

  3. Reserve Requirements: Issuers are required to hold 100% of the nominal value of all outstanding stablecoins. Low risk highly liquid assets that can match the daily circulation of stablecoins. Reserves must be held separately from the issuer's proprietary assets.

  4. Disclosure and Transparency: Attestations and audits by independent CPAs are required to occur during regular intervals. The CPA must be able to affirm the adequacy of reserves.

  5. Capital Adequacy: VBCs falling under custodian, exchange, and transmission services are required to meet broader capital adequacy evaluations determined by NYDFS to ensure financial stability.

GENIUS Act: (Federal - Passed)

• Overview: The first federal legislation in the United States to establish a comprehensive regulatory framework for USD payment stablecoins, pegging digital assets to fiat currency like the US dollar, and forming eligibility regulatory standards for permitted issuers to issue USD stablecoins.

• When: Introduced May 1, 2025 and passed both Senate and House July 18, 2025. It will become effective on ~January 18, 2027, or the date that is 120 days after regulators issue any final regulations, whichever comes first.

• Main highlights:

  1. Oversight: The GENIUS Act specifies that payment stablecoins meeting its terms are excluded from the definition of a “security” under the federal securities laws and “commodity” under the Commodity Exchange Act, effectively removing them from regulation by the Securities and Exchange Commission (“SEC”) and Commodity Futures Trading Commission (“CFTC”).

  2. Issuers & Scope: Only designated “permitted payment stablecoin issuers”, which include approved bank subsidiaries, OCC-chartered entities, and certain state-regulated issuers, can issue stablecoins in the US. Some limited set of foreign issuers may participate if they meet stringent US standards and compliance. Additionally, imporant to note this Act prohibits stablecoin issuers from directly paying interest or yield on payment stablecoins.

  3. Reserve Requirements & Disclosure: Issuers must maintain 1:1 backing of stablecoins with highly liquid assets like US dollars, short-term Treasuries, demand deposits, certain repos, and tokenized equivalents in addition to monthly disclosure requirements for composition of reserves for added transparency.

  4. Regulatory Classification & Oversight: Payment stablecoins issued by permitted entities are not considered securities or commodities, placing them outside SEC and CFTC oversight, and instead, under banking regulators. Issuers must adhere to anti-money laundering and sanctions laws under the Bank Secrecy Act.

  5. Consumer Protection:

Clarity Act: (Federal - Passed House, awaiting Senate)

• Overview: Legislative proposal seeking to establish a regulatory framework for digital assets. It aims to differentiate “digital commodities” from securities, introduce a "mature blockchain system" concept for regulatory exemptions, and protect individual self-custody rights.

• When: Introduced on May 29, 2025 and passed the House on July 17, 2025. Currently awaiting Senate approval.

• Main highlights:

  1. Jurisdictional Clarity: Seeks to resolve the regulatory overlap between the SEC and CFTC. It gives the CFTC exclusive regulatory authority over spot market transactions in digital commodities, while the SEC retains authority over investment contract assets. This provides legal certainty for developers, investors, and exchanges.

  2. “Digital Commodities”: Digital commodities are defined based on their inherent characteristics, excluding securities, derivatives, and stablecoins. In other words, digital commodities are intangible and are represented on blockchain networks, examples include cryptocurrencies like Bitcoin, digital tokens, or other blockchain-based assets that hold value and can be exchanged.

  3. Maturity Framework: Provides a four-year regulatory window for new token projects, issuers on mature blockchains can access a limited SEC registration exemption for capital raising under specific conditions. The act also introduces a maturity framework to determine if a blockchain system is not controlled by a single entity.

  4. Regulation of Intermediaries: Establishes new CFTC registration requirements for Digital Commodity Exchanges, Brokers, and Dealers, requiring them to adhere to standards similar to traditional financial markets.

  5. Decentralized Finance (“DeFi”): Provides safeguards for DeFi by exempting protocols and applications without discretionary control or custody of customer assets from intermediary regulations. However, any DeFi actor performing such functions would be subject to full registration and oversight.

BONUS: Decentralized Autonomous Organization (“DAOs”): (Not Federal, passing on many State levels)

• Overview: Community-governed entity that operates transparently on a blockchain, with rules encoded into smart contracts that define its structure and operations without central leadership. Members hold digital tokens and vote on decisions, allowing for collective decision-making and management of shared goals and resources.

• When: First DAO was introduced and formed in 2016 on a project basis, since, States have begun to discuss State-legislation to govern and provide frameworks for DAOs, notably, Wyoming and Utah. Other States likely to follow suit.

• Main highlights:

  1. Structure: DAOs can set up structures using smart contacts to permit and schedule dividend/reward allocations to qualifying participants.

  2. Governance & Voting: Built on blockchain technology distributed governance using membership through token ownership, and participation through collective decisions and smart contracts. Rules are transparent, and enforced through smart contracts.

  3. Coordination: Enabling communities to coordinate without a central control mechanism. Borderless participation is possible through token ownership. Token ownership alone determines governance rights.

  4. Themes: DAOs can focus on a particular goals or topics. Ranging from running a DeFi protocol, distributing grants and philanthropy to projects, organizing services distribution, or building cultural communities.

Other Legislation in the Pipeline

Additionally, there are several bills in the pipeline that will be reviewed by Senate and the House, and consequently continue to strengthen the regulatory frameworks to boost the Digital Assets ecosystem:

• CBDC Anti-Surveillance State Act [H.R.5403 - 118th Congress (2023-2024)]

• Uniform Treatment of Custodial Assets Act [H.R.5741 - 118th Congress (2023-2024)]

• Equal Opportunity for all Investors Act [S.3921 - 117th Congress (2021-2022)]

• Promoting Resilient Supply Chains Act of 2025 [H.R.2444 - 119th Congress (2025-2026)]

• Digital Commodity Exchange Act of 2022 [H.R.7614 - 117th Congress (2021-2022)]

Rayo Capital Group (“Rayo”) is a New York City-based investment and advisory firm focused on the digital assets economy. Rayo invests in and advises on the infrastructure, protocols, and founders shaping the future of finance onchain, helping institutions, corporates, and innovators navigate and thrive in this transformative paradigm.

Contributors: Christian Narvaez, Julian Bermeo, Orlando Cosme, Joel de la Cruz.

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