The Breakdown - The Stablecoin Surge and Stripe’s Crypto Power Play

Episode Date: June 12, 2025

Nathaniel dives into the growing momentum behind stablecoin legislation in Washington, including the Senate’s latest approval of the Genius Act, the political posturing surrounding it, and why this isn’t a crypto bill—it’s a dollar dominance bill. He explores Meta’s potential reentry into stablecoins and breaks down Stripe’s major crypto infrastructure move with its acquisition of wallet provider Privy. Plus, what Treasury Secretary Scott Bessino’s stablecoin vision signals for global dollar strategy, why GameStop’s Bitcoin treasury plan is raising eyebrows, and how altcoin treasury strategies are veering into the absurd. Brought to you by: Grayscale offers more than 20 different crypto investment products. Explore the full suite at grayscale.com. Invest in your share of the future. Investing involves risk and possible loss of principal. To learn more, visit ⁠⁠⁠⁠⁠⁠⁠⁠Grayscale.com⁠⁠⁠⁠⁠⁠⁠⁠ -- ⁠⁠⁠⁠⁠⁠⁠⁠https://www.grayscale.com//?utm_source=blockworks&utm_medium=paid-other&utm_campaign=brand&utm_id=&utm_term=&utm_content=audio-thebreakdown)⁠⁠⁠⁠⁠⁠⁠ 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 Thursday, June 12th, and today we are talking about the march of stablecoins through Washington. 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 at the show notes or go to bit.ly slash breakdown pod. Well, friends, the Senate has once again approved the stable coin bill, but the acrimony in Washington is palpable. Yesterday saw another cloture vote passed in the Senate, ensuring the amended bill

won't fall to the filibuster before going to a final vote. The session featured intense debate on the Senate floor from anti-crypto Democrats. Galaxy Digital's Alex Thorne reported, all day it's been a parade of Democrats criticizing the bill for enabling Trump's crypto corruption, but this is political theater that is intentionally misleading. He explained that Congress is being asked to introduce rules into the current regulatory vacuum, a vacuum that has enabled the president's activity. Thorne wrote, The Genius Act is not a so-called crypto bill. Crypto can already do this with mostly no rules. The idea that this is a handout to crypto is total BS. This bill imposes significant new rules on crypto issuers. Genius Act is a payments bill, a dollar upgrade bill,

a dollar dominance bill. The world is recoiling from dollars right now. Tariffs are an impediment to dollar's reserve status buying off our debt. If the U.S. wants to continue the party, it needs new dollar buyers and holders. Don't buy the gaslighting. There may be crypto issues you don't like, but this is not a crypto bill. It's a dollar bill and it's good policy. Apparently people agree because despite the arguments, the vote passed 68 to 30, achieving the required bipartisan's two-third majority. Compared to last month's vote, Democrat senators Kim and Hickenlooper switched their votes to yes, while Democrat Senator Blunt Rochester flipped her vote to a no. The bill is now eligible for a final Senate vote early next week, then it's on to reconciliation with a House bill and onto the

president's desk. Although Senate leader John Thune said that he would allow floor amendments heading into the vote, that didn't end up happening. Crucially, this means no amendment to limit the president's crypto dealings. Yesterday, data for progress published a poll showing strong support across the electorate for this amendment. That means anti-crypto-democrats can push against the bill with a presumed support of the public. They probably can't block this bill at this stage, but they will continue to be very loud as it continues through Congress. Now, by the way, these bill results are exactly what I said when Maxine Waters staged that weird walkout. Nobody on any side of the aisle likes politicians benefiting financially from where they sit, whether it's crypto or regular stocks. Make this its own

bill, keep it clean, and it would be a bipartisan piece of crypto-related legislation. Now, off the Senate floor, Elizabeth Warren is raising an additional concern. Joined by Senator Blumenthal, she wrote a letter to Mark Zuckerberg yesterday asking about META's plans to introduce another stable coin. The letter stated that given the size of the company and the expected passage of the Genius Act, quote, it's more critical than ever that Congress and the public fully understand the extent of META's plans. In 2019, META's proposed Libra Stablecoin was the largest controversy in crypto. Lawmakers were concerned about the idea that a tech company would issue their own money, but the situation has changed a lot since then. There have been rumors that META is taking another

look at stable coins, but no suggestion they would issue their own rather than work with partners. Meta stated, if META controlled its own stable coin, the company could further pry into consumers' transactions and commercial activity. The massive amounts of consumers' consumer data it would ingest, could help meta-fuel surveillance pricing schemes on its platform, more intrusive targeted advertising, or otherwise help the company monetize sensitive private information through sales to third-party data brokers. Well, all of those are genuine concerns with social media and advertising. Having an integrated stablecoin probably wouldn't meaningfully change their ability to conduct any of that behavior.

At a certain point, we're really arguing about whether tech companies should be able to interact with digital money natively. The reality, though, is that the passage of the Genius Act is set to release a tidal wave of adoption. Fintech Brain Food, Simon Taylor tweeted, Today I've spoken to a bank C-suite and a fintech money-mover C-s suite about stable coins. Tomorrow I'm talking to a major global retailer. The single unifying thread between all of those conversations, the Genius Act is a tipping point.

Now, one fintech that has already tipped is Stripe, who are all in on stable coins. Adding to their billion-dollar acquisition of bridge last year, the company has bought out wallet developer Privy for an undisclosed amount. Privy offers non-custodial blockchain wallets across multiple chains, which are able to be embedded into other apps. They support account abstraction to enable users to sign in using Web2 authentication rather than private keys. The company isn't that well-known to crypto-natives, but their technology sits behind over 50 wallet

integrations currently in production. As an example, they powered the integrated wallet for NFT platform OpenC. Rather than forcing new customers to spin up a metamask before they can get started, Privy allowed OpenC to just create wallets on behalf of customers so they can get started right away. Privy said that their product will still operate independently, but adding a Stripe integration is obviously a game changer. Stripe CEO Patrick Collison tweeted, We're delighted to welcome Privy to Stripe. Money has to reside somewhere and Privy builds the world's best programmable vaults. Alongside our other stablecoin work, we're looking forward to enabling a new generation of global internet-native financial services. Breaking down the implication,

Simon Taylor again said, most people missed what this combination actually means. Here's the play that's about to change everything. Bridge is stablecoin infrastructure. Stripe can now process stablecoin payments like any other transaction. Privy is wallet as a service, makes wallet creation, balance management, and transaction signing as simple as an API call. The combination is lethal. Bridge handles the stablecoin rails, Privy handles the wallet complexity. Stripe keeps its reputation for simplifying complexity for developers. This enables any marketplace to offer crypto wallets to users, any fintech to add stablecoin accounts, any platform to settle globally in seconds, all through API's developers already trust.

Stripe is going beyond payments. They're building infrastructure for every business to use, crypto rails without the complexity, without the technical headaches. The dial-up era of crypto integration just ended. 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 diversified to thematic exposure to crypto and the broader crypto industry. They have long been innovators at the intersection of tradfi 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, visitgrayscale.com. Go to grayscale.com to explore their full suite of crypto investment products and invest in your share of the future. So functionally, then, it looks like Stripe isn't just building a stable coin payments network anymore, but instead are building a system where every Stripe account can also be a self-custodial stablecoin wallet. And the kicker is that no one will need to interact with blockchain infrastructure to get the benefits. Mike Dutas of Sixth Man Ventures commented, it's not just stablecoins, it's a step function change in consumer and business financial accounts. Maya Zahavi tweeted, probably one of the smartest acquisitions in crypto.

Stripe is going all in building up the building blocks to rule crypto payments before the banks get in. Rehobatoria of Castle Island Ventures posted, with Stripe, acquiring bridge and now Privy, the ability to build complete seamless fiat to on-chain fintech products is easier than ever before. FinTech slapped lipstick on a pig. Stablecoins and embedded wallets are now upgrading the back end of fintech in real time. Stablecoins were also a hot topic during Treasury Secretary Scott Besson's Senate hearing. Earlier this year, the Treasury put out research suggesting that stable coin issuance could grow 8x to reach $2 trillion within the next three years. Besson, though, thinks that could be a conservative estimate, stating,

I believe that stablecoin legislation backed by U.S. Treasuries will create a market that will expand U.S. dollar usage via these stable coins all around the world. I think that $2 trillion is a very reasonable number, and I could see it greatly exceeding that. He reiterated that Staplequin legislation is specifically about cementing the dollar's reserve status, commenting, in the history of the U.S. dollar as a reserve currency, there have been numerous passages along the way where many people assume that the U.S. dollar would lose reserve currency status, and there's always been a new mechanism that has cemented that. Now, none of this is new, but it's never been put forward in such a public and straightforward manner.

This narrative about stablecoins supporting the dollar's reserve status and driving incremental demand for government debt is now a consensus strategy within the administration. In nine months, the narrative has gone from Nick Carter's blog post to the official policy of the U.S. Treasury. In a period where there's concerns about the dollar, the government is explicitly turning to stable coins as a solution. One of the big shifts is that stable coins are getting far more adoption than most in crypto would have imagined. When the stablecoin bill was first conceptualized, it was largely viewed as a way to clear up impeliority. big U.S. legal issues with existing tokens. Now, it's looking like the floodgates are open and

stablecoin rails would become the core of the U.S. and global payments network. Lewis Kee commented, Banks and Corps piling into Stablecoins reminds me of tech companies piling into the Metaverse, except with fundamentals. As Besson said, there's a fair chance we're all vastly underestimating how big the Stablecoin wave is going to be. Look, man, ultimately, stable coins are just the world's most desirable financial product, which is the U.S. dollar, in a 100x improved technical package, which is Stable Coin Rails. Simple as that. We're not talking about rapid adoption here. We're talking about ubiquitous proliferation. Over in Bitcoin Treasury World, the other big theme of the moment, GameStop is conducting another big

round of fundraising to drive their Bitcoin Treasury strategy. The company announced a $1.75 billion round of convertible debt issuance on Wednesday night after the market closed. The announcement came the day after GameStop's quarterly financials disclosed a 17% drop in revenue, which sent the stock tumbling by 5%. The stock slid even further in after-hours trading losing another 12%. It's not entirely clear whether GameStop is set on plowing money into Bitcoin or simply raising money to prop up their struggling business. The fundraising round didn't explicitly state the money would be used to buy Bitcoin. Their previous round of convertible debt issuance raised $1.5 billion in March, and only $5.13 million of that has been used to acquire Bitcoin with a single

large purchase late last month. The company did have a profitable quarter in Q1, and GameStop will also have more than $8 billion in cash on their balance sheet after they complete this new fundraising. For the moment, it looks like the market is pricing in GameStop's Bitcoin strategy is a whole bunch of dilution with very little to show for it. Interestingly, Cryptobank Signum has warned that the Bitcoin Treasury strategy narrative could hold Bitcoin back from even greater adoption. In a research note, they argued, large concentrated holdings are a risk for any asset, and at this point, micro-stratage's holdings are approaching a point where they become problematic. The company holds close

to 3% of the total Bitcoin ever-issured, but a much higher share of the actual liquid supply. Their goal of acquiring 5% of the total issued Bitcoin raises concerns, not least because these vehicles amassing too much of the supply undermines Bitcoin's safe haven properties. Private corporation controlling a large portion of the existing supply would make Bitcoin inappropriate for central banks to hold as a reserve asset. Micro Strategy is really just the tip of the iceberg. We now have 126 publicly listed companies that have adopted Bitcoin strategies and the announcements continue to pour in every day. Signum also pointed out that these companies are starting to undermine the properties that made Bitcoin attractive as a reserve asset in the first place.

They wrote, The steep drop in the liquid supply can also reverse the structural trends of declining Bitcoin volatility and rising liquidity. Basically, over recent years, many institutions have pointed to declining volatility as a reason they're starting to get comfortable holding Bitcoin. Signam argued that the leveraged Bitcoin treasury companies could be crowding out demand from other sources. Signum's point is that the organic demand story built up over recent years is getting

displaced by a big leveraged bet. They wrote, as demand levels off and is saturated by increased supply, the valuation of these shares relative to their Bitcoin holdings is at risk. Additionally, these strategies also create certain risks for the crypto market as a whole. Now, it's not just Bitcoin treasury strategies that are starting to become in vogue. There are also Altcoin treasury strategies, although some of them are starting to look a little bit questionable. Yesterday, the DeFi Development Corp, which is stockpiling Solana, had paperwork knocked back by the SEC. The company is looking to raise a billion dollars to make additional purchases, but have been delayed by a regulatory

issue. They failed to file a management report on internal control over financial reporting before the due date, so we're ineligible for fundraising. It's not entirely clear whether this is a paperwork issue that's quickly cleared up or a deeper problem, but on face value, not a great look to mess up documenting internal controls to the SEC. The all-coin treasury companies are also starting to go deep outside of the top 20 crypto assets. A NASDAQ listed fitness equipment company called Interactive Strength has said it's raising 500 million to fund purchases of the native token for fetch.a.i's ticket symbol FETT. CEO Trent Ward said, Fetch.a.I. is the market leader at the intersection of the two most important technology trends today, artificial intelligence and crypto. We believe our strategy to

acquire a significant number of FET tokens could dramatically accelerate our mission to create significant long-term value for our shareholders. This, my friends, is completely insane. There was a slim narrative around Fetch AI partnering with the company on an AI-driven personal training platform. This is a tiny company with an $8 million market cap. Initial funding has been provided by Crypto Marketmaker DWF Labs, so it it kind of seems like it's just taking the crypto casino to the NASDAQ now. Indeed, it's starting to feel like a mix between ICO Mania and Long Island blockchain. Small chain commented, so we're just going to backdoor list all coins by announcing treasuries like this?

Keep your eyes on that one, friends. That is definitely something that we are going to continue to watch. For now that that is going to do it for today's breakdown. Appreciate you listening, as always, and until next time, be safe and take care of each other. Peace.