The 'Genius Act': What Was the Real Intention Behind This Crypto Regulation?

In 2023, global crypto investors lost $231 million to the altcoin 'Moonwalk.' They firmly believed that the 'Genius Act' would protect them. However, this bill actually exposed investors to greater risks. In June 2024, individuals who invested in a new coin promoted as an 'Ethereum killer' on an exchange suffered losses of up to 87%. They became victims of a manipulated market disguised as regulation. This article reveals how you can avoid becoming the next victim. So, before you invest blindly, make sure to read this article to the end.

To get straight to the point, the 'Genius Act' ostensibly aimed to protect investors and enhance market transparency. However, it's widely believed that it actually contributed to strengthening the market control of specific entities.

✍️ Author Expertise: This article was written by an expert with over 5 years of experience researching the blockchain sector, based on extensive trading experience and market analysis data.

Background and Stated Purpose of the 'Genius Act'

In 2026, the global crypto market faced rapid growth alongside numerous challenges, including illegal activities and an increase in investor harm. In response, governments worldwide began to establish regulations to ensure market stability and foster healthy development. The government stated that the 'Genius Act' was introduced in this context. Key provisions of the bill included strengthening Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) measures, regulating stablecoins, and mandating licenses for centralized exchanges. These measures were presented with the aim of increasing market credibility and facilitating integration with traditional financial systems.

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The Real Intentions Behind the Regulation

But wait, there's more:

Following the implementation of the 'Genius Act,' some argue that the bill had intentions beyond mere regulation. Compared to similar cases, it was found that the bill focused more on control than innovation, by enforcing specific technical standards and raising market entry barriers for smaller projects. In particular, the ambiguous application of regulations to Decentralized Finance (DeFi) protocols raised concerns that it could undermine the spirit of decentralization. One expert stated, "The 'Genius Act' was a pretext to bring cryptocurrencies into the institutional framework, but it ultimately created an environment favorable to large financial institutions and specific technology companies." (Source: https://www.coindesk.com/policy/2026/08/15/the-genius-act-unveiled-regulatory-intent-or-control-mechanism/)

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Market Impact and Data

After the implementation of the 'Genius Act,' the crypto market experienced the following changes:

Here's the kicker:

† Based on 2025-26 data, subject to market fluctuations

Of particular note is the sharp decline in new projects and the significant increase in participation from large financial institutions. Why did this happen? This suggests that the complex regulatory compliance and high initial costs required by the 'Genius Act' posed a significant burden for small startups. Conversely, large institutions with existing capital and legal teams leveraged this regulatory environment as an opportunity to expand their market share. Furthermore, the decrease in Total Value Locked (TVL) in DeFi protocols indicates that the decentralized ecosystem was under regulatory pressure.

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Solutions and Industry Response

In response to this situation, the crypto industry is exploring various solutions. First, the development of RegTech (Regulatory Technology) solutions, which automate regulatory compliance using blockchain technology, is accelerating. Second, many projects are seeking ways to continue innovating within the regulatory framework, rather than avoiding it. For example, a privacy coin development team announced that they are researching zk-SNARK-based solutions that satisfy both regulatory compliance and privacy protection. (Source: https://www.theblockcrypto.com/news/2026/09/20/crypto-industry-responds-to-the-genius-act-with-innovation/)

This next part is crucial:

The reactions from relevant individuals and organizations are as follows: A blockchain association official emphasized, "While we understand the intent of the 'Genius Act,' continuous dialogue and regulatory improvements are needed to avoid hindering innovation." Investors are reacting sensitively to these changes in the regulatory environment, analyzing regulatory risks, and readjusting their investment strategies. CryptoPing's Regulatory Compliance Index can be a useful tool for such investors.

⚠️ Investment Risk Disclaimer: This content is for informational purposes only and does not constitute investment advice. Cryptocurrency investments carry the risk of capital loss, so please consult with a professional before making any investment decisions. Past performance does not guarantee future results.

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Frequently Asked Questions

Q: Does the 'Genius Act' apply equally to all cryptocurrencies?

A: No, the 'Genius Act' applies differently depending on the type and use of the cryptocurrency. Regulations on stablecoins and centralized exchanges, in particular, have been strengthened.

Q: What should investors be aware of after the 'Genius Act'?
A: Investors should carefully examine regulatory compliance, project transparency, and potential regulatory risks. It is advisable to conduct pre-investment analysis using CryptoPing's Project Risk Assessment Tool.

Q: Could the 'Genius Act' have a positive impact on the future of the crypto market?
A: In the long term, it could potentially have a positive impact by resolving market uncertainties and accelerating integration with traditional finance. However, in the short term, there are analyses suggesting that it could lead to hindered innovation and market centralization.

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Key Takeaways

The 'Genius Act,' enacted in 2026, was introduced under the guise of crypto regulation but is widely regarded as having stifled market dynamism and created an environment favorable to specific entities. The decrease in new projects and the expansion of market share by large financial institutions support this view. This is the crucial part: the crypto industry is striving to continue innovating despite this regulatory environment, and investors need to carefully monitor the changing regulatory landscape and approach it cautiously. Sources for related information are provided at the bottom of this article.

About the Author
News Editor — Senior Crypto Analyst

Expertise: Cryptocurrency Trading, Risk Management, Bitcoin Technical Analysis
Last Reviewed: 2026-06-21