The Breakdown - Inside the Genius Act: Trump Signs Landmark Stablecoin Bill into Law

Episode Date: July 22, 2025

NLW breaks down the newly signed Genius Act—the first major piece of U.S. crypto legislation. He unpacks what the law actually contains, from reserve requirements and audit rules to the “Libra clause” banning Big Tech stablecoins. With Circle and Tether taking center stage at the White House, what does this mean for the future of stablecoins, tokenization, and U.S. financial dominance? Plus, thoughts on DeFi tailwinds, CBDC fears, Schwab’s crypto plans, and the latest crypto IPO filings. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/@TheBreakdownBW Subscribe to the newsletter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://blockworks.co/newsletter/thebreakdown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownBW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Monday, July 21st, and today we are talking all about what is actually in the Genius Act. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to Biddle. All right, friends, well, President Trump has officially signed the Genius Act into law, making stable coins formally regulated in the United States. In a Friday ceremony, Trump officially endorsed the first significant crypto legislation to be passed by Congress. He said,

This afternoon, we take a giant step to cement American dominance of global finance and crypto technology as we signed the landmark Genius Act into law. They've come a long way since the Biden administration when they had no idea what you were all talking about and half of you were under arrest for no reason. Crypto executives aligned the Oval Office for the occasion. Both Palo Arduino of Tether and Jeremy Allaire of Circle were in the room, along with numerous others. While walking to the White House Nathan McCauley of Anchorage Digital posted, honored to be in Washington today. Genius is the first major digital asset legislation to clear Congress after years of public and private effort led to this bipartisan milestone, taking a moment to appreciate what it took to get here and excited

for what is coming next. Chainlink CEO Sergei Nazaroff, meanwhile, is ready for what comes next, the Genius Act is a huge step forward for stable coins, forming the basis of on-chain payments for retail users in both highly developed and emerging markets. With even more Fiat value now going on-chain, we're now off to the next stage of our industry's development, a real-world asset tokenization boom phase. Indeed, SEC Chair Paul Atkins has signaled that tokenization is next on the agenda. He said his staff are considering an innovation exception that would fast-track the required regulatory changes, adding, it's hard to say exactly where things will go or what will happen, but, you know, assets clearly are moving on chain. So if it can be tokenized, it will be tokenized.

Now, zooming back in on stable coins, the focus is on first mover circle and Tether. Bank stable coins are clearly coming, but for now, the competition will play out between the two crypto-native issuers. And indeed, rather than getting blocked by the Genius Act, Tether was featured in the White House ceremony. CEO, Paulo Ardwino was called out by name and thanked the president. Based 16-Z tweeted, imagine flooding Tether for eight years and now Trump is thanking Paulo in person. Now, Tether isn't currently compliant with the Genius Act due to their reserve containing assets other than U.S. Treasuries. They will also need to provide annual audits and comply with anti-money laundering laws,

however, they have three years grace to come into compliance. On Friday, Pollo said, We'll be working very, very hard to make sure we comply with the foreign issuer pathway within the Genius Act. It's crazy that sometimes people think Tether will not comply. For Circle, the compliance process is much more straightforward. CEO Jeremy Aller remarked, I think the Genius Act enshrines-in-law circles way of doing business. The two dominant stable coins will both continue to exist under the Genius Act, although the

competition from banks is expected to be fierce. Circle view their opportunity being largely domestic, with a layer stating, we think that this law obviously continues to accelerate that opportunity for us, as we move from offshore crypto trading into the world of legal, dollar-digital currency integrated into the mainstream financial system. Much of Circle's focus this year has been on payment rails and disrupting the credit card networks. Tether, meanwhile, is looking abroad, seeking to establish themselves as the dominant platform for remittances out of the U.S. Paolo mentioned, there are a lot of expats who work in the United States and their families are at home. Now, that might be what they're quoting, but I think Tether's real role is much bigger than that.

I think Tether views itself, in the long term, as the Federal Reserve for the rest of the world. They will, if the trend continues, be the single best way for the Eurodollar market to get access to dollar-like instruments. I think and have said for a long time that U.S. dollar-denominated stable coins likely extend the U.S. dollars dominance for at least another generation, and Tether is already in an incredible position to be the easiest way for people to access that system. Still, both companies have a ton of work ahead of them, even if they don't necessarily overlap with each other when it comes to their main strategy. Tether has a fairly complicated regulatory pathway, but of course they've already made big strides in cleaning up their image, and Circles big challenge is going to be competition.

With a domestic focus, they'll need to go up against large incumbents if they want to capture payments or financial flows. I would say that the good news for them is that their explosively successful IPO creates way more tailwinds for them to head into that challenge, well-resourced and with a lot of narrative at their back. Still, whatever hurdles remain ahead, after more than a decade of fighting, the first substantial piece of crypto legislation in the U.S. is in the books. Today's episode of The Breakdown is brought to you exclusively by Grayscale. Grayscale is almost certainly a name you know. They've been offering exposure to crypto for over a decade now, and offer over 20 different crypto investment products, ranging from single asset

to diversify, to thematic exposure to crypto and the broader crypto industry. They have long been innovators at the intersection of tradfai and crypto, and one of the benefits for a lot of us is that grayscale products are available right through your existing brokerage or IRA. Now, of course, investing involves risk, including possible loss of principle. For more information and important disclosures, visit grayscale.com. Go to grayscale.com. to explore their full suite of crypto investment products and invest in your share of the future. Now that we have the finalized piece of legislation, it's worth unpacking a little more what actually made it into the bill. All of the compliance provisions we were expecting made it in,

things like AML compliance, annual audits, reserve standards are in place. One of the big narratives around the legislation is that it will boost demand for treasuries, but that isn't necessarily the case. The Genius Act allows reverse repo transactions to be used as stablecoin reserves, which is basically a fancy term for overnight lending to the largest banks. Once all the plumbing is set up, this lending could dilute the need for stablecoin issuers to hold everything in T-bills. A really big provision from the Genius Act is that paying interest to consumers is also banned. Stablecoin issuers might find a workaround for this by calling interest payments rewards, but for the sake of argument, let's assume that stable coins will yield zero. That could be a

tailwind for defy, perhaps even giving rise to products that wrap DeFi yield in a more retail-friendly way. Coin fund president Christopher Perkins said, the dollar is a depreciating asset without yield. Defy is where you can generate that yield to preserve value. And so I think Stablecoin Summer is going to turn into Defy Summer. Paradoxically, the prohibition on yield could make consumers even more aware that their dollars are being debased. And with Stablecoins providing a more convenient bridge into DeFi, could we see a new generation of consumers looking for on-chain yield? Another major provision is a ban on large companies issuing stable coins, which some are referring to as

the Libra Clause. Companies like the tech giants won't be able to issue stable coins without an exemption, as of course Facebook famously attempted with their Libra project in 2019. Dante Disparte, the chief strategy officer of Circle, noted that any non-bank that wanted to issue stable coins would need to spin up, quote, a standalone entity that looks more like Circle and less like a bank. He added that non-banks would also need to clear antitrust hurdles as well as get past a treasury review process before it comes to market. Who knows what might be approved, but the Genius Act is biased towards banning a Walmart coin or an Amazon coin, preferring to keep stable coin issuance in the financial sector. Now, one last note is the fear of a backdoor CBDC.

Maga Republican Marjorie Taylor Green maintained her opposition to the Genius Act right through to the final vote. Once the bill passed, she tweeted, in 1971, we were taken off the gold standard cash, which was a ridiculous decision and has weakened our dollar tremendously. Now we are on the path to move from cash you can hold in your hand, hide from the government, and save for yourself and your family, to a digital currency system where your ability to buy and sell will ultimately be held in digital accounts that you cannot tangibly hold yet or at the will of those who control the banks and the government. So how much is this actually a concern? Hold aside a lot of the rhetoric around it, and there are some that are at least a little sympathetic. A world where stable

coins are the only form of money does have some uncomfortable similarities to a CBDC system, particularly the parts that people don't like. The Genius Act, for example, requires stablecoin issuers to have the ability to freeze and seize stablecoins, which both Circle and Tether have had to utilize with some frequency. And yet to some, the safeguard already exists. If all stablecoin issuers ultimately take orders from a future tyrannical regime, then as CryptoLoyer Gabriel Shapiro posted, if you want a censorship-resistant asset, don't park your money in a custodial stable coin. Pretty simple. Park it in ETH or Bitcoin. So that is the story from the Genius Act, a couple of other quick market updates to kick off the week before we get out of here. First of all,

CEO of Charles Schwab has signaled that spot Bitcoin trading is coming soon. Speaking with CNBC on Friday, CEO Rick Worcester said his clients are already heavily into crypto, owning around 20% of the ETFs. However, ownership is still a tiny portion of assets on the platform, just $25 billion of the $10 trillion total. Wister added, we anticipate launching Bitcoin and ether sometime soon so that our clients have access to that. We think that will be an acceleration of our growth. He claimed that a subsection of clients hold the vast majority of their assets with Charles Schwab, but still retain a few percentage points on crypto-native platforms. Wister said, they really want to bring it back to Schwab because they trust us. They wanted to sit alongside their other assets. And being extremely

clear about the goal, Worcester said, if they're buying their crypto at Coinbase, we would love to see them bringing their crypto back to Schwab. Crypto-friendly RIA, Tyrone Ross, thinks that the Tradfai players like Schwab are running out of time. He commented, I do believe the regulatory environment paired with the success of Coinbase in Robin Hood is an impetus for them to do something here. I don't know whether it will be built in house or a buy, but in my opinion they should buy as they're so far behind. On the retail trading side, sentiment analysis firm Santiment believes that they are coming back. In their latest report, they noted that social dominance for Bitcoin topics spiked alongside last week's all-time high. Analyst Brian Quinlevan wrote,

43.06% of all crypto discussions were about Bitcoin just as the coin's market value was peaking. He added that, the sudden spike was indicative of many retail traders fomoing in. This is the latest in a long string of factors suggesting that retail traders are once again paying attention to Bitcoin, possibly for the first time this cycle. Now, sentiment data is largely informed by crypto Twitter, so this isn't your Uncle Joe locking back in. Then again, Quinlan suggested that traders shouldn't look to enter the market while Bitcoin is on everyone's mind, commenting, wait for the euphoria to cool down some and you'll likely find another key entry point coming up. Then again, at the same time, Axel Adler Jr. is seeing no signs that the market is overheated,

commenting, we're not at a peak yet. Finally, today, Crypto Exchange bullish is the latest company to file for an IPO. The application came with financials, giving us a first look at what the exchange's business looks like. They claimed 80 million in net profit last year, but suffered a downturn in the first quarter of 2025, taking a $349 million loss. Bullish also disclosed $1.9 billion in liquid assets, including cash, Bitcoin, and other digital assets. The firm also reported a string of foreign subsidiaries across Hong Kong, the Cayman Islands, Singapore, Germany, and the UK.

Bullish will go public via a traditional IPO after failing to complete a SPAC deal in 2021. Like Circle and many others, they're looking to hit this IPO window while it's available. Basically, the second half of this year is lining up to be a very crypto-rich IPO environment. We will see if market demand holds. For now, though, that is going to do it for today's breakdown. Good way to start off a week, I have to say, and until next time, be safe and take care of each other. Peace.