Wall Street and Crypto Are Getting Married

Progress on the stablecoin bill could pave the way for a multi-year bull market in crypto.

Politicians in Washington did the right thing.

It’s been a while since I’ve had the chance to write that sentence, but I get to today.

On Monday, the U.S. Senate voted 66-32 to advance the GENIUS Act to a final vote, with sixteen Democrats crossing party lines to vote “yes.” The bill provides a firm regulatory framework for stablecoins in America.

I don’t want to count my chickens before they hatch, but it looks like we will have our first full-fledged piece of crypto legislation passed in the U.S. by the summer.

This is a big deal.

Outside of the January 2024 approval of spot bitcoin ETFs, this is the most important regulatory development in the history of crypto. It may even be bigger.

I believe it sets the stage for a long-term, sustained rally in crypto assets beyond bitcoin. The largest beneficiaries are Ethereum (ETH), Solana (SOL), and various decentralized finance (DeFi) assets like Uniswap (UNI) and Aave (AAVE).

Before I explain why, let’s take a quick detour to discuss what this is all about.

What Is the GENIUS Act?

Stablecoins are one of the killer apps of crypto. They are digital representations of the U.S. dollar that move over blockchains like Ethereum. While bank wires take 24 hours, stablecoins settle in seconds—like a text or email.

Stablecoins were virtually nonexistent in 2019; today their global market cap is more than $200 billion.

Stablecoin Market Capitalization

Source: Bitwise Asset Management with data from The Block, Coin Metrics, and CoinGecko. Data from Q1 2020 to Q1 2025.

Note: "Others" includes BUSD, crvUSD, DAI, FDUSD, FEI, FRAX, GHO, GUSD, HUSD, LUSD, MIM, PYUSD, TUSD, USDD, USDP, and USDS.

But stablecoins have long existed in a regulatory gray zone. Stablecoin issuers like Circle have to follow many regulations, but there is no overarching federal framework. The GENIUS Act provides that framework.

The bill guarantees that:

• Stablecoins will be backed 1-to-1 by U.S. Treasuries and dollar equivalents;

• Large stablecoin issuers will register with federal banking regulators;

• Those issuers will be audited regularly to ensure soundness; and

• Stablecoin issuers will apply anti-money laundering restrictions to their tokens.

In other words, the bill puts federal weight behind stablecoins, and allows big banks to issue stablecoins and merchants to accept them.

It’s pretty amazing to me that stablecoins grew to well over $200 billion in assets without any participation by the largest financial institutions in the world, and without consumers having an easy way to separate “good stablecoins” like USDC from “bad stablecoins” like TerraUSD.

With those protections in place, I expect this will be a $2.5 trillion market in no time. Close your eyes and imagine a world where JPMorgan and Bank of America issue stablecoins, where Amazon gives you a 2% discount if you buy using stablecoins instead of Visa, and where it’s as common to accept stablecoins as it is to accept Venmo or PayPal.

That’s the world we’re going to be living in soon.

Only the Beginning

As excited as I am for stablecoins themselves, I think this is only the beginning. Once we normalize moving dollars over blockchain networks—and the largest financial institutions in the world are participating in that effort—it’s a relatively small step to moving stocks, bonds, and other financial assets over the same rails.

This is the fundamental thesis for investing in non-bitcoin crypto assets like Ethereum, Solana, and the like: that $100+ trillion of financial assets will eventually move over blockchains. Passage of this bill starts that ball rolling.

I suspect the impact here will be similar to the impact of bitcoin ETFs.

The approval of spot bitcoin ETFs normalized crypto as an investment, and now some of the largest institutions in the world issue bitcoin ETFs and own them in their portfolios. I see the approval of stablecoin regulations normalizing crypto as a financial tool, paving the way for the largest institutions in the world to issue stablecoins and use them for payments.

A genius act indeed.

Risks and Important Information

No Advice on Investment; Risk of Loss: Prior to making any investment decision, each investor must undertake its own independent examination and investigation, including the merits and risks involved in an investment, and must base its investment decision—including a determination whether the investment would be a suitable investment for the investor—on such examination and investigation.

Crypto assets are digital representations of value that function as a medium of exchange, a unit of account, or a store of value, but they do not have legal tender status. Crypto assets are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not currently backed nor supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional currencies, stocks, or bonds.

Trading in crypto assets comes with significant risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks and risk of losing principal or all of your investment. In addition, crypto asset markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing.

Crypto asset trading requires knowledge of crypto asset markets. In attempting to profit through crypto asset trading, you must compete with traders worldwide. You should have appropriate knowledge and experience before engaging in substantial crypto asset trading. Crypto asset trading can lead to large and immediate financial losses. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price.

The opinions expressed represent an assessment of the market environment at a specific time and are not intended to be a forecast of future events, or a guarantee of future results, and are subject to further discussion, completion and amendment. The information herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice, or investment recommendations. You should consult your accounting, legal, tax or other advisors about the matters discussed herein.