Summary

Congress has just taken a historic step toward crypto regulation. During “Crypto Week,” lawmakers passed the GENIUS Act—now signed into law—creating the first federal framework for stablecoins. The House also advanced the CLARITY Act to define digital asset classifications and the Anti-CBDC Act to block a government-issued digital dollar.

Here’s what this means for the future of money:

A Major New Buyer of U.S. Debt: As stablecoins must be backed by Treasuries, their growth could turn issuers into the largest holders of U.S. government debt—providing vital demand amid record deficits.
Frictionless Payments: Stablecoins enable near-instant, low-cost, 24/7 money transfers worldwide—making sending funds as simple as texting or emailing.
Global Dollar Reach: In countries with unstable currencies, stablecoins enable non-U.S. citizens to more easily transact in U.S. dollars, offering a stable alternative to local money. This growing dollar adoption can increase economic pressure on local governments and challenge their monetary sovereignty.
A Surge in Issuers: With stablecoin issuance proving extremely profitable, major banks and tech firms—JPMorgan, Citi, BofA, PayPal, Meta, Apple, and others—are exploring entry into the space, setting the stage for widespread adoption.

A Recap of Crypto Week

The U.S. House advanced a watershed trio of crypto bills during so‑called “Crypto Week,” including the GENIUS Act regulating stablecoins (now signed into law by the President), the CLARITY Act defining which tokens are securities, and the Anti‑CBDC Surveillance State Act blocking a central bank digital dollar. Here is a brief breakdown of each:

GENIUS Act

(Guiding and Establishing National Innovation for U.S. Stablecoins Act)

This law marks a historic turning point—the United States has enacted its first-ever comprehensive federal law regulating crypto, shattering years of uncertainty and redrawing the regulatory map for the entire industry.

The law establishes the first federal framework for “payment stablecoins,” requiring issuers to hold fully-backed reserves of U.S. dollars or Treasury securities, maintain segregated accounts, publish regular attestations, undergo audits, and comply with AML standards—removing them from SEC purview and placing oversight under federal and state banking regulators, such as FinCEN and the OCC.

A key provision of the GENIUS Act explicitly prohibits stablecoin issuers from paying interest or yield to holders. While this limits direct benefits to end users, it alleviates competitive pressure on banks for deposits and enables issuers to retain 100% of the interest earned on reserve assets.

CLARITY Act

(Digital Asset Market Clarity Act of 2025)

This bill defines which digital tokens are “digital commodities” for CFTC jurisdiction and which are “digital securities” for SEC jurisdiction. Although it passed the House last week, the Senate has yet to consider it. It is expected the Senate will debate this bill sometime in August or September before it is potentially voted into law.

Its goal is to clear regulatory ambiguity by setting criteria—such as blockchain maturity and issuer filings—to determine whether a token is a commodity or security, and which regulator has oversight.

Anti‑CBDC Surveillance State Act

The bill expressly prohibits the Federal Reserve from issuing or piloting a central bank digital currency (CBDC), either directly or indirectly. Although the House approved it narrowly last week, the Senate has yet to vote on it. The bill aims to block a CBDC implementation without express congressional approval, citing privacy and surveillance concerns. A CBDC, depending on how it is implemented, potentially gives the federal government unprecedented control over how money moves in the U.S. and abroad, and thus has raised alarms for potential abuse.

The Importance of Legislative Clarity

Legislative clarity is critical for the crypto industry because, until now, the U.S. regulatory environment has been marked by confusion, inconsistency, and politicized enforcement—stifling innovation and driving capital offshore. Here's how we got here:

1. Regulation by Enforcement (Gary Gensler’s SEC)

Under SEC Chair Gary Gensler, the agency has pursued an aggressive “regulation by enforcement” strategy—suing dozens of crypto firms without first establishing clear rules. Rather than defining what makes a token a security through rulemaking, the SEC claimed nearly all digital assets were securities and launched lawsuits against firms like Ripple, Coinbase, and Binance, yet failed to prevent the spectacular collapse of FTX. This has left projects guessing what is or isn’t legal until they’re targeted, creating a chilling effect on development and investment.

2. Strategic Ambiguity

U.S. regulators such as the SEC, CFTC, FDIC, and OCC have often deliberately withheld clarity on whether crypto assets are securities, commodities, or something else. This ambiguity gives agencies wide leeway to assert jurisdiction and pursue enforcement, even when their authority is legally uncertain. Crypto companies have struggled to comply, not due to unwillingness, but because the rules were undefined or contradictory. As SEC Commissioner Hester Peirce put it, “the Commission’s approach to crypto in recent years has evaded sound regulatory practice and must be corrected.”

3. Operation Choke Point 2.0

Operation Choke Point 2.0 is an informal campaign by regulators—especially banking agencies—to pressure financial institutions to cut off services to crypto firms. By raising supervisory risk flags and discouraging banking relationships, regulators effectively “debanked” parts of the industry. This pushed companies to foreign jurisdictions and undermined dollar-backed innovation at home.

4. Debanking and Loss of U.S. Access

Major banks closed the accounts of legitimate crypto businesses, citing unclear regulatory guidance or perceived risk. Even U.S.-based firms with proper licensing, such as Circle and Paxos, faced difficulties maintaining stable fiat onramps. This severely limited everyday business operations—from payroll to client fund custody—and made it nearly impossible to launch or scale blockchain-based services domestically.

Laws like the GENIUS Act and the CLARITY Act marks an end to the era of fear and ambiguity—and replaces it with a rules-based framework that rewards responsible innovation.

The Significance of the GENIUS Act and Stablecoins

A New Buyer of U.S. Debt

With U.S. debt at record highs by virtually every measure, stablecoins have quietly emerged as a vital new source of demand for Treasury securities. Under the GENIUS Act, all payment stablecoins must be backed 1:1 by U.S. dollars or short-term Treasury instruments held by the Federal Reserve or qualified custodians. This structure effectively channels every dollar converted into a stablecoin into U.S. government debt. Tether and Circle—the two dominant issuers comprising roughly 90% of the stablecoin market—currently hold a combined $170 billion in Treasuries, placing them 19th among top foreign holders, as seen in the chart below. Treasury Secretary Scott Bessent recently projected that dollar-linked stablecoins could grow to $2 trillion or more, potentially making stablecoin issuers the single largest holders of U.S. Treasuries and introducing a powerful new force in sovereign debt markets.

An Exceptionally Lucrative Business

Issuing stablecoins has become an exceptionally lucrative business, particularly for market leaders like Tether. Because stablecoins are fully backed by U.S. Treasury bills, issuers benefit from the yield on these assets—often exceeding 5% in the current interest rate environment. Unlike traditional banks, which typically share a portion of this yield with depositors, stablecoin issuers retain 100% of the earnings. The result is extraordinary profitability. In 2024, Tether reported $5.2 billion in net income with fewer than 100 employees, making it one of the most capital-efficient companies in the world. Its profit per employee—approximately $50 million—dwarfs that of leading financial institutions such as JPMorgan ($194,000) and Goldman Sachs ($189,000), as well as tech giants like Apple ($600,000) and Meta ($580,000).

Send Money Like a Text

Stablecoins enable near-instant, low-cost transfers across borders, 24 hours a day, seven days a week—offering a sharp contrast to traditional bank wires, which are often slow, expensive, and limited by business hours or geographic boundaries. This capability makes stablecoins particularly well-suited for remittances, international commerce, and financial inclusion in underbanked regions. As adoption grows and user interfaces improve, sending and receiving stablecoins may soon become as seamless and intuitive as sending a text message or an email.

Preserve U.S. Dollar Dominance Globally

Stablecoins—especially U.S. dollar–backed ones like USDC and USDT—expand the reach of the dollar across borders and onto blockchains. They act as a dollar export tool in countries with weak currencies or capital controls, reinforcing the dollar’s role as the world’s reserve currency. For example, in Argentina freelancers and workers often receive salaries in U.S. stablecoins via wallets like Lemon or Buenbit. Venezuelans use stablecoins like USDT to store value and receive remittances from family abroad. Youth-led crypto adoption has made stablecoins a digital alternative to dollars and local currencies, especially for importing goods and paying salaries.

A New Era for Stablecoins

Over the next year, we are likely to see a significant expansion in the issuance, adoption, and integration of stablecoins by large, established companies. With the passage of the GENIUS Act providing a clear regulatory framework for payment stablecoins, major banks and fintech firms are increasingly confident in entering the space. This signals a notable shift from crypto-native issuers like Tether and Circle to traditional financial institutions and technology leaders actively developing tokenized dollar solutions. As a result, incumbent crypto firms will face growing competitive pressure. Below are key developments to watch in the months ahead:

Citigroup’s CEO Jane Fraser confirmed that the bank is considering launching its own stablecoin to enhance digital payment capabilities and further develop tokenized deposit strategies.

BofA CEO Brian Moynihan stated the bank is actively exploring stablecoin issuance, while emphasizing the need for legislative clarity—the passage of the GENIUS Act being a key enabler.

JPMorgan, already a pioneer with its “deposit token,” has plans to deepen its involvement in stablecoin issuance—citing the regulatory framework from GENIUS as motivation.

In terms of fintechs entering the space, Paypal has already launched a U.S. dollar stablecoin in August 2023, becoming the first major financial technology firm at the time to embrace digital currencies for payments and transfers.

The GENIUS Act imposes strict conditions on Meta, Apple, Amazon, and X (formerly Twitter), barring them from issuing dollar-backed stablecoins without unanimous approval from the Stablecoin Certification Review Committee, comprised of several key bank regulators. Despite this hurdle, there are reports that these firms, along with Uber, Google, and Airbnb, are holding early conversations with crypto firms about integrating stablecoins.

Conclusion

As the Senate takes up the remaining bills in the coming months, all eyes will be on how these measures reshape the regulatory landscape. The next phase could define who leads the future of digital finance—crypto natives or traditional financial giants.

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Mike Treidl, CFA | Founder & CIO @ Blue Coin Capital

mike@bluecoin.capital
https://www.linkedin.com/in/mtreidl/

Disclosures & Disclaimers

The information contained in this newsletter is for informational purposes only and does not constitute investment, legal, or tax advice. Blue Coin Capital is an investment adviser that manages digital asset strategies for qualified investors. Nothing herein should be interpreted as an offer to sell, or a solicitation of an offer to buy, any securities or investment products.

Opinions expressed are current as of the date of publication and subject to change without notice. Certain content may reflect the views of Blue Coin Capital and its personnel and may include forward-looking statements that are not guarantees of future performance.

Digital assets, including cryptocurrencies and stablecoins, are speculative and involve a high degree of risk. Past performance is not indicative of future results. Always conduct your own research and consult with a qualified professional before making any investment decisions.

Blue Coin Capital, LLC is a California limited liability company.

Congress Takes on Crypto