Stablecoins Are Now Legit, but That's Only the First Step - Bits + Bips

Moderators: Steve Ehrlich, Chief Writer, Unchained Kingdom; Noelle Atchison, Editor-in-Chief and Lead Analyst, Crypto is Macro Now

Guests: Ram Alawalia, Head of Wealth Management at Lumida; Cosmo Jiang, Senior Trader and Liquidity Strategies Portfolio Manager at Pantera Liquid Vault

Podcast Date: July 24, 2025

Compiled and edited by LenaXin and ChainCatcher

Summary

This article is compiled from the Unchained podcast column Bits + Bips. With the introduction of the GENIUS Act and the Stablecoin Act, the United States has established a clear regulatory framework for stablecoins for the first time.

Why does Noelle say the stablecoin bill is just the beginning? What does Ethereum's latest rally mean, and what is its nature? How could Trump's threat to fire Powell shake macro sentiment?

This issue will discuss topics such as the rise in Ethereum prices, the interpretation of the "GENIUS" Act, the independence of the Federal Reserve, and the rise of emerging crypto asset management companies.

ChainCatcher did the collation and compilation.

Summary of highlights

• Noelle: The stablecoin bill is just the beginning of the regulatory process.
• Noelle: Tokenized money market funds may become the biggest winners.
• Noelle: Circle's core revenue source is interest rate carry, and interest rates will eventually fall.
• Noelle: There are no surprises in the current macroeconomic data, CPI is in line with expectations, there is insufficient reason to cut interest rates, and economic growth data is stable.
• Cosmo: The fundamental change lies in the legislative improvement of market structure and regulatory framework.
• Cosmo: The DeFi sector will be the biggest beneficiary.
• Cosmo: The core difficulty facing market judgment is how to define "others" in traditional investment wisdom in the field of encryption.
• Cosmo: The key to token success lies in scale
• Cosmo: Although Coinbase is the first choice, the market can accommodate other competitors, but the allocation weights will be different.
• Ram: I expect the importance of payment giants such as Visa and MasterCard to decline significantly over the next decade.
• Ram: There is an interesting paradox in how markets work: the more decentralized a system is, the more centralized market leadership is needed.
• Ram: Innovations like “shareholders as users” are reshaping the market landscape.
• Ram: Finance Minister Besson made it clear that "stablecoins can strengthen the hegemony of the US dollar." This policy orientation has significantly benefited Ethereum, which carries the main stablecoin traffic.
• Ram: We expect more cases to emerge in the fourth quarter, and the market may pick up by the end of this year or early next year.

Stablecoin law is just the beginning

Steve: What impressed you most about the bill signing ceremony itself, or the crypto industry's response over the past 72 hours?

Noelle: The US has achieved a substantial breakthrough in cryptocurrency legislation. As the world's largest financial market, the US has introduced its first dedicated regulatory bill for cryptocurrencies, which is a milestone.

The Stablecoin Act is only the beginning of the regulatory process. A more complex regulatory framework is still being developed.

The new regulations will allow the use of ETH or Bitcoin for everyday consumption and are expected to be included in pension and 401k account investments.

Ram: The bill's eventual passage was thanks to Trump summoning 12 congressional leaders to the White House for mediation. His subsequent Bitcoin tweet also created the "Trump tweet effect."

But the market reaction was surprising. Despite the simultaneous positive news of the bill's passage and Trump's tweet, Bitcoin's price this week was lower than last week's. This phenomenon of peaking as positive news materializes is not new. Fringe assets like Litecoin have been particularly active, demonstrating a strong speculative atmosphere in the market.

Cosmo: I remain optimistic. Bitcoin has already reached a record high and has seen significant gains this year. While the short-term price reaction is muted, the fundamental change lies in the improvement of market structure and regulatory frameworks.

The most noteworthy aspect of the GENIUS Act is the banks' actions. JPMorgan Chase, Citigroup, and Bank of America, among others, have announced plans to launch their own stablecoins or tokenized deposits , suggesting the transition may be accelerating faster than expected. These banks have already established digital asset teams numbering hundreds of people and invested tens of millions of dollars in multi-year research and development.

Can Visa and Mastercard survive the stablecoin disruption?

Steve: The passage of the first crypto bill marks a new phase for the industry. Subsequent regulatory details and market reaction will determine whether this can be transformed into tangible growth momentum. The market faces a critical decision: cash in on the positive news and exit, or continue investing?

Ram: This milestone will bring about two fundamental changes:

1. Cryptocurrency and FinTech are deeply integrated, reshaping financial infrastructure such as custody, lending, and payment.

2. The traditional payment system will undergo structural change. The importance of payment giants like Visa and MasterCard will decline significantly over the next decade. The GENIUS Act is a significant beginning of this transformation.

Noelle: I am cautious about the rapid replacement of payment giants. The core competitiveness of Visa and MasterCard lies in the customer service, dispute resolution and merchant management systems accumulated over decades.

What's more, if payment giants such as Alipay decide to enter the stablecoin field, the market competition landscape may become further complicated.

Cosmo: How will the profit pool of stablecoins be distributed? Will it spawn entirely new businesses or be absorbed by existing financial institutions?

Noelle: In a declining yield environment, Circle's core interest rate carry model will face challenges. Investors may turn to the DeFi sector in search of higher returns.

Ram: The market will develop in a diversified manner. Traditional banks and technology giants will compete, and niche stablecoins targeting different scenarios will emerge over the next three years. The ultimate beneficiaries will be end consumers.

Who will benefit most from new stablecoin laws?

Steve: Could you please share a less obvious beneficiary or loser?

Ram: Traditional financial institutions will be the primary beneficiaries. Infrastructure banks like Custodia Bank, led by Caitlin Long, and Cross River Bank will benefit significantly. Traditional banks' advantages in capital flow allow them to earn substantial channel fees when connecting traditional finance with on-chain activities.

Noelle: Tokenized money market funds may be the biggest winners. In the future, funds will be intelligently transferred between payment accounts and tokenized money market funds, enabling "smart treasury management."

Cosmo : The DeFi sector will be the biggest beneficiary. The on-chain nature of stablecoins will drive massive capital inflows into various DeFi protocols. Users will naturally choose innovative on-chain services. However, regional banks may become the biggest losers, accelerating their long-term decline.

Ram: What about middlemen? There's another type of middleman at risk: investment banks. As asset tokenization expands, their traditional business models will be impacted.

Cosmo: The laws of capitalism consistently point to reducing transaction costs and improving consumer welfare . Ram's point hits home: cryptography and on-chain infrastructure are reshaping the structure of capital markets, and we may be witnessing the beginning of this transformation.

Are regional banks on the verge of collapse?

Steve : Given limited resources, should regional banks focus entirely on the stablecoin race, or leverage the momentum to develop broader blockchain applications? Are regional banks on the verge of collapse?

Ram: Regional banks lack the technical capabilities and are forced to rely on infrastructure providers like FIS and Jack Hunter to provide universal stablecoin solutions, which effectively strengthens the advantage of large banks. Infrastructure providers like Paxos are emerging as potential winners. They are still developing stablecoins for platforms like Robinhood and Kraken, replicating the distribution network that Circle has established through Coinbase.

This confirms the "shovel seller" theory: just as the tool vendors made the most money in the gold rush, in the stablecoin wave, infrastructure vendors that provide technical solutions to trading platforms (such as Paxos) may be more stable than issuers .

Steve: Are you referring to the regulatory issues that Paxos encountered when it previously partnered with Binance to issue BUSD?

Ram: To be precise, USDG is the stablecoin token they are issuing.

Noelle: Wallet service providers will have a significant development opportunity. The core pain point of user experience is the interoperability between different stablecoins . This is precisely the key aspect that wallet design can solve.

What ETH's latest rebound means

Steve: What do you think about the sharp rise in Ethereum?

Cosmo: The ETH/BTC exchange rate has nearly doubled in two months, reflecting a significant shift in market expectations. Large-scale purchases by digital asset custodians have been the primary driver, driven by the belief that Ethereum will become the infrastructure layer for the stablecoin ecosystem.

Steve: Ethereum is still in the process of scaling. What does this mean for listeners who are evaluating different ETH investment channels? For example, how to choose between leveraged ETFs and crypto asset management companies?

Cosmo: While core issues such as ETH's economic model remain, several key changes are taking place:

1. Organizational culture innovation

• The Ethereum Foundation’s long-standing efficiency issues are changing
• The organizational culture transformation driven by the new director Tomas has achieved remarkable results
• A fundamental shift in the interaction model with venture capital, DeFi protocols, and traditional financial institutions

2. Improved regulatory environment

• The implementation of stablecoin legislation provides certainty for the industry
• Milestones like Circle's IPO boost credibility in the asset class
• Ethereum's value capture capability as the underlying infrastructure is enhanced

These changes constitute substantial fundamental improvements . The positive cycle currently experienced by the Ethereum ecosystem is a typical sign of qualitative fundamental change.

Noelle: There's still a knowledge gap in the crypto space. New investors only start paying attention when policy announcements become news, leaving the market far from fully priced in. The current pace of government bond allocation strategies hasn't been fully digested either.

Ram: This involves two dimensions: policy direction and personal influence . Stablecoin policies are bringing about structural changes, which have significantly benefited Ethereum.

There's an interesting paradox in market mechanisms: the more decentralized a system, the more centralized market leadership it requires. Ethereum's current lack of market influence is precisely related to Vitalik's relatively low-key public image. Meanwhile, Solana's Kyle Samani and others are well-versed in the art of meme-sharing.

Steve: How will this ETH rally end? There are clear signs of a market bubble, and FOMO is spreading. How should investors respond?

Cosmo: The core issue is how to define "others" in the crypto market. Crypto-native capital is already fully deployed, and while traditional financial capital is entering the market slowly, there are signs of it. This gives me confidence in holding positions, but the true wave of investment still needs to wait.

What is the nature of the surge in digital asset finance companies?

Steve: As the head of Pantera’s crypto asset management business, can you share your market observations?

Cosmo: We focus on innovative projects. For example, DFTV, the Solana on-chain treasury bond company, quickly gained market validation for its groundbreaking value, with institutions like Tether and Cantor launching similar products. This sector is experiencing explosive growth.

While the industry will continue to undergo a period of survival of the fittest, we continue to increase our investment. Witnessing the birth of entirely new business categories is a rare investment opportunity.

Steve: How do you identify truly high-quality investment targets? When you review numerous financing proposals, what key factors do you base your decision on?

Cosmo: The business model must first be verified as sustainable. The current market is already experiencing clear homogeneous competition, and the industry is undergoing a process of commoditization.

The key to success lies in economies of scale , which requires the token itself to have:

1) Sufficiently large market capitalization (usually ranked in the top 10-15)

2) Mainstream market awareness

3) Clear value proposition

Execution is the key to success. The team needs to have both crypto-native marketing capabilities and the ability to use traditional financial tools.

Ram: As a cross-asset investor, we are noticing signs of market weakness. Cryptocurrencies have a particularly strong seasonal pattern, and next month coincides with Bitcoin's traditional weakness cycle.

Cryptocurrency prices are more dependent on market momentum than fundamental indicators. This self-reinforcing upward trend is weakening, suggesting a potential turning point in the momentum-driven market.

(Note: The "ramjet" effect is explained as a self-reinforcing mechanism for upward trends)

Can the surge in crypto IPOs match their early successes?

Noelle: Recently, many crypto giants have submitted IPO applications. Does this mean that the market in the second half of the year will not be as hot as in the first half?

Ram: The trend of a large number of crypto asset management companies emerging continues. However, as the number of similar projects increases, market attention is becoming dispersed, making it more difficult for investors to focus on industry leaders.

Noelle: The rush of crypto companies like BitGo, Grayscale, and Bullish to go public is noteworthy. How long will this enthusiasm last?

Ram: The market remains enthusiastic about investment, but valuations are clearly diverging. Some private projects are valued at only 35% of their listed peers, while Coinbase's P/E ratio is as high as 60x. We expect more IPOs to emerge in the fourth quarter.

Noelle: After the inflated valuations of 2021, VC funding dried up. Cosmo, are you seeing any signs of a pickup in VC activity?

Cosmo: Market capitalization is polarized. Coinbase's 60x P/E ratio, a benchmark, has made pre-IPO rounds more attractive. Early-stage investments like seed rounds remain active, but intermediate stages like AC rounds are relatively quiet.

Steve: Despite the optimistic narrative, why is venture capital activity still lagging?

Cosmo: The public market already accommodates numerous "qualified" companies. For example, in asset management, a portfolio will inevitably include multiple crypto trading platforms, though the weightings may vary.

How Trump's threat to fire Powell could shake macro sentiment

Steve: What are your thoughts on whether Trump will fire Powell? With earnings season approaching, could you briefly share your key points of focus and analysis?

Noelle: Current macroeconomic data is in line with expectations, and there is insufficient reason to cut interest rates. This week, we will focus on housing data.

The impact of tariffs is becoming apparent, with prices of affected categories rising significantly. Trump's threat to fire Powell warrants caution, as it has effectively undermined the Federal Reserve's independence.

The Fed's weakened independence will lead to worsening long-term inflation. With interest rate cuts essentially ruled out this year, Powell must defend policy independence.

Steve: Even if Trump replaces the Fed board, will the new members bend to the president's will? Will the other members maintain their independent stance?

Noelle: Fed policy depends on collective decision-making. The current FOMC median view is hawkish, and Trump can only replace two seats at most. The key lies in the Fed's tradition of independence. Members will certainly resist political pressure.

It is necessary to distinguish between the drivers of inflation: the tariff shock is a one-off effect, and the real risk lies in fiscal imbalances.

Steve: This week we have the China-EU summit, and Ursula von der Leyen will visit China next week. If Beijing is unable to export to the US, it may turn to the European market for dumping. What are your expectations?

Noelle: The meeting originally scheduled to be hosted by the European Union was forced to be adjusted due to China's counter-invitation, and the agenda was compressed to one day, putting the European delegation in a passive position.

The tension stems from the EU's recent inappropriate remarks on China, which have exposed its strategic dilemma and made Europe's economic vulnerability increasingly apparent.

Closing segment: Sharing opinions

Steve: As you all know, I have a habit of asking each guest to share a counter-consensus opinion that is dying to spark a debate on Twitter.

Ram: Newbank is an interesting case study. As amnesty negotiations progress, the tariffs previously imposed due to the treatment of the former Brazilian prime minister are expected to ease. I believe there are investment opportunities in the Brazilian market, and Newbank is worth watching.

Cosmo: The impact of Coinbase's inclusion in the S&P 500 index in April has been underestimated. This change has forced global asset managers to readjust their digital asset allocation strategies , with most institutions currently choosing an overweight position.

Noelle: I'll focus on Hong Kong's Stablecoin Act. After it takes effect on August 1st, it could potentially introduce stablecoins pegged to the Hong Kong dollar or the Chinese yuan. Given China's current push for cross-border payments using the digital yuan and expansion of non-US dollar trade, this development warrants attention.

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