The Genius Act: Stable Coins & Commercial Real Estate

Introduction

Welcome to an exciting exploration of the “Genius Act: Stable Coins and Commercial Real Estate,” a groundbreaking intersection of innovative finance and property investment. As the world of cryptocurrency continues to evolve, stable coins are emerging as a stable, reliable asset class, while commercial real estate remains a cornerstone of economic growth. This blog delves into how the Genius Act could revolutionize these sectors, blending digital currency stability with the tangible value of real estate. Join us as we uncover the potential impacts, opportunities, and future trends shaping this dynamic landscape!

Genius Act

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The GENIUS Act, passed by the Senate on June 17, 2025, establishes a regulatory framework for payment stablecoins in the United States, aiming to ensure financial stability, consumer protection, and compliance with anti-money laundering (AML) and sanctions laws. It defines key terms, sets issuance and operational standards, and outlines supervision and enforcement mechanisms for both domestic and foreign stablecoin issuers. It is expected to pass the house and be on the presidents desk before the end of October.

Table of Contents

• Introduction
• Genius Act  
• Stable Coins
• Advantages of Stable Coins
• Are Stable Coins Risky?
• Algorithmic Stable Coins vs Pegged Stable Coins
• Stable Coins in Commercial Real Estate  
• Tenant Paying Rent with USDC (Stable Coin)
• Landlord Converting Rent from USD to USDC (Stable Coin)
• Deploying Stable Coins in Web 3 to Increase Yield
• Applied Use Case
• Conclusion

Introduction

Welcome to an exciting exploration of the “Genius Act: Stable Coins and Commercial Real Estate,” a groundbreaking intersection of innovative finance and property investment. As the world of cryptocurrency continues to evolve, stable coins are emerging as a stable, reliable asset class, while commercial real estate remains a cornerstone of economic growth. This blog delves into how the Genius Act could revolutionize these sectors, blending digital currency stability with the tangible value of real estate. Join us as we uncover the potential impacts, opportunities, and future trends shaping this dynamic landscape!

Genius Act

The GENIUS Act, passed by the Senate on June 17, 2025, establishes a regulatory framework for payment stablecoins in the United States, aiming to ensure financial stability, consumer protection, and compliance with anti-money laundering (AML) and sanctions laws. It defines key terms, sets issuance and operational standards, and outlines supervision and enforcement mechanisms for both domestic and foreign stablecoin issuers. It is expected to pass the house and be on the presidents desk before the end of October.

Stable Coins  

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A stablecoin is a type of cryptocurrency designed to maintain a stable value, typically pegged to a fiat currency like the US dollar, a commodity like gold, or a basket of assets. Unlike volatile cryptocurrencies such as Bitcoin, stablecoins aim to minimize price fluctuations, making them suitable for transactions, savings, or as a store of value. They achieve stability through mechanisms like collateralization (backed by reserves of fiat, crypto, or commodities) or algorithmic adjustments to supply and demand. Examples include Tether (USDT), USD Coin (USDC), and Dai.

Below data as of June 30^th 2025 from  CoinGecko

Advantages of Stable Coins

• Price Stability: Pegged to assets like fiat or commodities, they minimize volatility compared to other cryptocurrencies, making them reliable for transactions and savings.

• Fast Transactions: Enable quick, low-cost transfers on blockchain networks, ideal for cross-border payments or remittances without traditional banking delays.

• Accessibility: Provide access to digital currency for unbanked or underbanked populations, requiring only an internet connection.

• Transparency: Many stablecoins operate on public blockchains, allowing auditable transactions and, in some cases, reserve backing verification.

• DeFi Integration: Widely used in decentralized finance (DeFi) for lending, borrowing, or yield farming, offering stable value in volatile crypto markets. Access yield with ease.

• Programmability: Can be used in smart contracts for automated, trustless financial applications, enhancing efficiency in payments or settlements.

• Hedge Against Volatility: Serve as a safe haven for crypto traders to park funds during market downturns without converting to fiat.

Are Stable Coins Risky?             

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Stablecoins carry risks, though they’re designed to maintain a stable value, typically pegged to assets like the U.S. dollar. Here’s a breakdown of the main risks based on current information:

• Peg Stability Risk: Stablecoins aim to hold a steady value (e.g., $1), but they can “de-peg” if the issuer fails to maintain the peg. For instance, algorithmic stablecoins like TerraUSD (UST) collapsed in 2022 when its peg mechanism failed, wiping out billions in value. Even asset-backed stablecoins like USDT or USDC can wobble during market stress if reserves are mismanaged or undercollateralized.

• Reserve Transparency: Many stablecoins, like Tether (USDT), have faced scrutiny over whether their reserves—supposedly backing each coin 1:1—are fully liquid or diversified. If reserves include risky assets like commercial paper or crypto, a market downturn could prevent redemption at full value. Audits are often incomplete or irregular, adding uncertainty.

• Counterparty Risk: Stablecoins rely on issuers (e.g., Tether, Circle) or custodians to manage reserves. If the issuer goes bankrupt, gets hacked, or faces regulatory action, your funds could be frozen or lost. For example, regulatory crackdowns could limit access to stablecoin platforms.

• Regulatory Uncertainty: Governments are increasingly eyeing stablecoins. In the U.S., proposed regulations could impose strict reserve requirements or ban certain types (e.g., algorithmic stablecoins). A sudden regulatory shift could disrupt operations or force de-pegging. Outside the U.S., some countries might outright ban stablecoin use in crypto markets. The Genius Act establishes a regulatory framework for stablecoins and specifies that only “permitted payment stablecoin issuers” can issue them. These issuers are primarily defined as insured depository institutions and certain non-bank financial institutions that meet specific licensing and regulatory requirements. 

• Market and Liquidity Risks: In volatile markets, redeeming stablecoins for fiat can be tough if liquidity dries up. During the 2022 crypto crash, some stablecoin platforms struggled with redemption delays. If a stablecoin’s trading volume drops, converting it to cash or other assets becomes harder.

• Smart Contract and Tech Risks: Stablecoins on blockchains (e.g., Ethereum) rely on smart contracts, which can have bugs or be exploited. Hacks targeting DeFi protocols have drained millions from stablecoin pools. Centralized stablecoins, while less prone to smart contract issues, are vulnerable to hacks at the issuer level.

• Fraud and Scams: The crypto space is rife with scams, and stablecoins aren’t immune. Fake stablecoin projects or phishing schemes can trick users into sending funds to malicious addresses. Even legitimate stablecoins can be used in Ponzi-like schemes.

That said, stablecoins like USDC or BUSD, backed by reputable issuers with regular audits, are generally seen as safer than algorithmic ones. Their risks are lower than volatile cryptocurrencies like Bitcoin but higher than traditional bank accounts, which have deposit insurance (e.g., FDIC up to $250,000). Your risk depends on the specific stablecoin, how you store it (e.g., self-custody vs. exchange), and your exposure to market or regulatory shocks.

Algorithmic Stable Coins vs Collateralized Stable Coins

Algorithmic stablecoins and collateralized stablecoins are two distinct types of stablecoins, each designed to maintain a stable value (typically pegged to a fiat currency like the USD) but differing in their mechanisms, backing, and risk profiles. Below is a concise comparison of their differences:              

1. Definition                  

• Algorithmic Stablecoins:  

• These stablecoins maintain their peg through algorithms and smart contracts that adjust the supply of the coin based on market demand, without relying on physical collateral.
  • They use mechanisms like minting, burning, or incentivizing users to stabilize the price.
  • Example: TerraUSD (UST, before its collapse in 2022) used an algorithm to balance its supply with another token, LUNA.

• Collateralized Stablecoins:  (Contact Elkpenn) 
                                                                   

• These stablecoins are backed by reserves of assets (e.g., fiat currency, cryptocurrencies, or other valuables) held in custody to ensure the coin’s value remains stable.
  • The collateral is typically held in a 1:1 ratio (or over-collateralized) to the stablecoin’s value.
  • Example: Tether (USDT) and USD Coin (USDC) are backed by fiat or fiat-equivalent reserves.
  •  

2. Backing Mechanism

• Algorithmic Stablecoins:
  • Not backed by tangible assets but rely on algorithms to control supply and demand.
  • Often use a dual-token system (e.g., a stablecoin and a volatile token) to absorb price volatility or incentivize arbitrage.
  • Example: If the price rises above the peg, more coins are minted to increase supply and lower the price; if below, coins are burned or supply is reduced.

• Collateralized Stablecoins:

• Backed by real-world assets like USD, Treasury bonds, or cryptocurrencies (e.g., Ethereum in DAI’s case).
  • Assets are held in reserves by a custodian or smart contract, ensuring the stablecoin can be redeemed for its pegged value.
  • Example: USDC holds USD or cash equivalents in audited reserves to maintain its 1:1 peg.

3. Stability and Risk

• Algorithmic Stablecoins:

• Higher risk due to reliance on market confidence and algorithmic mechanisms, which can fail during extreme volatility or loss of trust.
  • Prone to “death spirals” if the stabilizing mechanism (e.g., secondary token) collapses, as seen with TerraUSD.
  • Less capital-intensive since no physical collateral is needed, but stability depends on user trust and market dynamics.

• Collateralized Stablecoins:

• Generally, more stable due to tangible asset backing, but stability depends on the quality and transparency of the collateral.
  • Risks include reserve mismanagement, regulatory scrutiny, or counterparty risk (e.g., if the custodian fails).
  • Over-collateralized stablecoins like DAI (backed by crypto) require more collateral than the stablecoin’s value to mitigate volatility risks.

4. Transparency and Trust:

• Algorithmic Stablecoins:

• Transparency depends on the protocol’s code and governance. Since there’s no physical collateral, users must trust the algorithm and the project’s execution.
  • Often decentralized, reducing reliance on a central entity but increasing complexity and risk of bugs or manipulation.

• Collateralized Stablecoins:

• Transparency varies by issuer. Centralized stablecoins (e.g., USDT, USDC) rely on audits to verify reserves, which can raise concerns about reserve quality or centralization.
  • Decentralized collateralized stablecoins (e.g., DAI) use smart contracts for transparency, but users must trust the collateral’s value and the protocol’s security.

5. Examples

• Algorithmic Stablecoins:

• TerraUSD (UST, pre-collapse)
  • Ampleforth (AMPL)
  • Frax (FRAX, partially algorithmic)

• Collateralized Stablecoins:

• Tether (USDT)
  • USD Coin (USDC)
  • Dai (DAI, crypto-collateralized)

6. Use Cases and Trade-offs

• Algorithmic Stablecoins:

• Pros: Decentralized, capital-efficient, no need for physical reserves, scalable in theory.
  • Cons: Higher risk of depegging, complex mechanisms, vulnerable to market shocks.
  • Use Case: Preferred in decentralized finance (DeFi) for users seeking non-custodial solutions, but less reliable for everyday transactions due to volatility risks.

• Collateralized Stablecoins:     (Contact Elkpenn)

• Pros: More reliable peg, wider acceptance, simpler to understand, better suited for payments and savings.
  • Cons: Requires trust in custodians (for centralized versions), less capital-efficient, regulatory risks.
  • Use Case: Widely used for trading, remittances, and as a stable store of value in crypto ecosystems

Summary Table

Aspect	Algorithmic Stablecoins	Collateralized Stablecoins
Backing	Algorithms, supply/demand adjustments	Fiat, crypto, or other assets
Stability	Less stable, prone to depegging	More stable, backed by reserves
Risk	High (market confidence, algorithm failure)	Moderate (custodian risk, reserve quality)
Transparency	Code-based, decentralized but complex	Audits or smart contracts, varies by issuer
Examples	UST (pre-collapse), AMPL, FRAX	USDT, USDC, DAI
Use Case	DeFi, experimental finance	Trading, payments, DeFi

Stable Coins in Commercial Real Estate  

Stablecoins are transforming commercial real estate by streamlining transactions and unlocking new investment opportunities. Pegged to stable assets like the U.S. dollar, stablecoins like USDC enable rapid, low-cost property purchases, leasing agreements, and cross-border investments through blockchain’s transparent and instant settlement capabilities. Beyond efficiency, stablecoins allow investors to increase yield by redeploying USDC into Web3 yield-generating activities, such as decentralized finance (DeFi) protocols, where assets can earn interest or staking rewards. Additionally, stablecoins provide instant access to invest in digital commodities like tokenized gold, offering diversification without the complexities of traditional markets. By tokenizing real estate assets, stablecoins also enable fractional ownership, enhancing liquidity and accessibility while smart contracts automate processes like rent collection, reducing costs and driving higher returns for investors.

Tenant Paying Rent with USDC (Stable Coin)

• Application: Landlords can accept rent payments in stablecoins like USDC or DAI via smart  contracts or platforms like Coinbase (centralized) or MetaMask (Decentralized) enabling instant collection and reinvestment. Payments are processed on blockchain networks, avoiding traditional banking delays and fees (e.g., 2-5 days for ACH or wire transfers).

New rental payment instructions would need to be sent to tenants unless current systems already had the feature. It is a matter of time before property management software’s like appfolio , DoorLoop, & Buildium implement stable coin features.

• Benefits:

• Speed: Reinvest rental income instantly into appreciating or yield-producing assets like gold, DeFi protocols, commodities, or stocks within seconds, capitalizing on market opportunities. Idle money not earning yield is losing money (inflation).

• Cost Efficiency: Lower transaction fees compared to bank transfers or credit card processing (e.g., blockchain fees often < $1 vs. $20+ for wires), maximizing returns.

• Flexibility: Access decentralized exchanges or platforms (e.g., Uniswap, Coinbase) to diversify into assets like DeFi yield through lending or tokenized stocks without conversion delays.

• Example: A landlord collects $10,000 in USDC rent, reinvesting it immediately into a gold-backed digital asset, stock, etf, or a DeFi lending protocol earning between(5%-20% annually) depending on risk tolerance.

Landlord Converting Rent from USD to USDC (Stable Coin)

In an evolving financial landscape, some tenants may struggle to pay rent in USDC (USDCoin), a popular stablecoin pegged to the U.S. dollar. However, forward-thinking landlords can still harness the benefits of USDC by converting traditional USD rent payments into this cryptocurrency. This strategy not only aligns with the landlord’s preference for digital assets but also unlocks significant advantages. One key benefit of converting USD to USDC is the ability to instantly reinvest rental income. Unlike traditional banking systems, which may involve delays in fund availability, USDC transactions settle almost immediately on blockchain networks. This speed allows landlords to quickly allocate funds into high-yield investment opportunities, such as decentralized finance (DeFi) protocols or other crypto-based assets, potentially boosting overall returns on their real estate investments. Additionally, USDC offers stability due to its 1:1 peg with the USD, reducing the volatility risk often associated with other cryptocurrencies. This stability, combined with the ability to earn interest through lending platforms or staking, can enhance the landlord’s yield. By leveraging these opportunities, landlords can maximize the profitability of their rental income, turning a traditional cash flow into a dynamic, high-return investment strategy.In summary, converting USD rent to USDC enables landlords to enjoy the benefits of digital currency while instantly reinvesting for higher yields, making it a smart adaptation to modern financial tools.

Deploying Stable Coins in Web3 to Increase Yield

3. Purchasing Tokenized Property (Contact Elkpenn for More Information)

• Application: Rental income received via stablecoins (e.g., USDC, DAI) can be used to buy tokenized real estate on platforms like Lofty.ai or RealT.co, where properties are divided into digital tokens representing ownership shares.

• Advantages:

• Accessibility: Lowers the entry barrier, allowing investors to purchase fractions of high-value properties (e.g., $500 for a share of a $1M office building) using stablecoins.

• Liquidity: Tokenized assets can be traded on secondary markets, offering quicker exits compared to traditional CRE sales, which may take months.

• Global Reach: Stablecoins enable international buyers to invest without forex hassles, broadening the investor base.

• Transparency: Blockchain records ensure clear ownership and payment histories, reducing fraud and simplifying due diligence.

• Yield Generation: Token holders can earn rental income or appreciation dividends in stablecoins, paid automatically via smart contracts.

• Example: An investor uses USDC to buy tokens of a tokenized retail center, gaining partial ownership and receiving monthly rent distributions in stablecoins, with the option to sell tokens on a marketplace.

Applied Use Case

1. Background

• Landlord Profile: Jane manages a 50,000-square-foot office building with 10 tenants, each paying $10,000/month in rent, totaling $100,000/month.
• Objective: Accept rent payments instantly in USDC to reduce transaction costs and delays, then deploy the USDC into a Web3 decentralized finance (DeFi) protocol to generate yield, enhancing her rental income.
• Constraints: Jane must comply with the GENIUS Act, particularly the prohibition on stablecoin issuers paying yield to holders (Sec. 4(a)(11)), and ensure her DeFi activities align with anti-money laundering (AML) and sanctions requirements (Sec. 8-9).

2. Process Step 1: Accepting USDC for Rent Payments

• Setup:
  • Jane partners with a digital asset service provider (e.g., a crypto payment processor like BitPay or Coinbase Commerce) that complies with the GENIUS Act’s requirements (Sec. 3) for offering USDC, ensuring the stablecoin is issued by a permitted payment stablecoin issuer like Circle.
  • She provides tenants with a wallet address (e.g., on the Ethereum or Polygon blockchain) for sending USDC payments. Tenants can acquire USDC via regulated exchanges or convert fiat to USDC through the payment processor.
  • Jane ensures the payment processor has AML compliance programs, as required by Sec. 5(i) of the GENIUS Act, to verify tenant identities and monitor transactions for illicit activity.
• Execution:
  • On the 1st of each month, tenants send USDC to Jane’s wallet. For example, on July 1, 2025, Jane receives 100,000 USDC (equivalent to $100,000) instantly, with transaction fees typically under $1 on efficient blockchains like Polygon, compared to $20-$50 for traditional bank wires.
  • The blockchain records each transaction transparently, providing an immutable ledger for Jane’s accounting, aligning with the GENIUS Act’s transparency requirements (Sec. 4(a)(1)(C)).
• Benefits:
  • Instant settlement eliminates delays from bank processing (3-5 days for ACH or wires).
  • Low fees reduce costs compared to credit card payments (2-3% fees) or wire transfers.
  • Tenants, especially international ones, avoid currency conversion costs, as USDC is dollar-denominated.

Step 2: Deploying USDC into Web3 for Yield

• Setup:
  • Jane selects a reputable DeFi protocol (e.g., Maple.Finance, Compound, or Yearn Finance) on a blockchain compatible with USDC (e.g., Ethereum, Solana, or Polygon) to earn yield on her rental income.
  • She conducts due diligence to ensure the protocol complies with applicable regulations and has strong security measures, such as audited smart contracts, to mitigate risks like hacks or protocol failures.
  • Jane uses a non-custodial wallet (e.g., MetaMask) to maintain control of her USDC, aligning with the GENIUS Act’s exemption for self-custodial wallets (Sec. 3(h)(1)(C)).
• Execution:
  • Jane deposits her 100,000 USDC into Maple.Finance,  lending pool, where she lends her USDC to borrowers in exchange for interest. For example, Maple.Finance,  offers a 6% annual percentage yield (APY) on USDC deposits as of July 2025 (based on market conditions).
  • The DeFi protocol issues Jane aTokens (e.g., aUSDC), which represent her deposit and accrue interest in real-time. She can redeem these tokens for USDC plus interest at any time.
  • Jane monitors the protocol’s reserve composition and governance to ensure stability, aligning with the GENIUS Act’s emphasis on transparency (Sec. 4(a)(1)(C)).
• Yield Calculation:
  • At a 6% APY, Jane’s 100,000 USDC generates approximately $6,000/year in interest, or $500/month, paid in USDC or equivalent tokens.
  • Unlike traditional savings accounts (offering ~0.5% APY in 2025), DeFi yields are higher due to direct peer-to-peer lending and lower overhead.
• Compliance:
  • Jane ensures her DeFi activities comply with the GENIUS Act’s AML requirements (Sec. 9), such as reporting suspicious transactions through her digital asset service provider.
  • She avoids protocols that mix stablecoins in ways that obscure transaction identities (e.g., tumblers), as these are scrutinized under Sec. 9(d)(3) for potential illicit activity.
  • The GENIUS Act’s prohibition on issuers paying yield (Sec. 4(a)(11)) does not apply to Jane earning yield as a depositor in a DeFi protocol, as she is not the stablecoin issuer.

Step 3: Managing and Redeeming Funds

• Management:
  • Jane monitors her DeFi investment via the protocol’s dashboard, tracking interest accrual and market conditions.
  • She diversifies her USDC across multiple protocols (e.g., 50,000 USDC in Maple.Finance , 50,000 in Compound) to mitigate risks, aligning with the GENIUS Act’s reserve diversification standards for issuers (Sec. 4(a)(4)(A)(iii)).
• Redemption:
  • Jane can withdraw her USDC plus interest from the DeFi protocol at any time, converting it back to fiat via a regulated exchange if needed for operational expenses (e.g., property maintenance).
  • The GENIUS Act’s reserve requirements (Sec. 4(a)(1)) ensure Circle maintains 1:1 USDC reserves, guaranteeing Jane’s ability to redeem her USDC for dollars.
• Tax Compliance:
  • Jane reports her DeFi interest as income to the IRS, ensuring compliance with tax regulations. Blockchain transparency aids in accurate reporting.

3. Benefits

• Increased Income: Jane earns $3,000/year in additional yield on her $100,000 monthly rent, boosting her returns compared to holding cash in a low-yield bank account.
• Efficiency: Instant USDC rent payments save time and reduce costs, while DeFi platforms offer user-friendly interfaces for yield generation.
• Transparency: Blockchain records provide an auditable trail for rent and yield transactions, reducing disputes and aiding compliance with the GENIUS Act.
• Flexibility: Jane can access her funds anytime, unlike traditional CRE investments with long lock-up periods.

4. Risks and Mitigations

• Smart Contract Risk: DeFi protocols may have vulnerabilities. Jane mitigates this by choosing audited, reputable platforms like Maple.Finance,  or Compound.
• Market Risk: DeFi yields fluctuate with market demand. Jane diversifies across protocols to reduce exposure.
• Regulatory Risk: The GENIUS Act’s AML and sanctions rules (Sec. 8-9) require compliance. Jane uses regulated service providers and monitors for suspicious activity.
• Liquidity Risk: Jane keeps a portion of her funds in a liquid wallet for immediate needs, ensuring she can cover property expenses without relying solely on DeFi withdrawals.

5. Outcome

• Jane collects $100,000 in USDC rent monthly, deploys it into Maple.Finance,  for a 6% APY, and earns $500/month in additional income.
• Her tenants benefit from low-cost, instant payments, while Jane enjoys higher returns and streamlined operations.
• By using regulated providers and audited DeFi protocols, Jane complies with the GENIUS Act, ensuring her USDC transactions are secure and legal.

Conclusion (Contact Elkpenn for More Information)

In conclusion, the integration of stablecoins into commercial real estate offers a transformative opportunity for the industry. By enabling faster, more secure, and cost-effective transactions, stablecoins address longstanding inefficiencies in property deals, from cross-border investments to streamlined settlements. Their stability, backed by assets like fiat or commodities, fosters trust among investors and developers alike. As blockchain technology continues to evolve, stablecoins could redefine how commercial real estate operates, unlocking new levels of liquidity, transparency, and accessibility. Embracing this innovation positions the industry to thrive in a rapidly changing financial landscape, paving the way for a more efficient and inclusive market.

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