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Trend of Stablecoin Compliance: The GENIUS Act
The American Stablecoin National Innovation Guidance and Establishment Act (GENIUS Act), signed into law on July 18, 2025, is the first federal legislation in the United States specifically establishing a regulatory framework for payment stablecoins. This newly gained regulatory clarity is explicitly regarded as a key "cornerstone" for the development of Tempo and Arc, enabling both parties to build compliant and scalable solutions for financial applications such as cross-border payments.
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The Situation with Traditional Payment Methods and the Problems of Relying on L2
Traditional financial systems, represented by SWIFT, have been criticized for their inefficiency (long transaction times, high costs, and opaque processes). Although existing L2 solutions (such as Base) improve the scalability and cost-effectiveness of general-purpose blockchains, they still inherently rely on the underlying L1 network. This reliance brings unpredictable fee markets (e.g., uncertainty in underlying Gas fees) and risks associated with being subject to L1 governance and technical upgrades—both of which are unacceptable to global payment enterprises that require absolutely stable and cost-controllable settlement systems.
Moreover, the general design of public blockchains struggles to meet enterprise-level requirements, such as extremely high performance demands, transaction privacy guarantees, and stricter security models. By building their own L1 public chains, Stripe and Circle transition from "tenants" to "landlords," gaining full sovereignty to define settlement rules, fee models, and compliance paths, thereby achieving actual control over the settlement layer.
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Foundational Conditions for Enterprise-Grade Payments
Blockchains designed for enterprise payments must meet a series of stringent conditions:
High Performance: Extreme transaction throughput (TPS) and sub-second transaction finality (TTF) to meet the massive, high-frequency fund transfer needs of global enterprises.
Predictable Costs: Transaction fees must be low and predictable, such as using stablecoins as Gas tokens, which is more acceptable to financial institutions and publicly listed companies.
Compliance and Privacy: Optional privacy features, transaction monitoring systems, and regulatory interfaces are required to meet the strict compliance demands of enterprises and regulators.
Integration and Developer-Friendly: Seamless integration with existing financial systems and compatibility with the Ethereum Virtual Machine (EVM) to promote widespread adoption.
