The US DeFi is preparing to host mainstream funding.

On 17 July 2025, a historic moment took place in the area of encryption regulation in the United States.President Trump's official signatories passed the long-awaited State Innovation for Guidance and Establishment of the US Stable Currency (known as the Genius Act), setting out the first federal regulatory framework for the dollar.Under United States law, the new law will enter into force 18 months after signature, or 120 days after the issuance of implementing rules by key agencies such as the Treasury and the Fed. In order to strengthen regulation and consumer protection, the Act requires that the issuer of a stable currency obtain a special licence and that the scope of the operation be limited to the issue of a stable currency per se, or that he apply for a federally supervised trust bank; and that the issue of a stable currency be held in a full reserve of 1:1 for safe assets, such as cash in United States dollars or United States debt, and be made publicly available on a regular basis and reported to the regulatory body on a monthly basis after audit by a certified accountant. However, the genius bill is intended to obscure the DeFi area. The Digital Asset Clarity Act, adopted on the same day, is intended to provide for which DeFi operations are subject to the supervision of the SEC or the Commodity Futures Trading Commission (CFTC) and will provide a deep visualization of DeFi ' s supervision.

The decision to formally abolish the controversial IRS reporting rules of the Biden era has brought a major breakthrough in compliance to the DeFi platform. Rescission decision equals recognition of absence of trust DeFi (including DEX, loan agreements, liquidity pool, etc.)Not the subject of a "broker" declaration obligation in the traditional sense:The parties to the agreement do not have to implement the KYC/AML program for each user, or report the total amount of the transaction to IRS or issue a 1099 tax form, which fundamentally relieves the double pressure of technical impracticability and conceptual conflict. At the same time, the result is a clearer borderline for regulation: recognizing DeFi’s unique model of self-intellectual contracting, rather than a centralized hosting agent, avoiding the one-size-fits-all imposition of old-style financial intermediation rules on de-centre innovation, laying the foundation for more detailed, functionally classified regulatory discussions in the future.At the same time, through the Congressional Review Bill process, the IRS may no longer introduce similar provisions in the future without a special parliamentary mandate.

The repeal of the old rules not only cleared up the outstanding compliance shadows for the various DeFi projects, significantly reducing legal uncertainty, but also sending a positive signal to the market that the regulatory principles of "the same DeFi business, the same risks, the same regulations" were being implemented, while avoiding placing innovation under the yoke of an inadequate old system. For the compliance advisers for the various DeFi projects, the focus of future work will be on overcoming ambiguous high-pressure requirements and shifting to guiding the project ' s legal compliance within a clear new framework. The introduction of the new Act, such as the fence and guide for the DeFi industry, has injected new energy into the healthy development of the industry. Compliance is no longer the sword of Damocles, which the DeFi project party has been overwhelmed with, but will become a navigator on the path to decentralisation of financial innovation.

At the same time, it is expected that, as in the case of the financial science and technology monitoring box launched by the Hong Kong Monetary Authority in earlier years, similar innovative and friendly regulatory tools, such as the sandbox, will be used more widely. Through the sandbox mechanism,Supervisors can allow the emerging DeFi project to test business models and compliance programmes in a controlled environment, from which lessons can be learned and regulatory standards progressively refined to avoid inexperience stifling innovation.In addition, given the inherent cross-border flow properties of encrypted assets, the United States may also strengthen its collaboration with regulators in other major economies to build a worldwide sandbox regulatory coordination mechanism. The challenges faced by DeFi in cross-border transactions, money-laundering and consumer protection can be effectively addressed only if there is a degree of consensus and cooperation at the international level.

For large institutional investors, a clear and robust regulatory environment is a prerequisite for entry into emerging markets. Previously, the vague and stringent "broker" rule had been a high-wall between the agency and the DeFi world: Wall Street agencies had chosen to watch, mostly because they feared that their involvement in DeFi would involve themselves in an unpredictable compliance risk. Now, this major obstacle has been removed with the repeal of the rule, and the legal concerns of DeFi, the institutional layout, have been significantly reduced. Together with the talent bill, which provides a clear legal status and regulatory requirements for a key building block asset in the DeFi market, the Wall Street agencies have finally seen a green light to embrace DeFi. It is foreseeable that the interest of traditional financial institutions in DeFi assets and agreements will rise rapidly, and that the huge amount of money that had been deposited on the outside is expected to gradually spill over into the central financial sector.

When deep capital flows to the various DeFi agreements, market liquidity and price discovery will increase significantly, and volatility is expected to decrease, with increased market depth and stability throughout the encoded ecology. At the same time, institutions usually have well-developed risk management systems and compliance awareness, and their participation will bring higher professional standards into the DeFi ecology. For example, with institutional impetus, the DeFi agreement may improve security audits, transparency disclosures, governance mechanisms, etc., to attract more mainstream users. This will boost market confidence.In particular, when well-known banks and regulatory companies began to become involved in de-centralized lending, de-centralized derivatives, etc., this marked the gradual integration of DeFi into the mainstream financial landscape, which became increasingly blurred. This convergence, on the one hand, has injected innovation into the traditional financial system and accelerated its modernization, while, on the other hand, it has consolidated the status of encrypted assets as an emerging asset class and has led to a greater belief that DeFi is not a vagaries, but a real financial future...

✍️Submitted by:

@0xAlexWu