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

Hosts: Steve Ehrlich, Chief Contributor, Unchained Kingdom; Noelle Atchison, Editor-in-Chief and Chief Analyst, Crypto is Macro Now

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

Podcast Date: July 24, 2025

Compiled & Translated by: Lena Xin, ChainCatcher

ChainCatcher Editor's Summary

This article is compiled from the Unchained podcast episode, 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 has Trump's threat to fire Powell shaken macro sentiment?

This episode will discuss topics such as Ethereum's price rise, an interpretation of the "GENIUS" Act, the independence of the Federal Reserve, and the rise of emerging crypto asset management firms.

Collated and compiled by ChainCatcher.

Highlights

• Noelle: The stablecoin bill is just the beginning of the regulatory process.
• Noelle: Tokenized money market funds may be the biggest winners.
• Noelle: Circle's core revenue source is interest rate carry, and interest rates will eventually fall.
• Noelle: Current macro data presents no surprises: CPI is in line with expectations, there's little reason for a rate cut, and economic growth data is stable.
• Cosmo: The fundamental change lies in legislative improvements to market structure and regulatory frameworks.
• Cosmo: The DeFi sector will be the biggest beneficiary.
• Cosmo: The core challenge facing market judgment is how to define "others" in the crypto world, as defined by traditional investment wisdom.
• Cosmo: The key to token success lies in economies of scale.
• Cosmo: While Coinbase is the preferred choice, the market has ample room for other competitors, though allocation weights will vary.
• Ram: The importance of payment giants like Visa and MasterCard is expected to decline significantly over the next decade.
• Ram: There's an interesting paradox in how markets operate: the more decentralized a system, the more centralized market leadership is needed.
• Ram: Innovations like "shareholders as users" are reshaping the market landscape.
• Ram: Treasury Secretary Besson explicitly stated that "stablecoins can strengthen the dollar's hegemony." This policy direction has significantly benefited Ethereum, which carries the majority of stablecoin traffic.
• Ram: We expect more use cases to emerge in the fourth quarter, and the market may rebound by the end of this year or early next year.

The Stablecoin Act is Just the Beginning

Steve: What were your most profound impressions of the bill signing ceremony itself, or the crypto industry's response over the past 72 hours?

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

The Stablecoin Act is just 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 include them in pension and 401k investment accounts.

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

However, the market reaction was surprising. Despite the simultaneous positive impact 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 soon as positive news is realized" is not unprecedented. Fringe assets like Litecoin have been exceptionally active, demonstrating a strong speculative atmosphere in the market.

Cosmo: I remain optimistic. Bitcoin has already reached a new all-time high and has seen significant gains this year. While the short-term price reaction is muted, the fundamental shift lies in improving market structure and the regulatory framework.

The most noteworthy aspect of the GENIUS Act is the banks' behavior. Institutions like JPMorgan Chase, Citigroup, and Bank of America have all 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 have 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 reactions will determine whether it can be transformed into tangible development momentum. The market faces a critical decision: "Cash in on the upside and exit," or continue to invest?

Ram: This milestone will bring about two fundamental shifts:

1. Cryptocurrency and fintech are deeply converging, reshaping financial infrastructure such as custody, lending, and payments.

2. The traditional payment system will undergo structural changes. 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. Visa and Mastercard's core competitiveness lies in their decades-long customer service, dispute resolution, and merchant management systems.

Furthermore, if payment giants like Alipay decide to enter the stablecoin space, the market competition landscape could become even more complex.

Cosmo: How will the stablecoin profit pool 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 DeFi for higher returns.

Ram: The market will develop in a diversified manner. Traditional banks and tech 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 the new stablecoin regulations?

Steve: Could you please share a less obvious winner 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 are likely to 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. Regional banks, however, are likely to be the biggest losers, accelerating their long-term decline. Ram: What about intermediaries? Another type of intermediary faces 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 the nail on the head: Crypto technology 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 technical capabilities and are forced to rely on infrastructure providers like FIS and Jack Hunter to provide universal stablecoin solutions, which effectively strengthens the advantages 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 established through Coinbase.

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

Steve:Are you referring to the regulatory issues Paxos encountered when it partnered with Binance to launch 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 interoperability between different stablecoins. This is precisely the key aspect that wallet design can address.

What does ETH's latest rebound mean?

Steve: What do you all think of Ethereum's sharp rise?

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 are the primary driver, driven by the belief that Ethereum will become the infrastructure layer for the stablecoin ecosystem.

Steve: Ethereum is still scaling. What does this mean for listeners evaluating different ETH investment channels? For example, how should they choose between leveraged ETFs and crypto asset management firms?

Cosmo: While core issues like ETH's economic model remain, several key changes are occurring:

1. Organizational Culture Transformation

• The Ethereum Foundation's long-standing efficiency issues are being addressed
• The organizational culture transformation driven by new Director Tomas has yielded significant 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 such as Circle's listing enhance the credibility of the asset class
• Ethereum's ability to capture value as underlying infrastructure is increasing

These changes constitute substantial fundamental improvements. The positive cycle currently underway in the Ethereum ecosystem is a typical sign of a qualitative shift in fundamentals.

Noelle: There are still gaps in understanding within the crypto space. New investors only begin to pay attention when policy implementation becomes news, and the market is far from fully priced in. The current pace of government bond allocation strategies has also not been fully digested.

Ram: This involves two dimensions: policy direction and personal influence. Stablecoin policies are bringing about structural changes, significantly benefiting 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. Conversely, Solana's Kyle Samani and others are well-versed in meme-sharing.

Steve: How will ETH's current rally conclude? Signs of a market bubble are clear, and FOMO is rampant. How should investors respond?

Cosmo: The core issue lies in how to define "others" in the crypto market. Crypto-native capital is already fully deployed, and while traditional financial capital has been slow to enter the market, there are signs of growth. This gives me confidence in my holdings, but the real wave of allocations remains to be seen.

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. Take Solana's on-chain Treasury Bond Company (DFTV) as an example. Its groundbreaking value has quickly been validated by the market, and institutions like Tether and Cantor have launched similar products. This sector is experiencing explosive growth.

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

Steve:How do you identify truly high-quality investment targets? When reviewing numerous financing proposals, what key factors guide your decisions?

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

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

1) A sufficiently large market capitalization (typically ranked in the top 10-15)

2) Mainstream market recognition

3) A clear value proposition

Execution is the key to success. Teams need to possess both crypto-native marketing capabilities and the ability to utilize traditional financial instruments.

Ram: As a cross-asset investor, we are noticing signs of market weakness. Cryptocurrencies exhibit significant seasonality, and next month coincides with Bitcoin's traditional weakness.

Digital asset prices are more dependent on market momentum than fundamental indicators. This "self-reinforcing upward trend" mechanism is currently weakening, suggesting a possible turning point in momentum-driven markets.

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

Will the surge in crypto IPOs match their early successes?

Noelle: Several crypto giants have recently filed for IPOs. Does this mean the market will be less enthusiastic in the second half of the year than in the first?

Ram:The surge in crypto asset management companies 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 to go public by crypto companies like BitGo, Grayscale, and Bullish is worth watching. How long will this enthusiasm last?

Ram:The market remains enthusiastic, 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 60 times. More IPOs are expected in the fourth quarter.

Noelle:After inflated valuations in 2021, VC funding suddenly dried up. Cosmo, have you seen any signs of a rebound in VC activity?

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

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

Cosmo:The public markets already accommodate many "qualified" companies. For example, in asset management, a portfolio will inevitably include multiple crypto exchanges, albeit with varying weights.

How will Trump's threat to fire Powell shake macro sentiment?

Steve: What are Noelle's thoughts on whether Trump will fire Powell? With earnings season approaching, could you briefly share your key focus and analysis? Noelle: Current macroeconomic data is in line with expectations, and there's little reason to cut interest rates. This week, we'll focus on housing data. The impact of tariffs is evident, with prices in affected categories rising significantly. Trump's threat to fire Powell warrants caution, as it has effectively undermined the Fed's independence. This erosion of the Fed's independence will lead to worsening long-term inflation. A rate cut this year is virtually ruled out, and Powell must safeguard policy independence. Steve: Even if Trump replaces the Fed Board, will the new member 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. The members will certainly resist political pressure.