Crypto Shake-Up: The Genius Act and Market Moves

The Senate passed the Genius Act yesterday.

The bill provides a regulatory framework for stablecoins.

It now heads to the US House, which is working on its own stablecoin legislation.

Crypto prices fell yesterday along with stocks, and disappointing retail sales along with renewed concerns over the Israel-Iran conflict hurt sentiment.

Well, joining me in midweek trade is Matthew Segal, head of digital assets research at Vanek.

Good morning, Matthew.

Thank you so much for joining me.

Well, crypto equities like Circle Stock did outperform Bitcoin and many stocks in the past month.

So what is your take on this amid all of the macro as well as geopolitical tensions?

Yeah, Rey, you've noted the price performance.

It's been a remarkable month for crypto equities.

Bitcoin is pretty much flat over the last 30 days, but the circle IPO really catalyzed.

Wide open equity capital markets.

We are counting more than 30 reverse takeovers, backs, IPOs, pipes by these kind of micro strategy copycats, you know, I feel like there's a bit of digestion that may need to occur here, a lot of paper in the market and with Bitcoin flat, you know, maybe some mean reversion here ahead of us where The tokens will take the leadership for a while because after all these companies are issuing stock to buy tokens.

So yeah, that's the current state of the markets.

The stablecoin bill is definitely helpful, not just for sentiment, but we're seeing just an increasing number of banks.

And Fintechs that are looking to adopt stablecoins to cut costs on the back end and enable cheaper, more programmable payments as well as a direct relationship with customers rather than going through banks and credit card rewards.

And as you mentioned, there's been a lot of focus on the big banks as well as tech companies and their interest when it comes to stablecoin, but JP Morgan filed a trademark for a digital assets platform, JPMD.

So break this down for us and what does all of this mean here?

Yeah, yesterday JPMorgan had a meeting with the crypto task force at the SEC, and one of the topics that they discussed was The potential impact of existing capital markets activity migrating to public blockchains, and this is a big change.

Up until now, banks have been experimenting with private blockchains where they can really control who has access to these.

The fact that they're talking about public blockchains now is a big change.

Uh, we think it should be positive to things like Ethereum and Solana.

Uh, those tokens are both down by close to double digits over the last month, in contrast to many of the equities which are up by double digits.

So definitely an interesting development which is emblematic of really the regulatory 180 that has occurred since November.

And you just mentioned Solana ETF Solani.

I do want to ask you about Solana ETFs.

Today is that day and of course we're paying attention to what comes out of the nation's capital, not just out of the Fed Reserve building, but also the White House.

And as you mentioned, the SEC.

So we are keeping a close eye on what's happening in terms of applications with actual products here, but with Falana ETFs getting closer, what are the implications of this and what are you watching for?

The SEC is working hard to clear the way for a number of new crypto ETFs to come to market this year, including potentially Sellana, Ripple, and others, notably, they are open to the idea of staking the coins inside of this ETF which would allow retail investors to capture some of the same yield that's available when you buy these.

Tokens directly on crypto exchanges that also raises the possibility to create and redeem shares of the ETF not with cash, but with the tokens themselves, in which case many of America's largest brokers are going to be touching crypto on their balance sheets in a way that they have not.

Uh, so far, so that speaks to what we mentioned at the outset here, that the open capital markets, uh, the investment banks and brokers that are willing to underwrite, uh, this paper and what's coming is the tokens themselves.

And very quickly I do want to get your reaction to the Genius Act passing the Senate, so it does move to the House before it can reach Trump's desk.

And interestingly, the bill does ban executive branch officials and lawmakers from issuing stablecoins and also it does require regulators to oversee large stablecoin issues similar to how banks are regulated.

So overall, what's your reaction? it is clearly Motivating fintechs, internet companies, consumer facing businesses to explore issuing or partnering on stablecoins, we think it's going to be a tremendous way for retailers to forge direct relationships with their customers.

Then make the loyalty points essentially interchangeable as these stablecoins begin to speak to each other.

So it should be a margin opportunity for retailers, give consumers more choice and create a lot of disruption longer term for the typical credit card model.

And we have less than 30 seconds here, but US listed Bitcoin miners' share of network cash rate hit fresh all-time highs.

So what does this actually mean, Matt?

Well, you know, it means that Texas is a tremendous place to do business if you are an industrial company looking for property rights and cheap energy.

So you know this administration has made it a priority to create a more supportive backdrop for bitcoin mining.

If we do that, we're also going to be dominant in AI and energy production.

So a number of these bitcoin miners are also serving the AI market.

A number of deals have been announced in the last month to further those plans.

It's a pretty positive backdrop for the miners, especially given that they've lagged some of the other equities over the last month.

OK, Matt, well, we will have to leave it there.

Always great talking to you.

Thank you so much for joining us.