The GENIUS Act: Stablecoin is in 'different basket' than crypto
US lawmakers are currently voting on the GENIUS Act, the latest piece of legislation outlining regulatory oversights and consumer protections for stablecoin adoption, with many expecting the bill to pass through the Senate.
Delta Blockchain Fund CEO Kavita Gupta discusses her positive outlook on the bill and what sets stablecoins apart from the broader crypto landscape.
Catch Yahoo Finance's full interview with Galaxy Digital (GLXY) founder and CEO Mike Novogratz.
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
They're embracing us as opposed to chasing after us uh, and prosecuting us uh and now we're getting legislation and so you know, it's a huge tailwind for the industry, not just for Galaxy but the whole industry, but and we plan on taking advantage of it.
That was Mike Novogratz of Galaxy cheering the changing regulatory regime for the crypto industry which could see even more changes as soon as today. Stablecoin legislation is expected to clear the Senate this week. Stable coins underpinned most of the 3.3 trillion dollar market for Bitcoin. The so-called genius act would require stable coins to hold reserves of liquid safe assets like treasury bills. Issuers would also have to follow anti-money laundering and terrorism finance rules and to give holders of coins priority to recoup their money in the event of a bankruptcy. Joining us to break down what this means for the broader crypto space, we have Kavita Gupta, Delta block Jane Fund, founder and general partner and still with me is Amy Wu Silverman of RBC. Kavita, great to have you on this morning. Talk to me about the stable coin legislation and what it signals specifically for crypto investors.
Thank you, guys. Um, I think it's a very first good start move with this administration, especially because it's a bipartisan deal where we are saying, hey, let's legalize having stable coins, but let's put very strong and very good uh, positive and very structured uh rules around it that, hey, if you want to issue stable coins, you have to hold treasury bills, you have to have some sort of a collateral to support that you're not going to disappear. Also, at the same time, there is certain sort of transparency and accountability around it, which people can check what sort of a percentage of percentage of treasury bonds do you have? We have seen that trend, which has been questioned by SCC, two years, three years back uh, by Tether and Circle and different uh, different treasury bills uh circulations. And I think the accounting has always been a question what is acceptable or not acceptable? So finally having a very positive structured uh, rules and regulations around the around stable coin is I think is a very big part forward and is a big crypto vent.
Yeah, and I wonder from your perspective too about the dissolution of some of the headwinds to the bill. The two main ones that I've heard come up are big tech companies issuing their own stable coins which seems to have been a headwind that has resolved itself, but then the other concern is the president profiting from crypto specifically. How are you thinking about that as a risk to the legitimacy of crypto going forward?
I think when we think of stable coin, it is not a crypto which anybody or any token like Solana or like any of the 2,000, 10,000 tokens which we have any private company can just go issue and create a value associated with it. We have to put stable coin in a different basket. Stable coin are US or European or Indian, like whatever currency you take, it is a government issues currency backed and it is backed to it one is to one. So, uh, I think it is very different than the two issues which you highlighted. The first issue which you highlighted is very clear that can private companies like Meta or Square or any other uh, tech finance company can issue their own coins. Yes, they can. They can do the stable coins with the right regulations, but that is also very similar to digital payment system, which we are already using. When I do Venmo, I'm using digital payment system. Uh, can they do their own crypto? That is not in the stable coin basket. The other question which you asked about President Trump's benefiting from it, I think if it's a stable coin payment system, it's a, it's a, it's a fair game. Anybody and everybody can do that. But if it is about launching your own crypto, again, that's a different basket and if it's a conflict of interest where the president knowing everything, what regulations are coming, is participating in a financial deal, then yes, it is a very clear conflict of interest.
Yeah, and just zooming out beyond stable coins, just a crypto in general, Kavita, can you talk to me about how that potential conflict of interest reads into consumer sentiment, investor sentiment around crypto and I guess, is that a potential headwind in your view to a wider adoption of cryptocurrencies?
It is, it is a big uh, it is a big question. Uh, I mean, on one side, I want to look at it positively saying that we are seeing the biggest, like the president, the first president of United States, who is very positive about blockchain and crypto is actually having his extended family participating uh, in creating a lot of products around it and having commercial financial uh interest into it. So is that a positive long term uh vision around it? Yes, but at the same time, if it stays within the extended family without having any conflict of interest from the government position, that is much better because when we start seeing this as a tool of short-term benefiting by people in power, which could be anybody around the world, then of course, the investors start thinking that this is also going to come down heavily by the opposition who may be in power in the future and that is not a sentiment that does create volatility in the market, which we are seeing even though that the government is so pro crypto, but the market is not showing that strength in trust for the investable dollar amount.
Kavita, really appreciate you joining us. I hope you'll come back when we've got a little bit more time. Thank you so much for your insights.
Thank you.
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