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The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act) was signed into law on July 18, 2025. It establishes the first comprehensive U.S. regulatory framework for stablecoins, requiring 1:1 backing, transparency, and compliance measures. Combined with the OBBBA repeal of Section 174 amortization (restoring immediate expensing for domestic R&D costs effective for tax years after December 31, 2024), it creates powerful incentives for blockchain innovation. U.S.-based companies developing qualifying blockchain technologies can now claim enhanced R&D tax credits while benefiting from regulatory clarity.
This framework encourages onshoring blockchain development and strengthens claim defensibility amid IRS scrutiny. Proactive documentation is essential. Read on for qualification details, examples, FAQs, and filing strategies.
Enacted with bipartisan support (House vote: 308–122), the Act aims to enhance financial stability, increase transparency, and strengthen the U.S. dollar’s role in global finance (White House Fact Sheet).
For blockchain companies, the GENIUS Act represents a shift from regulatory uncertainty to a more supportive environment for innovation.
When paired with the repeal of Section 174 amortization under the One Big Beautiful Bill Act (OBBBA), effective for tax years beginning after December 31, 2024, this creates new opportunities for R&D tax credits, provided activities qualify. The repeal allows immediate expensing of domestic research and experimental (R&E) expenditures, reversing the prior five-year amortization rule.
⚠️ Important: Only U.S.-based R&D qualifies for immediate expensing. Offshore development remains subject to 15-year amortization.
The Act subjects stablecoin issuers to the Bank Secrecy Act, ensuring anti-money laundering compliance and consumer protections. It prohibits interest payouts on stablecoins and emphasizes yield capture for issuers, creating bank-like oversight without full banking regulation.
For blockchain innovation, this framework means stablecoins can serve as reliable tools for:
The GENIUS Act’s recognition of stablecoins as a strategic technology aligns with IRS definitions of R&D. Companies developing blockchain software or designing crypto/Web3-based applications can claim credits for activities that address technological uncertainty, such as scalability, interoperability, and security, if they meet IRS standards.
To qualify, blockchain companies must meet the IRS four-part test: reliance on hard sciences, technological uncertainty, process of experimentation, and a permitted business purpose.
Here’s how different entities may benefit:
⚠️ Important: Startups developing blockchain or Web3 applications may use the R&D credit to offset up to $500,000 in payroll taxes annually, even if they are not yet profitable, provided they meet IRS eligibility requirements.
The OBBBA repeal restores immediate expensing for domestic R&E, making credits more valuable.
For example, on a $1 million qualified spend (60% salaries, 20% cloud), federal R&D credits could approximate $200,000, plus additional state-level credits. Typical federal credits range from 6–10% of qualified expenses, often higher with state incentives.
The GENIUS Act and Section 174 repeal position the U.S. as one of the most favorable jurisdictions globally for blockchain R&D. Together, they provide regulatory certainty and financial incentives for innovators.
If you or your clients are developing blockchain software or designing crypto/Web3-based applications, now is the time to ensure you are capturing all eligible credits.
Strike Tax Advisory specializes in helping blockchain builders and fintech innovators turn past development into future savings. Let’s connect to explore your eligibility.
It regulates stablecoins, giving clarity that strengthens blockchain R&D claims. Combined with Section 174 repeal, companies can expense domestic costs immediately.
It allows full deduction of domestic R&E costs in the same year, improving cash flow for Web3 development.
Yes. Pre-revenue firms can offset up to $500,000 in payroll taxes annually.
Developer salaries, contractors, cloud hosting, security audits, prototypes. Not qualifying: marketing, routine ops, or non-experimental work.
Yes, by reducing regulatory uncertainty and aligning with tax incentives, the Act supports onshoring of blockchain R&D.
Yes, if linked to U.S. business components and within open tax years (typically 3 years). Foreign costs remain subject to amortization.
Historically yes, but with GENIUS Act legitimacy, claims are easier to defend. Documentation remains critical.
Both service providers and clients can apportion R&D claims for qualifying experimental activities.
Only domestic R&D qualifies for immediate expensing. Offshore development amortizes over 15 years.
