The U.S. Green Building Council’s LEED green building rating system has long been a bellwether for what voluntary sustainable construction can achieve: healthier indoor environments, less energy use, potable water conservation, waste reduction, reliable power, enhanced security and safety, ecosystem protection, and, in many instances, resulting in economic achievements of lower operating costs and increased property values. USGBC has successfully framed green building not as idealistic ornamentation, but as an investment in environmental protection of people and places, with economic value that rewards performance.
Yet for all of its success, the pace and scale of green building remain insufficient to meet the environmental imperatives we face today, such as air and water quality and biodiversity degradation, its own existential crisis. To truly meet those challenges, we must close the gaps that too often slow green building down: the gaps between sustainable building practice and the finance that enables it. In today’s economic reality, where many government mandates and incentives are being eliminated or reduced if not clawed back, and where physical and transition risks associated with environmental protection have not changed, the availability and cost of capital are major levers.
Many believe that stablecoin, especially under the new GENIUS Act regime, offers a novel tool, if designed and regulated properly, for bridging those gaps. Below, I lay out how stablecoin can serve green building finance, what legal guardrails are emerging, and why this is a moment we should all seize.
What Is the Financing Challenge for Green Building?
- Upfront costs & risk: Green building (not just LEED with its large market share, but also the very good Green Globes and the International Green Construction Code and other equivalents) often involves higher first cost construction or retrofit costs, and additional professional fees (e.g., energy modeling, commissioning, etc.). Those costs, plus perceived or real risks (.. whether performance will deliver promised savings), can deter businesses or financiers.
- Long-term payoff: Many benefits, energy cost savings, lower maintenance, increased rent, higher occupant satisfaction, health benefits, accrue over time. Construction and initial permanent financing models may undervalue those benefits, or discount them too heavily.
- Limited incentives: When today tax breaks and other government incentives and mandates, are being withdrawn, the financial models must stand on their own. In most jurisdictions now, financing terms, interest rates, mortgage underwriting, insurance, etc., are among the most important determinants of whether a building will be green.
- Existing Fails: PACE financing, green bonds, and other existing green financing vehicles have failed to provide adequate liquidity and while they can continue to exist, the green building industrial complex must embrace stablecoin or it risks going the way of the dodo bird.
- Market transformation required: USGBC’s new guide Green Building & Sustainable Finance: Accessing Capital to Accelerate Market Transformation highlights how voluntary green building rating systems, when integrated into sustainable finance instruments (green bonds, green loans, etc.), help align expectations and validate value, but disappointingly, that just published guide does not even mention stablecoin, in what has been characterized as a blind spot in the legacy green building promoting organizations.
To accelerate transformation, three financial gaps must be addressed: reliable sources of low cost capital; mechanisms for reducing risk so investors will invest; and scalable, liquid instruments so capital can flow efficiently across many projects.
Enter Stablecoins & the GENIUS Act
Stablecoins are, broadly speaking, digital tokens pegged to a stable asset (often the U.S. dollar), designed to reduce volatility relative to many cryptocurrencies. Under the newly enacted GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), the U.S. has created a comprehensive regulatory framework for payment stablecoins.
Key features of the law include:
- 1:1 reserve backing: Stablecoin issuers must back each token with fully liquid, low-risk assets, typically U.S. dollars or short term U.S. Treasuries.
- Transparency & auditing: Issuers will have to disclose reserve composition regularly (monthly) and undergo third party audits.
- Consumer protections & legal clarity: For example, stablecoin holders are granted priority claims in insolvency of issuers; prohibitions against misrepresentation in marketing; application of antimoney laundering, sanctions, and similar regimes. )
These features build trust, an essential ingredient if one is going to channel stablecoin denominated or stablecoin facilitated financing into real world infrastructure like green buildings.
How Stablecoins Can Accelerate Green Building Finance
Here are several ways stablecoins could be deployed to help accelerate green building, under the new framework, from this environmental attorney’s perspective.
- Lowering transaction friction & cost
Traditional capital flows (loans, bonds, mortgages) are often slow, involve multiple intermediaries, regulatory compliance, bank counterparty risk, currency conversion, etc. A well structured stablecoin payment ecosystem can reduce friction: faster settlement, fewer intermediaries, potentially lower costs of capital for projects that can access crypto native finance or tokenized financing structures. - Tokenization of sustainable finance instruments
Green bonds, green loans, or other sustainable finance instruments could be tokenized, meaning that rights to payments (interest, principal) could be held in digital form on the blockchain, perhaps denominated in stablecoins or integrated with stablecoin liquidity. This opens up possibilities:- More fractional participation: small investors, or communities, could invest in pieces of green building portfolios.
- Greater liquidity: if tokenized debts are tradable, investors may be more willing to commit capital.
- Faster capital raising: utilizing digital platforms to reach broader pools of capital domestically or globally.
- Direct incentive mechanisms
Imagine performance linked contracts where green building project outcomes (energy savings, potable water use reductions, reliable power, occupant health metrics) automatically trigger payments (rebates, bonuses) denominated in stablecoin. Because stablecoin is digital, programmable, and with clear legal rights under the new law, those incentive payments could be delivered and verified rapidly and transparently. - Mitigating climate risk in finance
As physical risks (weather extremes) and transition risks (shifting regulation and energy prices) become more sharply felt, investors require transparency, lower risk, and regulatory certainty. The GENIUS Act gives a framework that strengthens certainty for stablecoin denominated finance, making it easier for financiers to trust stablecoins for capital flows into long lived built environment assets. - Bridging green finance to underserved markets
Many smaller developers, especially in existing older cities or perhaps in places where traditional banking access is limited, are excluded from large green bonds or bank loans. Stablecoin based platforms could offer alternative fundraising models, crowdfunding, peer to peer, or community investment platforms, where small investors fund green retrofits, resilient housing, or energy efficiency projects, with stablecoin facilitating payments and transfers.
Legal & Regulatory Considerations – What Must Be Guarded
As with any financial tool, risks and missteps should be anticipated and mitigated. The following legal guardrails may be desirable:
- Full reserve integrity & auditability: The law’s requirement for 1:1 backing and monthly audited disclosures is critical. Without that, stablecoins risk loss of trust or failure, which would be disastrous for green projects with long lives and physical risk.
- Clear contractual rights for holders: In real estate finance, things like priority in insolvency, enforceability of payment rights, clarity on redemption rights, jurisdiction, applicable law, all these must be clear. The GENIUS Act helps, particularly with priority of holder’s claims, but project contracts and financing documentation must be drafted carefully.
- Regulatory consistency & compliance cost: State versus federal regimes must align (.. but importantly, there should be state stablecoin regulatory regimes), compliance costs must not become so large as to nullify the financial efficiencies that stablecoins are supposed to deliver.
- Environmental performance verification: If stablecoin based financing is used for green building, there must be reliable measurement, verification, and reporting of sustainable outcomes. LEED, Green Globes and other rating systems play a central role here.
- Managing climate and transition risk: Projects should include risk mitigation for weather events (e.g., flooding, temperature extremes, etc.), adaptation, and resilience; and transition risk (regulation changes, energy price changes) can be built into financial models.
The GENIUS Act & Stablecoin as an Enabler of Market Transformation
With the GENIUS Act now in law, the U.S. has laid foundational guardrails that can give stablecoins legitimacy and trust.
Some observable signals:
- The Treasury Department has opened a public comment period to convert the GENIUS Act into implementing regulation, and yes, most support regulation “lite.”
- Regulators are clarifying what reserve asset custody, disclosures, and issuer licensing will look like.
These developments reduce regulatory uncertainty, one of the biggest risks for investors and developers in green building. As that uncertainty drops, more capital will flow if market actors believe stablecoins can function as trusted mediums of exchange, store of value, or denominated asset in sustainable finance.
Looking Forward: What Success Could Look Like
If all goes well, here’s what we might see in a few months:
- Green Building Token Funds: Portfolios of LEED, Green Globes, and equivalent certified buildings financed via tokenized green bonds or stablecoin denominated debt, with minor investors participating across geographies.
- Performance-based stablecoin incentives: Programs where energy savings or emissions reductions trigger automated bonus payments in stablecoin, reducing measurement lag and incentive friction.
- Lower cost of capital for green building: Lenders recognizing lower risk in green certified buildings may be willing to offer favorable terms (interest rate and loan to cost) when stablecoin finance reduces transaction or currency risk.
- More resilient built environment: Projects are better able to finance adaptation and resilience measures (flood protection, power backup, enhance security and safety, etc.) because capital is more flexible and more trusted.
- Democratization of green building finance: More projects in underserved or marginalized communities accessing capital thanks to new platforms, including nonbanks enabled by stablecoins and digital finance.
Conclusion
We are witnessing the dawn of a new financial era, one in which the blockchain’s transparency, stablecoin’s liquidity, and green building’s promise converge. This moment doesn’t belong only to fintech or to environmentalists; it’s a hybrid solution to a breadth of problems faced by every person with a roof over their head.
With the GENIUS Act, America can lead in both clean technology and financial innovation. For building owners, developers, investors, and green entrepreneurs, the message is clear: Sustainability is no longer a sunk cost; it’s a frictionless tradable asset.
Done right, stablecoin enabled finance could help us scale the transformation of the built environment to the speed and scale the natural environment requires. And as an environmental attorney, I am hopeful that this law, together with wise contracting, robust rating, and accountability, will help close the financing gaps, protect people and places, and turn the voluntary green building vision into the norm rather than the exception.
Note, the content above has been generated by an artificial intelligence language model transcribing and combining my comments as a guest on a podcast last week. My words may not be entirely error free, and should you have questions, please reach out to me or seek advice from an appropriate professional.
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Join us for the next in our webinar series at the Intersection of Business, Science, and Law, “Understanding Stablecoin including as Capital for Your Green Building” on Tuesday, October 14 from 9 – 9:30 am. The webinar is complimentary, but you must register here.