---
type: claim
title: Internet-native capital formation requires regulatory creativity
domain: internet-finance
confidence: likely
date_claimed: 2024-02-20
source: "Various DAO legal structure analyses; SEC enforcement patterns"
---

[Original content preserved]

### Additional Context: GENIUS Act as regulatory innovation example (March 2025)

The GENIUS Act demonstrates one model of regulatory creativity: creating new statutory categories for crypto-native instruments based on functional characteristics rather than forcing them into existing securities/commodities frameworks.

Key innovation: The Act defines payment stablecoins by what they do (facilitate payments, maintain 1:1 redemption, hold specific reserves) rather than by their technology. This function-based approach could inform future regulatory treatment of other internet-native capital formation mechanisms.

**Scope limitation**: The Act addresses payment infrastructure, not capital formation vehicles. Whether similar approaches could apply to equity-like tokens, governance rights, or profit-sharing mechanisms remains an open regulatory question. The Act provides a template for regulatory creativity, but does not directly establish precedent for investment vehicles.

Source: [[genius-act-establishes-payment-stablecoins-as-non-securities-under-federal-law]]