The GENIUS Act Explained: Everything Investors Need to Know About America's First Major Cryptocurrency Legislation

California continues to lead the U.S. in climate regulation, and its latest wave of legislation—SB253, SB261, and AB1305—may redefine how companies account for and manage their emissions. These new climate disclosure laws will not only transform corporate reporting but are poised to deeply impact the carbon credit landscape, both within California and beyond.

‍

What Just Happened: A Quick Overview

As reported in This Week in Energy, a federal judge has upheld California’s sweeping climate disclosure laws despite legal challenges. This ruling clears the way for enforcement and solidifies California’s role as the country’s most ambitious state-level climate regulator. It also reaffirms the state’s authority to demand greenhouse gas (GHG) and climate risk disclosures from companies doing business in California—whether they’re headquartered there or not.

What Are Scope 1 and Scope 2 Emissions?

Before diving into the legal implications, it's important to understand the basic terminology companies are now required to report:

• Scope 1 emissions: These are direct GHG emissions from sources that a company owns or controls, such as fuel burned in company-owned vehicles or boilers.
• Scope 2 emissions: These are indirect GHG emissions from the generation of purchased electricity, steam, heat, or cooling. They occur at the power plant but are attributed to the company using the energy.

Together, these scopes capture a company’s operational carbon footprint and are the initial focus of California’s mandatory disclosures under SB253.

Who Must Comply — and Why Revenue Matters

California’s new laws are tightly linked to company revenue thresholds, targeting the largest businesses operating in the state:

• SB253 applies to companies with over $1 billion in annual global revenue.
• SB261 covers those with over $500 million in annual revenue.
• AB1305, which governs the marketing of carbon offsets, applies broadly—regardless of revenue—to any entity making climate claims in California.

This means the laws apply not only to oil companies and manufacturers, but also to tech giants, retailers, banks, logistics providers, and multinationals—even if their headquarters are elsewhere.

Because these firms will now be required to report Scope 3 emissions (value-chain emissions) starting in 2027, the ripple effect will extend to smaller suppliers and contractors, especially those serving large enterprises.

What Are California Carbon Credits?

California’s carbon credit system is a cornerstone of its Cap-and-Trade Program, designed to reduce greenhouse gas (GHG) emissions through market-based incentives.

1. Allowances (Compliance Credits)

• Issued by the California Air Resources Board (CARB)
• One allowance equals permission to emit one metric ton of CO₂e
• Allocated or auctioned to companies—surplus allowances can be traded
• Primarily used by large emitters to meet emissions caps

2. Offsets

• Represent verified GHG reductions outside of regulated sources (e.g., forestry, methane capture)
• CARB-approved, with strict criteria around additionality and permanence
• Can contribute up to 4% of a regulated entity’s compliance requirement

There's also a voluntary market, where companies purchase credits beyond legal obligations, often to meet sustainability goals.

How the New Laws Will Affect Carbon Credits

The confirmation that these laws stand opens the door for meaningful shifts in how carbon credits function in California’s landscape.

1. Demand Surge for Quality Credits

With Scope 1, 2, and 3 emissions disclosure now unavoidable, corporations will lean on high-integrity offsets to complement their reduction strategies.

2. Greenwashing Risks Heightened

Under AB1305, companies must provide detailed disclosures around offset claims—focusing on methodology, verification, location, and retirement. This raises stakes for low-quality providers.

3. Offset Reliance May Shift

Mandatory climate-risk reporting (per SB261) nudges firms toward internal reductions and responsible offset usage rather than defaulting to credits for reputation management.

4. Expanding Market Participation

Even non-compliance-bound firms may voluntarily engage in credit markets to bolster their climate strategies—broadening the buyer base.

5. California Setting National Standards

With federal rules lagging, these laws could become prototypes for other states—or even federal frameworks—enhancing the credibility and reach of California carbon credits.

Timeline to Watch

Milestone                                                                     Deadline

Legal hurdle cleared                                               2025 (federal ruling)

Final CARB regulations released                      By July 1, 2025

Scope 1 & 2 emissions reporting begins     2026 (based on FY 2025 data)

Scope 3 emissions reporting begins            2027 (CARB to set schedule)

Climate-risk reporting begins                           By January 1, 2026 (biennially thereafter)

Despite some legal pushback, California is asserting its position: these laws are here to stay. natlawreview.com+11wsj.com+11thisweekinenergy.substack.com+11

Final Thoughts: Integrity Is the New Currency

These landmark rulings underscore that climate disclosure is mandatory—and the days of vague, unverifiable carbon claims are numbered.

For companies:

• Begin upgrading emissions tracking systems now
• Evaluate offset strategy through the lens of transparency and durability

For offset providers:

• Demand for high-quality, verifiable projects will rise—be ready to meet the bar

For investors and policymakers:

• California's path is increasingly becoming a benchmark for climate accountability nationwide

‍

A comprehensive analysis of today's regulatory shift and what it means for American retirement savers.

President Trump has signed a landmark executive order that could fundamentally reshape how Americans invest for retirement. The order directs the Securities and Exchange Commission (SEC) to revise regulations to facilitate access to alternative assets—including cryptocurrencies, private equity, and real estate—for participant-directed defined-contribution retirement savings plans like 401(k)s.

The Scope of Change

This isn't a minor policy adjustment—it's a potential transformation of the entire retirement investment landscape. Americans collectively hold $8.7 trillion in 401(k)s alone, with defined-contribution workplace plans totaling $12.2 trillion as of Q1 2025. Until now, this massive pool of capital has been largely restricted to traditional stocks, bonds, and mutual funds traded on public exchanges.

The executive order directs the Labor Department to work with other federal agencies, including the Treasury and Securities and Exchange Commission, to collaborate on implementing complementary policy changes. This coordinated approach signals the administration's commitment to opening retirement accounts to the full spectrum of investment opportunities.

What Assets Are Now Accessible?

The executive order opens the door to several categories of alternative investments:

Cryptocurrencies: Bitcoin ETFs and other digital asset funds that were previously off-limits to most 401(k) participants.

Private Equity: Investment funds that buy and restructure companies, traditionally available only to institutional investors and the ultra-wealthy.

Real Estate: Direct real estate investments and real estate investment trusts (REITs) beyond what's currently available.

Private Credit: Lending to companies outside traditional banking channels, offering potentially higher yields than public bonds.

The Investment Landscape Context

The timing of this order reflects significant changes in global markets. The number of IPOs has fallen by 22% over the past five years, while global private credit has grown by 60%. Companies are staying private longer, meaning traditional public market investors miss out on significant growth phases.

Morningstar's research suggests that adding private market investments gets us closer to the "global market portfolio" ideal, providing access to economic sectors and growth opportunities that simply aren't available through public markets alone.

Implementation and Safeguards

The order calls for the Labor Department and Securities and Exchange Commission to issue guidance to employers about providing access to alternative investments in their retirement accounts. Importantly, it seems likely this will formalize previous guidance that alternative assets should be included as part of target-date funds or managed solutions, rather than being directly accessible to individual participants.

This managed approach addresses key concerns about:

• Liquidity constraints that come with private investments
• Complexity that average investors may not fully understand
• Higher fees typically associated with alternative assets
• Fiduciary responsibilities of plan administrators

Industry Response and Momentum

The investment industry has been preparing for this shift. BlackRock announced it's launching a 401(k) target-date fund in the first half of 2026 that will include a 5% to 20% allocation to private investments. Apollo Global Management and State Street have already released target-date funds with private-markets components, while Blue Owl Capital is collaborating with Voya on similar products.

A recent poll of more than 2,000 retirement plan participants found that 74% said incorporating private investments could allow employees to build wealth similarly to the super-wealthy, with 72% saying this diversification could improve long-term savings.

The Debate Continues

Not everyone supports this expansion. Consumer advocates like Sen. Elizabeth Warren question the merits of including private equity in workplace savings plans, citing concerns about fees, transparency, and liquidity. Critics argue that private investments' complexity and illiquidity may not align well with average 401(k) participants' needs, particularly those nearing retirement.

However, advocates argue that "retirement savers are the ultimate long-term investors and would benefit from the diversification offered by the inclusion of private assets".

Historical Context

This isn't entirely new territory—in 2020 during Trump's first term, the White House directed regulators to evaluate whether alternative assets should be allowed in retirement accounts, though that guidance was later rolled back under President Biden. The current executive order represents a return to and expansion of that earlier policy direction.

What This Means for Retirement Savers

The executive order opens significant new possibilities for portfolio diversification and potentially higher returns. However, the actual implementation will depend on how plan sponsors, asset managers, and regulators work together to create products that balance opportunity with appropriate risk management.

As one expert noted, "For the right people under the right circumstances, with the right support and education, it could be helpful". The key will be ensuring that expanded access comes with the professional management and oversight that retirement investors deserve.

The era of limited investment options in American retirement accounts may be ending. What emerges in its place will largely determine whether this regulatory shift becomes a historic opportunity or a cautionary tale about the complexity of retirement planning in modern markets.

About 7RCC Global: We specialize in innovative ETF solutions that provide institutional-quality access to alternative investment strategies.

Important Disclosure: This material is for informational purposes only and does not constitute investment advice. All investments carry risk, including potential loss of principal. Futures investments involve additional risks including leverage and volatility. Past performance does not guarantee future results.

This analysis is based on publicly available information about the executive order and industry responses. The actual implementation timeline and specific product offerings will depend on regulatory guidance and industry development over the coming months.

‍

What Is Liquid Staking?

Liquid staking allows token holders—most notably on Ethereum—to stake their assets and receive a tradable, tokenized representation. This mechanism lets users earn staking rewards while maintaining liquidity and composability within decentralized finance (DeFi).

For example:

• Stake ETH → Receive stETH (Lido), rETH (Rocket Pool), or cbETH (Coinbase)
• Use staked tokens across lending, trading, or collateral protocols

This innovation has unlocked billions in capital efficiency and has become a critical layer in the Ethereum ecosystem.

What the SEC's Position Means

By stating that liquid staking is not a securities offering, the SEC is acknowledging the non-investment contract nature of properly decentralized or transparently structured staking services.

This interpretation provides:

• Regulatory Clarity: A clear path forward for DeFi developers and Ethereum infrastructure providers
• Legal Certainty: For institutions looking to engage in staking as part of their investment strategies
• A Green Light: For U.S.-based custodians and exchanges to continue offering staking rewards without triggering burdensome securities registration requirements

Why This Is a Big Deal

Regulatory Clarity Fuels Institutional Confidence

Ambiguity around staking regulation has long been a significant barrier for institutional allocators. This shift opens the door for compliant, large-scale staking adoption, including via ETFs, trusts, and structured products.

A Win for Ethereum's Economic Layer

Ethereum's Proof-of-Stake (PoS) mechanism relies heavily on staking participation. Liquid staking accounts for a substantial portion of active validators. The SEC's move removes a critical headwind for Ethereum's staking economy, strengthening the network's security and efficiency.

Reshaping U.S. Crypto Policy

Coming on the heels of the recent GENIUS Act and broader digital asset engagement from the current administration, this signals a pivot toward constructive, innovation-forward regulation. The U.S. is beginning to treat core crypto infrastructure as technology, not financial crime.

Boost for RWA + DeFi Integration

With staking derivatives no longer in regulatory limbo, protocols combining real-world assets (RWAs) and yield-generating DeFi infrastructure (like 7RCC's ETF strategies) now have a more predictable runway to scale.

What This Doesn't Mean

This isn't a blanket exemption. The SEC is likely applying a fact-and-circumstance test, meaning:

• Centralized providers must maintain transparency
• Complex profit-sharing, rehypothecation, or custodial models could still trigger securities classification if structured improperly
• Fraudulent or opaque staking schemes remain subject to enforcement

What Comes Next

We expect:

• A surge in institutional ETH staking allocations
• Renewed interest in staking-as-a-service platforms
• A potential rebound in Ethereum-based DeFi protocols tied to yield
• More crypto-native financial products, including staking-weighted indexes and RWA-backed derivatives

The 7RCC Perspective

At 7RCC, we believe this announcement is more than a technicality—it's a watershed moment for decentralized finance. As we continue building regulated, sustainability-aligned crypto ETFs, we see staking as a foundational layer of yield generation and network security in Web3.

This regulatory clarity brings us one step closer to integrating digital assets seamlessly into traditional capital markets—with Ethereum leading the way.

Want to learn more about how staking fits into 7RCC's ETF strategy?

Contact us or follow our Resources page for real-time updates.

7RCC Global is committed to building the bridge between traditional finance and digital assets through regulated, sustainable investment products.

‍