\n\t\tRegulation \u2013 and sovereignty \u2013 loom large<\/p>\n
Technical interoperability will help\u00a0determine\u00a0the success of tokenised finance. But regulation and sovereignty may\u00a0ultimately determine\u00a0who shapes it.<\/p>\n
In this context, the most important recent development in digital assets is the 2025 Genius Act, which has created a regulatory framework for payment stablecoins. The Clarity Act, which has advanced through the Senate Banking Committee but still requires further action in Congress, is aimed at providing greater clarity for cryptocurrencies and other digital assets. Together, they reduce uncertainty by outlining clearer rules for issuers, exchanges and brokers.<\/p>\n
The US previously lagged other jurisdictions on regulation related to digital assets but new rules strike a different tone \u2013 far more market-led and encouraging experimentation. At the same time, questions remain around how these frameworks will interact internationally, with a risk that differing approaches could increase fragmentation and limit interoperability.<\/p>\n
The stakes are high because the Genius Act,\u00a0in particular,\u00a0could\u00a0accelerate a broader recalibration of\u00a0default currencies. If US dollar-denominated stablecoins \u2013 backed by US Treasuries \u2013 become the dominant global format, the implications go far beyond payments. The US could reinforce dollar dominance and fund itself more cheaply, while other economies might face higher borrowing costs and potential constraints on fiscal sovereignty.<\/p>\n
The opportunities, however, are also significant. Stablecoins create new flexibility in how legitimate actors\u00a0transmit\u00a0value\u00a0across borders. In a fragmented geopolitical environment, some countries will not want every transaction to depend on rails shaped primarily by US priorities. There may be growing demand for robust alternatives \u2013 including digital euro or sterling-denominated rails \u2013 but those alternatives will only\u00a0become contenders\u00a0if they can work across systems,\u00a0jurisdictions\u00a0and use cases.<\/p>\n
For guidance, regulators should look to past successes \u2013 such as the UK\u2019s approach to fintech\u00a0over a decade ago\u00a0\u2013 to get the balance between safety and innovation right. The UK, the EU and other financial centres around the world\u00a0need to\u00a0play\u00a0an important role\u00a0in the digital asset era. But\u00a0they need to collaborate\u00a0on\u00a0common standards and innovation-friendly regulation that allows tokenised finance to develop without becoming fragmented.<\/p>\n
The digital asset debate has moved on. Tokenisation is not a sideshow to crypto. It is part of the long-term evolution of money \u2013 and an infrastructure question that could help define the next era of finance.\u00a0<\/p>\n
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