The Stablecoin as a Payment Instrument and the Gaming Industry

For stablecoins to truly find their footing in the gaming world, one thing was essential: legal recognition. U.S. authorities struggled to classify digital assets, creating regulatory uncertainty that hindered crypto adoption. The Guiding and Establishing National Innovation for U.S. Stablecoins Act (the “GENIUS Act” or “Act”) provides a legislative framework aimed at providing clarity on the legal classification of stablecoins and a standardized model for stablecoin issuances and secondary markets.

For decades, the gaming industry used closed-loop currencies like Simoleons in The Sims and Gold in World of Warcraft(2). These developer-controlled credits had inherent risks: they were non-fungible across platforms, could be lost if a game shut down, and their theft was difficult to prosecute due to ambiguous legal status. Early web3 gaming experiments such as Axie Infinity, experienced volatility tied to speculative native tokens. Their economic models attracted users focused more on financial gain, acting more like DeFi protocols than sustainable games economies. Composability was also a challenge, limiting asset interaction across games and blockchains.

A stablecoin’s primary feature is its role as a reliable means of payment and settlement, transforming isolated digital points into open, transferable assets with verifiable, real-world value. The GENIUS Act clearly definies these instruments.

So, what exactly is a "payment stablecoin" in the eyes of the law?

Section 2(22)(A) defines a "payment stablecoin" as a digital asset designed for payment, whose issuer must redeem for a fixed amount of "monetary value. "

This monetary value means currencies issued by foreign central banks or international organizations under Section 2(19). Thus, stablecoins pegged to the Euro, Yen, or other national currencies are covered if offered in the U.S.

Authorized Stablecoin Issuers Under the GENIUS Act

The GENIUS Act establishes a stringent opt-in mechanism, making it unlawful for any entity other than a "permitted payment stablecoin issuer" (PPSI) to issue a payment stablecoin in the U.S. (Section 3(a)). PPSIs are U.S.-formed entities, either subsidiaries of insured banks or specially chartered federal or state nonbank entities, all to be subject to oversight.

The Act also provides the possibility for non U.S. stablecoin issuers to serve the American market via substituted compliance. A "foreign payment stablecoin issuer" may be exempt if operating under a foreign regulatory regime deemed "comparable" by the U.S. Secretary of the Treasury. The foreign issuer must register with the U.S. Comptroller of the Currency (OCC) and hold sufficient reserves in a U.S. financial institution to meet U.S. customer liquidity demands, as detailed in Section 18(a). Crucially, the Act mandates that permitted issuers must possess the technological capability to comply with the terms of any lawful order (Section 4(a)(6)(B)). A "lawful order" is defined as a legal command that requires an issuer to seize, freeze, burn, or prevent the transfer of its stablecoins from the moment of issuance onwards.(Section 2(16)(A))

Digital Asset Service Providers: In and Out of Scope of the Genius Act

The GENIUS Act imposes obligations on "digital asset service providers" (DASPs). Web3 gaming platforms should determine if they fall under this definition. A DASP is defined as “a person that, for compensation or profit, engages in the business in the United States (on behalf of customers or users in the United States) of:

(i) exchanging digital assets for monetary value

(ii) exchanging digital assets for other digital assets

(iii) transferring digital assets to a third party

(iv) acting as a digital asset custodian;

(v) participating in financial services relating to digital asset issuance. (section 2(7)(A) of the Act.

What about a gaming platform with a centralized marketplace for in-game items (like RuneScape's Grand Exchange) that takes a commission on stablecoin transactions, or ingaming platforms that facilitate the exchange of digital assets for monetary value (e.g., selling in-game items for stablecoins) or transfer digital assets on behalf of users (e.g., facilitating marketplace transactions)?

The DASP qualification might be remote and in any case, it needs to be checked on a case-bycase basis.

The Act also provides needed safe harbors. The DASP definition explicitly excludes in Section 2(7)(B) entities merely developing or operating distributed ledger protocols, selfcustodial software interfaces (like noncustodial wallets), or participating in liquidity pools or into peer-to-peer transactions. These exemptions are likely to incentivize gaming platforms to design economies around decentralized systems where players transact directly. These exclusions are outlined in.

A New Foundation for In-Game Economies

The GENIUS Act balances consumer protection with innovation. For gaming, the Act regulatory clarity unlocks new monetization and crossgame economies. Permitted stablecoins are subject to supervision, audits, and transparency. Hence, the stablecoins could be more reliable than volatile, opaque cryptocurrencies used previously in early web3 gaming. They solve the core volatility problem and addresss composability, as major stablecoins will operate on established L1 payment rails across multiple blockchain ecosystems.

Indirectly (and somehow unintentionally) the Genius Act might shift the economic power to gamers and less to publishers. Players will no longer be captive to a single publisher's proprietary currency, whose value depends on gaming company's health, and highly centralized credit/token awarding rules. A gamer holding a permitted stablecoin owns an asset with stable, universally accepted value that transcends any single game. This enables microtransaction models, like those in Clash of Clans, to operate on open rails, creating a more seamless and robust economic experience. On the other hand, there might be situations where microtransactions would simply hypercommercialize the gaming experience, but this will depend a lot on the gaming concept from the get-go.With this stable regulatory foundation, innovation in digital assets is fostered, benefiting industries like gaming for years to come.

Conclusion

The GENIUS Act is a landmark piece of legislation providing much-needed clarity to the digital asset space. While it imposes significant compliance obligations, especially for global platforms serving U.S. customers, it simultaneously creates a foundation of trust and stability. The gaming industry can move beyond past speculative and volatile economic models to build the next generation of sustainable, transparent, and empowering virtual economies with a focus more on gaming and less on web3 trading native gaming tokens.

The GENIUS Act and Europe's Markets in Crypto-Assets regulation represent a remarkable global movement toward international standardization, creating momentum. The European Union's MiCA regulation preceded the GENIUS Act by approximately six months and established many foundational principles that the US framework later adopted: (i) reserve backing; (ii) issuance only by licensed institutions; (iii) monthly reserve audits, and (iv) guaranteed redemption rights. Asian jurisdictions are part of this alignment. Singapore already finalized its comprehensive stablecoin regime in August 2023, while Japan's March 2025 liberalization specifically permitted foreign stablecoins through domestic intermediaries (eg. the use of Circle's USDC). Hong Kong enacted its Stablecoin Ordinance in May 2025, all these reflecting the creation of international best practices (and recognition) of stablecoins, whereby the USA seems not to be missing out, not this time.

Article provided in the Stablecoins & Gaming Report 2025 (by Blockchain Game Alliance), by Alexandru Stănescu, partner at Lexters. The full report can be accesed here: https://blockchaingamealliance.net/wp-content/uploads/2025/10/BGA-Stablecoins-Gaming-Report.pdf