Original Title: Stablecoins Are Now Legit, but That’s Only the First Step - Bits + Bips
Host: Steve Ehrlich, Chief Writer at Unchained Kingdom; Noelle Atchison, Editor-in-Chief and Chief Analyst of "Crypto is Macro Now"
Guests: Ram Alawalia, Head of Lumida Wealth Management; Cosmo Jiang, Senior Trader and Liquid Strategy Portfolio Manager at Pantera Liquid Vault
Podcast Date: July 24, 2025
Compiled & Edited by: LenaXin, ChainCatcher
ChainCatcher Editor's Summary
This article is compiled from the Unchained podcast segment Bits + Bips. With the introduction of the "GENIUS" Act and the stablecoin legislation, the U.S. has established a clear regulatory framework for stablecoins for the first time.
Why does Noelle say the stablecoin legislation is just the beginning? What does Ethereum's latest rebound mean, and what is its essence? How does Trump's threat to fire Powell shake macro sentiment?
This episode will discuss topics such as the rise in Ethereum prices, interpretations of the "GENIUS" Act, the independence of the Federal Reserve, and the rise of emerging crypto asset management companies.
ChainCatcher has compiled and edited the content.
Key Highlights
- Noelle: The stablecoin legislation 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 margin income, which will eventually decline.
- Noelle: Current macro data is not surprising; CPI meets expectations, and there is insufficient reason for interest rate cuts, with stable economic growth data.
- Cosmo: The fundamental change lies in the improvement of market structure and regulatory framework.
- Cosmo: The DeFi sector will be the biggest beneficiary.
- Cosmo: The core challenge facing market judgment is how "others" in traditional investment wisdom are defined in the crypto space.
- Cosmo: The key to a token's success lies in scale effects.
- Cosmo: While Coinbase is the first choice, the market can fully accommodate other competitors, though the allocation weights may differ.
- Ram: The importance of payment giants like Visa and MasterCard is expected to decline significantly over the next decade.
- Ram: There is an interesting paradox in market operation mechanisms: the more decentralized the system, the more centralized market leadership is needed.
- Ram: The innovation of "shareholders as users" reshapes the market landscape.
- Ram: Treasury Secretary Besson clearly stated that "stablecoins can strengthen the dollar's hegemony," and this policy direction significantly benefits Ethereum, which carries the main stablecoin traffic.
- Ram: More cases are expected to emerge in the fourth quarter, and the market may warm up by the end of this year or early next year.
The Stablecoin Legislation is Just the Beginning
Steve: What are your deep impressions regarding the bill signing ceremony itself or the crypto industry's reaction over the past 72 hours?
Noelle: The U.S. cryptocurrency legislation has made substantial breakthroughs. As the largest financial market in the world, the U.S. has introduced a special regulatory bill for cryptocurrencies for the first time, which is a milestone.
The stablecoin legislation is just the beginning of the regulatory process. A more complex regulatory framework is still being constructed.
The new regulations will allow the use of ETH or Bitcoin for daily consumption and are expected to be included in pension and 401k account investment scopes.
Ram: The bill's final passage benefited from Trump convening 12 congressional leaders to negotiate at the White House. His subsequent Bitcoin tweet also created the "Trump tweet effect."
However, the market reaction was surprising. Despite the simultaneous arrival of the bill's passage and Trump's tweet as two positive factors, Bitcoin's price this week is below last week's level. This phenomenon of "good news peaking immediately" is not the first time; marginal assets like Litecoin are unusually active, indicating a strong speculative atmosphere in the market.
Cosmo: I remain optimistic. Bitcoin had previously set a historical high, with considerable gains this year. Although the short-term price reaction is muted, the improvement of market structure and regulatory framework is the fundamental change.
The most noteworthy aspect of the "GENIUS" Act is the movement of banks. Institutions like JPMorgan, Citigroup, and Bank of America have all stated they will launch their own stablecoins or tokenized deposits, indicating that the transformation process may accelerate beyond expectations. These banks have formed digital asset teams of hundreds and invested tens of millions of dollars in years of 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. The subsequent regulatory details and market reactions will determine whether it can translate into substantial development momentum. The market faces a critical choice: is it "good news realized and exit," or will it continue to lay out positions?**
Ram: This milestone will bring two fundamental changes:
Cryptocurrencies and fintech are deeply integrating, reconstructing financial infrastructures such as custody, lending, and payments.
The traditional payment system will undergo structural changes. The importance of payment giants like Visa and MasterCard is expected to decline significantly over the next decade. The "GENIUS" Act is an important beginning of this transformation.
Noelle: I am cautious about the rapid replacement of payment giants. Visa and MasterCard's core competitiveness lies in decades of accumulated customer service, dispute resolution, and merchant management systems.
Moreover, if payment giants like Alipay decide to enter the stablecoin space, the market competition landscape may become even more complicated.
Cosmo: How will the profit pool of stablecoins be distributed? Will it give rise to new businesses, or will it be absorbed by existing financial institutions?
Noelle: In a declining yield environment, Circle's core interest margin revenue model will face challenges. Investors may turn to the DeFi sector in search of higher returns.
Ram: The market will show a diversified development trend. Traditional banks and tech giants will compete, and in the next three years, segmented stablecoins targeting different scenarios will emerge. The ultimate beneficiaries will be end consumers.
Who Will Benefit the Most from the New Stablecoin Law?
Steve: Please share a less obvious beneficiary or loser?
Ram: Traditional financial institutions will become the main beneficiaries. Custodia Bank, led by Caitlin Long, and infrastructure banks like Cross River Bank will benefit significantly. Traditional banks' advantages in capital flow will allow them to earn considerable channel fees when connecting traditional finance with on-chain activities.
Noelle: Tokenized money market funds may become the biggest winners. In the future, funds can be intelligently transferred between payment accounts and tokenized money market funds, achieving "smart asset management."
Cosmo: The DeFi sector will be the biggest beneficiary. The on-chain characteristics of stablecoins will guide massive capital inflows into various DeFi protocols. Users will naturally choose on-chain innovative services. Regional banks may become the biggest losers, as their long-term decline trend will accelerate.
Ram: What about intermediaries? Another type of intermediary faces risks: investment banks. As the scope of asset tokenization expands, their traditional business models will be impacted.
Cosmo: The development law of capitalism always points to reducing transaction costs and enhancing 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 prologue of this transformation.
Are Regional Banks on the Brink of Collapse?
Steve: In a resource-constrained environment, should regional banks fully invest in the stablecoin competition or leverage the opportunity to layout broader blockchain applications? Are regional banks on the brink of collapse?
Ram: Regional banks lack technological capabilities and can only rely on infrastructure providers like FIS and Jack Hunter to offer generic stablecoin solutions, which actually strengthens the advantages of large banks. Infrastructure providers like Paxos are becoming potential winners. They are still developing stablecoins for platforms like Robinhood and Kraken, replicating the distribution network established by Circle through Coinbase.
This confirms the "shovel seller" theory: just as the most profitable during the gold rush were the tool sellers, in the stablecoin wave, infrastructure providers (like Paxos) offering technical solutions to trading platforms may be more robust than issuers.
Steve: Are you referring to the regulatory issues Paxos faced when issuing BUSD in collaboration with Binance?
Ram: To be precise, USDG is the stablecoin token they are currently issuing.
Noelle: Wallet service providers will encounter significant development opportunities. The core pain point of user experience is the interoperability between different stablecoins. This is precisely the key aspect that wallet design can address.
What Does Ethereum's Latest Rebound Mean?
Steve: How do you view Ethereum's significant rise?
Cosmo: The ETH/BTC exchange rate has nearly doubled in two months, reflecting a major shift in market expectations. Large-scale purchases by digital asset custodians have become the main driving force, with the core logic being that Ethereum will become the infrastructure layer of the stablecoin ecosystem.
Steve: Ethereum is still in the expansion process. What does this mean for listeners evaluating different ETH investment channels? For example, how should one choose between leveraged ETFs and crypto asset management companies?
Cosmo: Although core issues such as Ethereum's economic model still exist, several key changes are occurring:
- Organizational Culture Innovation
- The long-standing efficiency issues within the Ethereum Foundation are changing.
- The organizational culture transformation driven by new director Tomas is showing significant results.
- The interaction patterns with venture capital, DeFi protocols, and traditional financial institutions are undergoing fundamental changes.
- Improved Regulatory Environment
- The implementation of stablecoin legislation provides certainty for the industry.
- Milestone events like Circle's IPO enhance the credibility of the asset class.
- The value capture ability of Ethereum as underlying infrastructure is strengthening.
These changes constitute substantial fundamental improvements. The positive cycle currently experienced by the Ethereum ecosystem is a typical characteristic of fundamental qualitative change.
Noelle: There is still a cognitive gap in the crypto space. When policies are implemented and become news, new investors begin to pay attention, and the market is far from fully priced. The current pace of advancing treasury allocation strategies has also not been fully digested.
Ram: This involves two dimensions: policy direction and individual influence. Stablecoin policies are bringing structural changes, significantly benefiting Ethereum.
There is an interesting paradox in market operation mechanisms: the more decentralized the system, the more centralized market leadership is needed. The current lack of market volume faced by Ethereum is precisely related to Vitalik's relatively low-key public image. In contrast, figures in the Solana camp, like Kyle Samani, are well-versed in meme propagation.
Steve: How will the current ETH market trend conclude? There are obvious signs of market bubbles, and FOMO sentiment is spreading. How should investors respond?
Cosmo: The core issue is how to define "others" in the crypto market. Currently, crypto-native capital has fully positioned itself, and while traditional financial capital is entering slowly, there are already signs. This gives me confidence in holding positions, but the real wave of allocation still needs to wait.
What is the essence of the surge in digital asset financial 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 the Solana-based treasury company DFTV as an example; its pioneering value was quickly validated by the market, with institutions like Tether and Cantor launching similar products. This sector is experiencing explosive growth.
While the industry will undergo a process of survival of the fittest, we continue to increase our investments. Witnessing the birth of a new category of enterprises is a rare investment opportunity.
Steve: How do you identify truly high-quality investment targets? What key factors do you consider when reviewing numerous financing proposals?
Cosmo: The business model must first be validated through sustainability. There is already significant homogenous competition in the current market, and the industry is undergoing a commoditization process.
The key to success lies in scale effects, which requires the token itself to have:
1) A sufficiently large market capitalization (usually ranking in the top 10-15) 2) Mainstream market recognition 3) A clear value proposition
Execution capability is the decisive factor. The team needs to possess both crypto-native marketing skills and the ability to utilize traditional financial tools.
Ram: As cross-asset investors, we have noticed that the market is showing signs of fatigue. The seasonal characteristics of cryptocurrencies are particularly prominent, with next month coinciding with Bitcoin's traditional weak cycle.
Digital asset prices rely more on market momentum than on fundamental indicators. The current "self-reinforcing upward trend" mechanism is weakening, indicating that momentum-driven trends may face a turning point.
(Note: The "pumping engine" effect is explained as the mechanism of self-reinforcing upward trends.)
Can the wave of crypto companies going public match the early successes?
Noelle: Recently, several crypto giants have submitted IPO applications. Does this mean that market enthusiasm in the second half of the year will not match that of the first half?
Ram: The trend of a large number of crypto asset management companies emerging is still ongoing. However, as similar projects increase, market attention is becoming dispersed, making it harder for investors to focus on industry leaders.
Noelle: The phenomenon of crypto companies like BitGo, Grayscale, and Bullish clustering to go public is worth noting. How long will this enthusiasm last?
Ram: The market still has investment enthusiasm, but the valuation system is clearly diverging. Some private projects are valued at only 35% of their public counterparts, while Coinbase's price-to-earnings ratio is as high as 60 times. More IPO cases are expected to emerge in the fourth quarter.
Noelle: After the inflated valuations in 2021, VC funding has suddenly dried up. Cosmo, have you observed any signs of a rebound in VC activity?
Cosmo: Market funding is showing polarization. The benchmark effect of Coinbase's 60 times price-to-earnings ratio makes Pre-IPO rounds more attractive. Seed rounds and other early investments remain active, but mid-stage rounds like A-C are relatively quiet.
Steve: Despite the optimistic narrative, why is venture capital activity still lagging?
Cosmo: The public market inherently accommodates many "qualified" companies. For example, in asset management, the portfolio will inevitably allocate to multiple crypto trading platforms, just that the weights will differ.
How does 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, can you briefly share the key points of focus and analysis?
Noelle: Current macro data meets expectations, and there is insufficient reason for interest rate cuts. This week, housing data is a key focus.
The impact of tariff policies is becoming evident, with significant price increases in affected categories. Trump's threat to fire Powell is concerning, as it has effectively weakened the Federal Reserve's independence.
A loss of independence for the Federal Reserve will lead to long-term inflation deterioration. The possibility of interest rate cuts this year is basically ruled out, and Powell must defend policy independence.
Steve: Even if Trump replaces the Federal Reserve board members, will the new appointees yield to presidential will? Will other members maintain an independent stance?
Noelle: The Fed's policy depends on collective decision-making. Currently, the median view within the FOMC is relatively hawkish, and Trump can at most replace two seats. The key lies in the tradition of the Fed's independence. Committee members will resist political pressure.
It is essential to distinguish the drivers of inflation: tariff shocks are one-time impacts, while the real risk lies in fiscal imbalances.
Steve: At this week's China-Europe summit, von der Leyen will visit China next week. If exports to the U.S. cannot be secured, Beijing may turn to the European market for dumping. What are your expectations?
Noelle: The originally scheduled EU-hosted meeting was forced to adjust due to China's counter-invitation, compressing the agenda to one day, leaving the European delegation in a passive position.
The tension stems from the EU's recent inappropriate remarks towards China, exposing its strategic dilemma. The vulnerability of the European economy is becoming increasingly evident.
Closing Segment: Sharing Opinions
Steve: As you all know, I like to ask each guest to share a contrarian insight they are eager to spark a debate about on Twitter.
Ram: Newbank is an interesting case. As the pardon negotiations progress, the tariffs previously imposed due to the treatment of Brazil's former president are expected to ease. I believe there are investment opportunities in the Brazilian market, and Newbank is worth paying attention to.
Cosmo: The impact of Coinbase being added to the S&P 500 in April has been underestimated. This change forces global asset managers to readjust their digital asset allocation strategies, and currently, most institutions have chosen to overweight.
Noelle: I will focus on Hong Kong's "Stablecoin Act." After the act takes effect on August 1, it may introduce stablecoins pegged to the Hong Kong dollar or the renminbi. In the context of China promoting cross-border payments with the digital renminbi and expanding non-U.S. dollar trade, this trend is worth monitoring.
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