How Climate-Focused Innovation Can Help Manage Systemic Risk

In your recent TradeTalks interview, you noted that the GENIUS Act is a “game-changer” for the digital asset space, specifically stablecoins. How do you see the use of stablecoins evolving in the short and long term? 

With the GENIUS Act signed into law, regulatory clarity and federal oversight are expected to drive rapid growth and adoption. In the near term, we will see many stablecoins launched and business models getting shaped to take advantage of the regulatory framework. We expect some early winners to develop and solidify, where market participants will be forced to make choices on which stablecoins to engage with.

A range of non-banks will attempt to become stablecoin issuers, including large technology companies (through partnerships or direct issuance). Many will build business models around incentivizing the use of stablecoins as part of both corporate and retail decision making. We will see banks respond, including with the use of tokenized deposits and seeking opportunities to directly engage in the stablecoin ecosystem.

Stablecoins may draw from traditional, FDIC-insured bank deposits – the extent to which is a large debate/focus and depends on whether use cases and function gain traction with corporate and retail customers.

Over the longer horizon, we believe many will come to think of stablecoins as another “payment rail,”  including the role they can play as a “cash-like” instrument in a broader set of digital assets that are all on-chain. Just like corporates and retail customers think about checks, wires etc. As stablecoins evolve from their initial role as trading collateral and on-chain liquidity vehicles, they will increasingly underpin a spectrum of use cases, including cross-border payments, treasury management, and programmable money movement.

In addition to the framework established by the GENIUS Act, what do you think are some of the drivers of adoption for digital assets this year and beyond?

In addition to the regulatory clarity and market confidence fostered by the GENIUS Act, the key driver of adoption will be the programmability of digital assets and their ability to integrate seamlessly into existing payment, trading and treasury systems. Programmability enables digital assets to do things traditional money cannot. Through smart contracts and composable financial products, businesses and individuals can automate complex processes, create new business models, and unlock efficiencies across industries. As agentic AI systems mature, the ability for digital assets to be managed and transacted autonomously will further accelerate adoption, opening doors to machine-to-machine payments and decentralized autonomous organizations.

However, several critical areas such as tax and accounting treatment need to further evolve to a “cash-like” treatment which will make it easier for a range of stakeholders to engage with stablecoins. More work is also needed in the fraud, AML and resiliency space to ensure that financial institutions can engage and offer the products they want to customers while still balancing liability and risks associated with being regulated.  These risks include the security of blockchain networks, the AML risks of moving money on permissionless rails.

There still is more regulatory clarity needed; the CLARITY Act and SEC/CFTC work on Project Crypto are modernizing securities rules and setting clearer boundaries to accommodate crypto assets and distributed ledger technology, further supporting the digital asset ecosystem. Additionally, the evolution of regulatory frameworks across jurisdictions is reducing barriers to entry and supporting the growth of compliant digital asset offerings.

Lastly, fintechs and banks are focused on making digital assets as easy to use as traditional money. The more seamless the experience, faster onboarding, simpler payments, and intuitive interfaces, the more likely non-crypto natives are to adopt.

You also mentioned that companies are considering how to embed stablecoins into their business practices as a means of incentivizing consumer behavior or discounts. What are some of the use case options that companies can explore?

Consider a technology company that wants to reward customer loyalty. Instead of traditional points or rebates, every time you buy a product, you instantly receive a percentage of the purchase back in stable coins. These digital rewards are deposited in your wallet within seconds, and you as a customer can spend them on future purchases, transfer them to friends, or even convert them to local currency. The experience feels immediate and empowering—your loyalty is recognized in real time, and the value is tangible. It can enhance customer experience and increase engagement and loyalty, as rewards are tangible and accessible in real time.

The possibilities and use cases of enabling stablecoin payments are wide; Retailers can settle international transactions instantly, providing merchants better payment terms. Gaming platforms can reward achievements with stablecoins.  Stablecoin issuers ability to share some of the yield that they earn indirectly with customers combined with the aspect that stablecoins are programmable money makes the range of stablecoins make payments faster, rewards more flexible, and business operations more efficient.

With stable coins in cross-border payments, how can the industry and regulators ensure there are safeguards in place for any vulnerabilities on the blockchain rails?  

Although regulators are promoting innovation and growth, the onus is on stablecoin ecosystem participants who are processing and engaging with these stablecoins.There is still quite a bit of work to do for regulators to define the “playbook” and a detailed set of expectations for what the requirements are for engaging with stablecoins.

To make stablecoin cross-border payments resilient and trustworthy, issuers and regulators must address risks across technology, AML, risk, governance, and consumer protection. Issuers must adopt strong cybersecurity, AML/KYC, risk controls and transparent reserves to preserve stability and trust. While regulators need to provide clear rules/ standards on disclosures, accounting treatment and oversight to reduce uncertainty. Technical vulnerabilities, such as flaws in smart contracts or congestion on blockchain networks will require significant focus. Areas of focus will also include how fraud and AML is addressed in decentralised blockchain networks.  Consumer protection is equally important: clear disclosures, dispute resolution mechanisms, and educational resources help users understand their rights and responsibilities, building confidence in the system.

Do you have any unique predictions on the outlook of stablecoins or, more broadly, digital assets?

I do think this time is different when it comes to the adoption and usage of stablecoins and digital assets. Unlike previous cycles, we’re seeing real infrastructure maturity, regulatory clarity, and a shift from speculation to practical business utility. Stablecoins are no longer just a niche tool for crypto enthusiasts, they’re being integrated into mainstream payment networks, and treasury platforms, allowing corporates to manage digital assets alongside fiat currencies with minimal friction.

Additionally, I believe that the intersection of payments, AI, and blockchain will be the real catalyst for digital asset adoption. AI is rapidly transforming how businesses operate, and when combined with programmable money and blockchain rails, it opens up entirely new possibilities. For example, AI can automate payments based on real-time data, optimize treasury management, and personalize consumer incentives delivered via stablecoins. This convergence enables smarter, faster, and more adaptive financial transactions, something that simply wasn’t possible before. As regulatory frameworks become clearer and more supportive, institutional participation will accelerate. Stablecoins, in particular, will serve as the “on-ramp” for broader digital asset ecosystems, bridging the gap between traditional finance and emerging blockchain-based models.