Groundbreaking new stablecoin legislation in the United States will boost, not reduce, Bermuda’s relevance in the industry, according to one legal executive.

Henry Tucker, managing partner at Harneys' office in Bermuda, said: “While the United States has only just created a framework through the newly signed Genius Act, Bermuda has already had digital assets regulation in place for some time. There is advantage to being first at the table.”

On July 18, Donald Trump signed the Genius Act, officially known as the Guiding and Establishing National Innovation for US Stablecoins Act. It is the first digital assets legal framework in the country. Stablecoins are cryptocurrencies whose value is tied to another stable asset, such as the American dollar.

“This creates both the demand for stablecoin and supply,” Mr Tucker said. “With that happening, it creates a much larger market for the Bermuda-regulated stablecoin product. The fact that you can set up a US-regulated fund does not eliminate the utility of an offshore Bermuda-regulated fund.”

He added that the Genius Act is distinguishable from the Bermuda regulatory regime in several critical aspects. For example, the Genius Act does not allow interest or yields on stablecoins, like Bermuda does. Therefore, the island would be more attractive to someone who was launching an interest-bearing stablecoin.

“Bermuda also permits a broader category of stablecoins to be issued and used,” he said.

Walkers agrees, stating that Bermuda and other jurisdictions such as the British Virgin Islands and Cayman Islands stand to gain from the Genius Act.

“You would be forgiven for speculating that a positive shift in the US approach to digital assets regulation could reduce the relevance of international investment hubs to the digital asset industry,” the law firm wrote on its website earlier this month. “However, we believe the picture to be more nuanced and optimistic.”

Walkers’ Bermuda office said that the island, after having spent years developing its own specialist digital assets ecosystem, is on track to play an even greater role as demand for regulated digital products accelerates.

“The Genius Act should help provide a new level regulatory foundation in the US, unlocking new levels of market participation and driving demand for innovative products,” the firm stated. “In turn, this could lead to greater need for efficient cross-border structuring and administration, particularly for firms looking to scale beyond the US.”

Darren Wolfberg, chief executive of Triangle Digital, a firm with offices in Bermuda, told The Royal Gazette that a rising tide floats all ships.

Triangle Digital measures carbon footprints so that firms can obtain carbon offset credits that are then tokenised.

“The Genius Act gives more credibility to the digital assets space,” Mr Wolfberg said. “It substantiates the activity that people are doing.”

The US is now preparing to enact another piece of legislation called the Digital Asset Market Clarity Act, which solves a long debate over whether cryptocurrency is a security or a commodity by declaring it a commodity.

It has been passed by the House of Representatives and is being considered by the Senate.

Mr Wolfberg told The Royal Gazette he fully expects it to be passed by the Senate.

“It is potentially really in line with existing digital asset legislation from the different roles of stakeholders in the digital asset ecosystem,” he said. “Having that facility substantiates the digital asset market more and allows for products like carbon credits to become a digital asset.”