Viewpoint by: Aaron Basi, product lead at IoTeX
With the recent approval of the GENIUS Act, the United States has made a significant advance towards national crypto regulation. This legislation centers on stablecoins, establishing rules for reserves, audits, and authorized issuers. This marks a key moment for the sector. If legislators aim to foster the next wave of advancements, they must not stop at this point.
One of the most rapidly expanding areas, decentralized physical infrastructure networks, or DePINs, still lacks a legislative framework .
DePIN transcends speculation or NFTs. It focuses on constructing real-world infrastructure via community-owned hardware. Individuals contribute antennas, sensors, or hard drives and earn token rewards. These networks support services such as wireless connectivity, mapping, and decentralized storage.
In contrast to numerous blockchain applications, DePIN is already in operation and escalating rapidly.
DePIN is advancing quicker than regulation
Initiatives like Glow have exceeded $15 million in revenue, while Geodnet reports an annual recurring revenue exceeding $1 million. DePIN protocols throughout the ecosystem collectively generate more than $250 million in revenue. These are not experiments; they are operational networks providing value to users and contributors.
However, they still lack regulatory clarity. Unlike stablecoins, which are now governed by specified federal regulations, DePIN projects operate in a nebulous area. This ambiguity exposes users, developers, and investors to risk.
Regulatory deficiencies are becoming increasingly apparent
DePIN systems depend on tangible data and infrastructure. They do not neatly fall into the telecom, cloud computing, or crypto categories. This complicates the application of existing laws.
Many DePIN protocols rely on devices that collect and share environmental or location-specific data. There are no distinct standards regarding what data can be gathered, how it should be stored, or who possesses it. Without this clarity, users may lose confidence and opt-out.
Compensation remains another unresolved concern. Individuals are incurring out-of-pocket expenses to deploy hardware, yet there are no established guidelines on how they should be compensated. If incentives diminish or tokenomics alter, contributors are left bearing risk without protections.
Related: Blockchain and AI could catalyze a $3.5T DePIN market boom by 2028: WEF
Governance poses its own difficulties. Many DePIN projects assert decentralization, yet key decisions remain concentrated among core teams. If these systems are to serve public interests, they must be transparent and accountable.
DePIN merits thoughtful regulation
The GENIUS Act demonstrated that crypto regulation does not need to be punitive. It establishes a foundation for stablecoins while fostering innovation. DePIN warrants a similarly discerning approach.
DePIN is distinct from financial tokens. It occupies the intersection of hardware, software, and services. This hybrid nature necessitates a customized framework. It should not be classified alongside decentralized finance (DeFi) or stablecoins.
What is required is a definition of what constitutes a DePIN protocol. Standards should be established for data ownership, privacy, contribution tracking, and reward systems. Transparent governance regulations are also vital for building trust and accountability.
An opportunity for the US to take the lead
DePIN has the capability to enhance infrastructure in underserved regions, enable smarter urban areas, and return control of essential systems to communities. To achieve that expansion, the sector requires legal clarity.
Investors will remain hesitant without regulatory assurance. Communities will be reluctant to engage with systems that lack user protections. Builders may delay progress due to fears of potential penalties. Momentum hinges on clear guidance.
With stablecoins now having a legal framework, DePIN ought to be next in line.
It’s time to foster genuine innovation
Congress and regulators have a chance to shape the future of decentralized infrastructure. DePIN builders are prepared to collaborate. What is needed now is a policy framework that facilitates transparency, innovation, and user protection.
The GENIUS Act was a significant initial step. It should not be the concluding act. It’s time to acknowledge the potential of physical infrastructure that is created and managed by the individuals who utilize it.
DePIN is established. It’s expanding. And it deserves to be part of the regulatory dialogue.
Viewpoint by: Aaron Basi, product lead at IoTeX
This article is for general informational purposes and is not intended to be and should not be interpreted as legal or investment advice. The perspectives, thoughts, and beliefs expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
