Manny Khan is the Deputy Chief Information Security Officer for BitGo.
For too long, digital assets have been treated as a separate category of finance. That is the wrong lens.
The more durable way to understand the GENIUS Act and CLARITY Act is as part of a broader shift in financial infrastructure. They point toward a system in which value can be stored, transferred, settled and represented on technology that operates continuously and globally.
For banks and financial institutions, the significance is larger than whether they choose to “offer crypto.” The question is whether they will help shape the next generation of financial rails or wait for others to define them.
This Is Money
The GENIUS Act is not any individual reporting requirement. It is the regulatory architecture explaining reserve quality, redemption, disclosure, supervision, financial-crime controls, operational resilience and accountability.
Those concepts should look familiar to bankers because they are familiar. Financial institutions have always had to answer the same questions: What backs the liability? Who holds the assets? Who bears the risk? What happens during stress? Who supervises the institution?
The CLARITY Act addresses another major issue regarding which regulatory agency has jurisdiction. For years, the SEC and CFTC had not settled that question clearly enough for the market to move with confidence, creating friction when there was none to begin with. The CLARITY Act helps provide cleaner jurisdictional lines.
Stablecoins, tokenized deposits, digital custody and blockchain-based settlement should increasingly be understood in the same category as ACH, SWIFT, card networks and clearing infrastructure. The technologies are different, but the economic function is familiar: safely moving value between parties.
Financial institutions that reduce the discussion to whether they “believe in crypto” are therefore asking the wrong question. Banks did not need to believe in the internet to eventually require internet banking. They needed to understand how a new communications architecture would change the delivery of financial services.
Here’s what you can expect now: reserve requirements, disclosures, custodial requirements, and clear regulatory delineation. This is what makes up the “plumbing” for the financial markets.
This plumbing falls into the same category as the ACH, SWIFT, card rails and clearing-and-settlement layer underneath the equities market. These Treasury-backed stablecoins should be of interest to every bank because they support dollar primacy and provide a structural demand for U.S. government debt. The math is undeniable.
The media may label these acts as “crypto legislation,” but that framing implies institutions can ignore them if they do not touch crypto. These acts are part of the rulebook for how money and assets will move in the digital asset economy for the global markets.
Clarity Helps Grow The Pie
The global financial industry often views digital assets as a zero-sum game, as if every dollar that moves through blockchain means one less dollar in the banking system. I do not believe that is the right read.
The single biggest cost in this market over the last decade has not been the technology. It has been uncertainty. When institutions cannot underwrite the regulatory environment, capital waits.
Clearer frameworks provided by the CLARITY Act and GENIUS Act reduce that uncertainty. They make it easier for institutions to explore tokenized real-world assets, faster settlement, 24/7 markets, lower-cost cross-border payments and access for customers who are underserved by existing rails.
The value comes from reduced friction. When money can move faster, with stronger transparency and clearer rules, the pie can grow because the system is no longer paying the uncertainty tax.
Banks’ Concerns Are Real
I take banks’ concerns seriously because they are real. Deposit leakage is real. Payment competition is real. Margin compression and regulatory arbitrage are real.
If customers can hold near-cash instruments that move faster, some balances will shift. Existing payment rails have been slow and expensive for a long time, which is one reason alternatives emerged.
Where I think the fear gets misread is in the conclusion many institutions draw from it. Waiting feels safe, but it may simply mean letting others build the capabilities your customers eventually expect.
The GENIUS Act did not write banks out of the stablecoin movement. It keeps insured depository institutions close to the center of who may participate. Much of what gets called “leakage” is actually a set of services banks can offer themselves or through qualified partners, such as custody, tokenized deposits, stablecoin issuance and settlement.
While the concern is valid, treating it only as a threat to defend against, rather than a capability to build, is the expensive mistake.
Banks also have an important option that is sometimes lost in the stablecoin debate: tokenized deposits. They do not necessarily need to replace traditional deposits with stablecoins to participate in digital financial infrastructure. Stablecoins, tokenized deposits and other forms of digital money may ultimately coexist because the winning architecture is likely to be interoperable, not winner-take-all.
Responsible Participation Starts Deliberately
Responsible participation starts deliberately. It begins with internal literacy, board and executive education, a clear risk assessment and a map of where digital assets already touch the business.
From there, the work is readiness, including custody and key-management standards, AML and sanctions controls, third-party diligence and narrow pilots with hard guardrails.
Operational discipline is the hard part. Major failures in digital assets were not failures of blockchain; they were failures of controls. The institutions that succeed will bring the same rigor to this market that they would bring to any serious new line of business.
Shape The Market Or React To It
Every major shift in financial infrastructure creates a choice for established institutions. Online banking, electronic trading, mobile payments and cloud computing all went through periods when leaders questioned whether the technology was mature, regulated or important enough to justify investment.
Digital asset infrastructure is entering that same phase.
Institutions have two levers. They can help shape policy through industry engagement and dialogue with regulators. They can also lead by example by setting practical standards for custody, settlement, security, controls and customer protection.
You either help set the standard or adopt someone else’s.
The greater risk is discovering too late that financial infrastructure evolved without you. None of this is about hype or fear of missing out. It is about strategic value creation, responsible participation and the future role financial institutions want to play in the global economy.
This article is for informational purposes only and is not financial advice. The views expressed are my own and do not necessarily reflect those of BitGo or its affiliates.
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