We're on the verge of a payments revolution with blockchain technology, says Coinbase's Shirzad
Faryar Shirzad, Coinbase chief policy officer, joins 'Money Movers' to discuss the senate passing Stablecoin bill and the Genius Act.
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Gizmodo
3 hours ago
- Gizmodo
Bitcoin Who? Wall Street Has a New Crypto Obsession
For over a decade, Bitcoin has been the undisputed face of digital finance. When you think 'crypto,' you think Bitcoin. Its surges and crashes have been treated as bellwethers for the entire industry. This year, it even set new records, solidifying its reign. But for the past month, the crypto world hasn't been talking about Bitcoin. The spotlight has been stolen by a company that most people have never heard of. While Bitcoin's price reached an all-time high this spring, its dominance is being challenged. Its market value, while still a colossal $2 trillion, is suddenly looking like yesterday's news. Because in the world of finance, Wall Street and social media have a new darling: Circle Internet Group. On June 5, Circle went public. Its IPO priced the stock at $31 a share, valuing the company at a respectable $6.3 billion. What happened next has been nothing short of explosive. In just eleven trading sessions, Circle's stock skyrocketed 675%, pushing its market capitalization to over $48 billion. To put that in perspective, Circle is now worth more than iconic industrial giants like Ford Motor Company and General Motors. The Big Three automakers in Detroit produce millions of physical cars per year. So, what does Circle produce to justify this staggering valuation? The answer is surprisingly simple: a special type of cryptocurrency called a stablecoin. Here's how it works. You give Circle one U.S. dollar. In return, they give you one of their digital tokens, called USDC. This token is a stablecoin, meaning its value is pegged to a stable asset. In this case, the dollar you just gave them. It will always be worth $1 because, unlike Bitcoin or Ethereum, stablecoins aren't designed to fluctuate in value. Circle then takes your actual dollar, invests it in safe, interest-bearing assets like short-term U.S. Treasury bonds, and pockets the yield. You get a digital dollar; they get the profit. That's the entire business model. What Wall Street is buying isn't just a clever financial loop; it's the hope that stablecoins are the future of money. The dream is that USDC will become as common as Visa or Mastercard for daily transactions, allowing people to move money cheaply and instantly without the volatility of other cryptocurrencies. This hope is being fueled by a favorable wind from Washington. The Senate recently passed the 'Genius Act,' a landmark piece of legislation that opens the door for banks, fintech companies like PayPal, and major retailers like Amazon to adopt stablecoins for payments. This is the first major, and notably friendly, crypto regulation approved by Congress. While it still needs to pass in the House, crypto advocates are optimistic. Until now, stablecoins have mostly been used within the crypto world for trading or in decentralized finance (DeFi). But with this new legislation, Circle, which isn't tied to a single financial institution, is perfectly positioned to become the big winner. Some are calling this the industry's 'iPhone moment.' The Circle fever will likely rage on, at least until the company posts its first quarterly earnings. Only then will investors decide if the honeymoon continues. In the meantime, if you want to sound like you know what's happening on Wall Street and in the tech world, there's a new name to drop. Bitcoin who?
Yahoo
4 hours ago
- Yahoo
Arthur Hayes Says Circle Is Overvalued, Warns Against Stablecoin IPO Mania: 'Trade This S--t Like You Would A Hot Potato'
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. A stablecoin mania is brewing in public equity markets, according to BitMEX founder and Maelstrom investment chief Arthur Hayes. Hayes on Monday said the public listing of USDC stablecoin issuer Circle (NYSE:CRCL) marked the beginning of this bubble. And that company's stock is already overvalued, he said. In just nine trading days, Circle's stock has surged over 140% from its opening price and over 435% from its listing price, boasting a valuation of $36 billion at last look. The impressive debut comes amid a growing buzz around stablecoins. Don't Miss: — no wallets, just price speculation and free paper trading to practice different strategies. Grow your IRA or 401(k) with Crypto – . From the prospect of greater legitimization in the U.S. to the U.S. Treasury's projection that stablecoins could grow to a $2 trillion market, investors have several reasons to be optimistic about the sector, which is arguably already the most profitable blockchain business vertical. But Hayes calls for caution as more companies predictably appear on the scene. In Hayes' telling, the stablecoin market is already divvied up. 'There is no real future because the distribution channels for new entrants are closed,' he said. Hayes said stablecoins only succeed if they can affordably reach millions of users. According to him, there are only three channels through which this can happen. These channels are cryptocurrency exchanges, social media giants and legacy banks. Cryptocurrency exchanges already own stablecoins or are partnered with market leaders Tether and Circle, Hayes said. At the same time, he said social media giants and legacy banks showing interest in the space as the regulatory climate improves are unlikely to partner with third parties. Social media giants have the most customers and almost complete information on their behavior and preferences, he said, noting that they are well-positioned to lead the sector. For legacy banks, he said, 'regulators might likely forbid' such third-party partnerships. Trending: New to crypto? on Coinbase. Hayes says that new entrants will crop up despite this lack of distribution, lured by the profit potential of becoming a stablecoin issuer, but warns that they will eventually leave investors holding the bag. Hayes said Circle copycats would emerge with even more insane valuations dangling the promise of traditional finance integrations. These will be followed by issuers that use a risky mix of financial engineering and leverage to offer high yields to depositors, he said. The bubble will pop after one of these issuers collapses, triggering billions of dollars in losses. 'Trade this s–t like you would a hot potato,' he said. While Hayes is skeptical of the stablecoin mania in the long term, he warns that shorting it is a bad idea. 'Do not go short,' he said. 'These new stocks will rip the faces off of shorts. The macro and micro are in sync.' Hayes even hints at making speculative bets through his family office to profit from the current momentum. 'If there is money to be made, we will be making it,' he said. Read Next: A must-have for all crypto enthusiasts: . Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — Image: Shutterstock This article Arthur Hayes Says Circle Is Overvalued, Warns Against Stablecoin IPO Mania: 'Trade This S--t Like You Would A Hot Potato' originally appeared on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
4 hours ago
- CNBC
How the stablecoin bill gives Treasury Secretary Bessent a new tool to fund the U.S. deficit
The crypto industry is on the verge of a major regulatory milestone, and it could lead to digital assets being a significant source of funding for the U.S. government. On Tuesday, the Senate passed the GENIUS Act , which lays out a regulatory framework for stablecoins, sending it on to the House of Representatives with bipartisan support. Treasury Secretary Scott Bessent praised the bill in a post on X , saying that a regulated and growing stablecoin market could create new buyers for U.S. government debt. "A thriving stablecoin ecosystem will drive demand from the private sector for US Treasuries, which back stablecoins. This newfound demand could lower government borrowing costs and help rein in the national debt. It could also onramp millions of new users — across the globe — to the dollar-based digital asset economy," Bessent said. "It's a win-win-win for everyone involved" The exact size the stablecoin market can reach in the future is unclear, but it does appear that the U.S. government will have plenty of debt to sell to it. The Congressional Budget Office's dynamic score — which takes into account the legislation's potential changes to factors like economic growth — said the tax and spending bill that recently passed the House would increase the total deficit by $3.4 trillion from 2025 to 2034, including interest costs. The current size of the U.S. dollar-denominated stablecoin market is around $230 billion to $250 billion, according to Robbert van Batenburg, strategist at The Bear Traps Report, and there is a theory that a clearer regulatory framework can help lead to wider adoption. Several major tech and consumer companies are reportedly exploring issuing their own stablecoins or using existing coins more frequently. Bessent previously told the House Financial Services Committee in May that there is "speculation" the stablecoin market could be "up to $2 trillion of demand over the next few years for U.S. government securities from digital assets." The market could in theory surpass that $2 trillion figure if stablecoins start to take market share from traditional credit card payment networks, van Batenburg said. The stablecoin bill also comes at a time when Wall Street has started to fret about foreign investors and governments turning away from U.S. assets. Katie Haun, founder and CEO of Haun Ventures and former Coinbase board member, said Friday on " Squawk Box " that the stablecoin industry is already 14th largest holder in the world of U.S. Treasurys, ahead of nations like Germany and Norway, and that the new legislation should help it continue to grow. "I've been asking for regulatory clarity and more rules of the road, and I think the GENIUS Act is exactly that," Haun said. How stablecoins work Stablecoins are a type of digital currency that is often used to facilitate crypto trading but can also work for other types of transactions. They are designed to be "stable" at a set value. Some stablecoins have drawn scrutiny in the past over concerns that their reserves were insufficient or relied on mechanisms that would unreliable in times of market stress. The Senate bill calls for stablecoins to be backed on at least a 1-to-1 basis by highly liquid assets, including U.S. currency, U.S. Treasury bills, repurchase agreements — or "repos" — backed by Treasury securities, government money market funds and central bank reserve deposits. An example of a stablecoin's reserves can be found in the disclosures from Circle , which went public earlier this month and has seen its stock soar . CRCL 1M mountain Shares of Circle have soared since the IPO. Circle's IPO prospectus shows that the vast majority of its stablecoin reserves are held in a BlackRock vehicle called the Circle Reserve Fund . That fund's holdings are split roughly 50-50 between short-term U.S. Treasury Debt and Treasury repurchase agreements. If the GENIUS Act is enacted as currently written, stablecoin companies will be required to certify they have these holdings on a monthly basis, with the oversight of registered public accounting companies. Risks A growing stablecoin industry in the U.S. is not likely to completely fix the government's debt funding problem, and it could introduce additional risks. Nonprofit group Better Markets opposes the GENIUS Act, and its policy director Amanda Fischer said in a statement that the bill ignores "the susceptibility of stablecoin companies to runs, bankruptcies, and taxpayer-funded bailouts." Counting on the industry as a funding source for the Treasury market could also be tricky. Lawrence McDonald, founder of the Bear Traps Report, cautioned that additional demand from stablecoins will take time to develop while the U.S. Treasury will likely need to issue significant amounts of debt securities over the next year. McDonald also said that, while interest costs of short-term debt are cheaper than that of 30-year Treasurys, relying so heavily on the short-end of the bond market can be a problem for countries. "If something ever went wrong, in terms of say oil, and that prevented the [Federal Reserve] from cutting, then you're going to have a high bill rate for a long-time and the deficit is going to spiral out of control," McDonald said.
