How IOTA is Responding to A New Era for U.S. Digital Asset Policy

IOTA Foundation ·

TL;DR:
The U.S. is developing digital asset regulation with the GENIUS Act establishing stablecoin frameworks. IOTA contributed feedback on Senate and CFTC initiatives, advocating for innovation-friendly rules that distinguish utility tokens from securities, support DeFi, and ensure proportionate compliance. European MiCA offers clarity but highlights complexity risks in implementation.

2025 is shaping up to be a turning point for digital asset regulation in the United States. Although President Donald Trump has promised to make the country the “crypto capital of the planet”, recent years have been marked by fragmented enforcement actions and regulatory uncertainty. But this year, U.S. policymakers are beginning to move toward more structured rulemaking.

In July and August, the IOTA Foundation contributed to two of the most important processes in this shift: 

  • The Senate Banking Committee’s Request for Information (RFI) on the draft Responsible Financial Innovation Act of 2025.
  • The Commodity Futures Trading Commission’s (CFTC) initiative on listing spot crypto asset contracts on federally regulated exchanges.

At the same time, the GENIUS Act was signed into law: the first federal law to create a framework for stablecoins. While this is a significant step, broader frameworks, such as the CLARITY Act and other market structure proposals, are still pending.

IOTA’s Feedback to the Senate RFI: Five Priorities

Our Senate feedback emphasized five priorities to help determine the shape of U.S. digital asset markets:

  1. Ancillary Assets: Not all tokens are securities. We support the proposed ancillary asset framework, which distinguishes utility and network tokens from traditional securities and recognizes that a token’s legal characterization can change over time A clear statutory definition of “investment contract” is needed to end uncertainty. 
  2. Stablecoins: Yield-bearing stablecoins should be allowed and not automatically be treated like money market funds. We advocate for bespoke rules with robust disclosure, reserve, and liquidity standards, while allowing innovation such as transparent rewards.
  3. Decentralized Finance: Regulation must not criminalize code or open-source builders. We call for a DeFi exemption for non-custodial, permissionless, autonomous systems, where no single party controls the network. Developers and validators should not be regulated as intermediaries.
  4. Innovation Mandate: For the first time, Congress is considering making innovation an explicit mission of the United States Securities and Exchange Commission (SEC). We strongly support this shift: without it, rules risk being outdated before they are implemented.
  5. Inter-agency Regulatory Coordination: The current split between the SEC and CFTC has created uncertainty. We support formal coordination mechanisms or even a joint office to avoid duplication and close gaps.

IOTA’s Feedback to the CFTC: Spot Crypto Listings

Our feedback to the CFTC’s initiative to allow spot crypto asset contracts to be listed on CFTC-regulated exchanges also emphasized five principles:

  1. Clear Classification and Coordination: The SEC and CFTC must develop a joint methodology for deciding whether an asset is a commodity or a security and apply it consistently during the listing process.
  2. Proportionate, Tech-Aware Standards: Listing criteria should reflect the realities of decentralized networks: governance distribution, consensus mechanisms, tokenomics, and cybersecurity resilience. Proportionate scrutiny is key.
  3. On-Chain Transparency for Oversight: Digital assets offer unique advantages for supervision. IOTA urged the CFTC to integrate on-chain monitoring tools to detect market manipulation in real time.
  4. Protect Innovation and Market Access: Rules must be proportionate and not unintentionally gatekeep smaller, innovative protocols. Excessive listing fees or prolonged reviews would undermine U.S. competitiveness.
  5. Transparency in the Listing Process: Clear, public guidance and templates for listing will build predictability and trust in the process.

GENIUS Act vs. MiCA: Two Models of Regulation

The U.S. and the European Union are now moving in parallel, though with different approaches and priorities. In July, the GENIUS Act became the first federal law in the United States to establish a framework for stablecoins. Meanwhile, the Regulation on Markets in Crypto-Assets (MiCA) has already taken effect in Europe, with its detailed technical standards now being rolled out by the European Securities and Markets Authority and European Banking Authority. Check out this blog post by the European Crypto Initiative for a handy table summarizing the key provisions of Genius vs. MiCA.

The two frameworks share common ground. Both prohibit algorithmic and interest-bearing stablecoins, enforce strict reserve backing, and emphasize transparency through disclosures and audits. But they diverge in scope and intent:

  • GENIUS Act (U.S.): Focused on payment stablecoins as a lever for U.S. financial leadership, limiting issuance to federally supervised or licensed entities,  granting Treasury authority to restrict foreign stablecoins, requiring 100% cash or Treasury reserves, and prohibiting interest-bearing or algorithmic tokens. It embeds a strong federal role while leaving some room for state-level issuers.
  • MiCA (EU): Prioritizes monetary sovereignty and market harmonization across the EU, covering most crypto-assets not already under financial regulation. It establishes licensing and prudential requirements for crypto-asset service providers and stablecoin issuers, while allowing licensed entities to operate across all 27 Member States under a single authorization.

Both frameworks aim to reduce systemic risks and strengthen trust. But they also illustrate the trade-offs of different regulatory philosophies: while MiCA offers clarity across 27 countries, its secondary regulations have already proven costly and complex for compliance. GENIUS, by contrast, centralizes oversight of the dollar in a way that underscores U.S. financial leadership, but leaves other aspects of digital asset regulation to future debates in Congress and the agencies.

For projects like IOTA, the coexistence of these frameworks creates both opportunity and responsibility: to design solutions that can thrive across jurisdictions, while advocating for proportionality so that smaller innovators are not crowded out by compliance costs.

Conclusion: A Defining Moment, But Much Work Ahead

The United States is beginning to build a more coherent framework for digital assets. The GENIUS Act is a milestone, while broader reforms like the CLARITY Act remain to be seen. What’s most encouraging is the open and collaborative process: by inviting feedback from industry, nonprofits, and innovators, U.S. policymakers are signaling that they want to get this right.

Europe’s MiCA has delivered clarity, but its implementation highlights the risks of complexity. The lesson from both sides: clarity is essential, but proportionality is just as important.

The IOTA Foundation will continue to engage to ensure frameworks are balanced, proportionate, and future-proof.