Ep 36 - June 11, 2025 - Circle IPOs
Welcome to another episode of the weekly crypto check-in recorded on June 2025. I'm your host, Robert Swarta. I'm joined by my cohost, Andres Sedate. How's it going, Andres?
Andres Sandate:Hey, Robert. It's good. It's been a couple weeks since we've been able to record, so it's nice to be back, and I hope your summer is going well.
Robert Swarthout:Yeah. You know, it's these weeks, you know, they not tons of news and also a bunch of news and then kind of this weird pendulum of sorts. So we we have some fun stuff to talk about it. You know, it feels like progress is being made. This is one of these episodes where we're not gonna complain about as much stuff as we sometimes do and kinda get to talk potentially about the future a little bit here.
Robert Swarthout:So Yeah. Should be pretty cool.
Andres Sandate:Yeah. Regulation, market trends, some corporate events. So, yeah, some good stuff to talk through.
Robert Swarthout:Yeah. Absolutely. So our topic, the Clarity Act, and this is the bill that's has started moving through the house for basically bringing clarity to the regulations around digital assets. So we have the Genius Act, which we'll get to in a minute. That's for stable coins.
Robert Swarthout:Genius Act, is further along, but the Clarity Act is, playing a little catch up here, in a middle. It is further along than I expected, at this point. I you kept hearing rumors that it might happen, and I've learned with congress rumors are probably, about the opposite of what's gonna happen. But it's cool. So the the house ag committee, which is weird that it comes to that, but for whatever reason, they came to the house ag committee.
Robert Swarthout:It got voted out of that. Actually, rather strong strongly, the votes was, 47 to six. So there's a lot of, senators. Well, a lot of Republicans, very few Democrats seem to have voted or however that works. But it made it through that, and then they did a, a markup session, and now it's headed to the floor.
Robert Swarthout:Apparently, like a marathon markup session. And, again, I I'm not too adept at to be able to explain what a markup session is, but I know from everything I read, it did take a while. And then now it's headed to the floor for discussion, which is pretty awesome.
Andres Sandate:Yeah. Like you said, it's moving to full house next week. I think the couple of headlines sort of takeaways or if you dig into kind of this CLARITY Act advancing is the goal is, I think, to try to define for the market the SEC versus the CFTC's authority, both being regulators, right? The Securities and Exchange Commission and then the Commodities Futures Trading Commission, the CFTC, their authority over digital assets, right? Which hopefully will fill some regulatory gaps and, you know, the objective of being it should support and hopefully will enhance the amount of innovation.
Andres Sandate:The Yeah. I mean, I think it's likely in that bigger markup that you're going to see whether it's amendments or it's individual stakeholders really start to push for positions. That's where I think the optimist in me is hoping that when it gets to that full markup process, we don't end up with a gutted bill and we don't end up with a bunch of sausage, pork, as they call it, in Capitol Hill in there in order to get it over the hump. But it does bode well that it was more of a bipartisan vote, right? The numbers, as you mentioned, 47 to six in ag and 32 to 19 in financial services.
Andres Sandate:So yeah, there's going to be conflicts between the CFTC and the SEC until we get some type of clarity bill. The irony is they're calling this the Clarity Act and I'm hoping there is clarity.
Robert Swarthout:Yeah. From what I've read from people that are like, I guess more deeply reading the bill, it's an interesting compromise that's being made because we would not have liked this kind of bill to potentially be passed in the last four years because it leaves a lot of the rulemaking up to the regulators. And like, obviously that wouldn't have worked at least in our opinion from the from the industry with the the SEC last four years. So I don't know.
Andres Sandate:Yeah. Do you worry at all that with the two parties involved here, I guess we're calling parties. I have to clarify my terminology. We don't mean Republican, Democrat. We mean, you know, the two agencies, the SEC and the CFTC.
Andres Sandate:One who oversees securities, the SEC, the other commodities, the CFTC. Do you worry at all that there is going to be, I guess, just too much fragmentation in a space that just, can easily get highly, highly fragmented and sort of, a lot of turf battles?
Robert Swarthout:Yeah. I you know, my hunch is, and and I hope I'm right about this, is that the bill gives enough space for the regulators to come to, I guess, agreement. The two regulators, right, the CFTC and SEC come together to make a framework to help define these things. Because there's no doubt when a token initially launches, it's a security. Yeah.
Robert Swarthout:But like over time it can morph into a commodity or whatever it may, you know, a new definition we might end up with. And that's what I I think I like about Hester Peirce at the SEC. She has this whole, like, two year period where she talks about the safe harbor, where it can kinda go through that. It has to hit milestones and they can get out of it. If that can get put into, I guess, as a rule that the SEC follows, the the CFTC also understands where the handoff would be and they agree upon that, I think that could be a great thing.
Robert Swarthout:Again, rules can more be more easily changed than laws so that there's a risk there. But I think once there's an established kind of, you know, method to the madness going forward, then maybe it's a little more like a law in some sense.
Andres Sandate:So Yeah.
Robert Swarthout:We'll see. It's but, you know, I I hesitate to say that in any rules are better than new rules. But with with proper regulators in place doing their jobs, I think that, you know, level heads have started to prevail a little bit here and, we'll we'll get some, you know, good guidance, maybe late summer at this point.
Andres Sandate:And I think for people listening or those at home, it's vital that we get this clarity because there is obviously, there's still a lot of innovation to happen. There's still a lot of adoption to happen, of, you know, digital assets and and more broadly, you know, just the technology, blockchain technology. So I think, you know, to visibility around where we're going on the SES here, it should unlock more activity more broadly in the industry, at least here in The US.
Robert Swarthout:Yep. Awesome. Well, we'll move on to something we've talked a little bit about already. The Genius Act negotiations are really heating up. Again, Genius Act is the bill that's going through the House and excuse me, the Senate right now around defining stablecoins, you know.
Robert Swarthout:Right. They have to be backed in a certain way. They're one to one. Interestingly enough, this current version of bill does not allow holders of a stablecoin to receive any yield. So the the issuers of these are the ones making the money.
Robert Swarthout:And we'll talk about that here in a minute with Circle, but it's a it is interesting to kinda see the progress. So again, we just talked about the Clarity Act. It's catching up with the Genius Act. Not quite at the same stage, but close, and it's just good progress.
Andres Sandate:Yeah. I mean, if you look at the the votes, it was 66 to 22 Yep. At the senate to to proceed. So, again, bipartisan by all accounts. And I think the goal being you want some consumer safeguards, right?
Andres Sandate:You want to have something also to address the AML KYC concerns that are out there. And so I think the question to be hammered out here for this one in terms of passing the Senate, and then obviously it's going have to go to the House and then ultimately through a final vote is, know, has the industry done enough or has, you know, more importantly, the elected officials, you know, the Senate and the House, have they done enough to address KYC AML? Because there have been obviously more laundering activities, illicit organized criminal behavior using stablecoins. So it's just a question of, as we start looking at the reality that this will be here being stablecoins, have we done enough to hopefully address some of those lingering concerns? But yeah, it's the summer, right?
Andres Sandate:So it's good to see that our, you know, our elected officials in DC are are making progress on both both the Clarity Act and also the Genius Act.
Robert Swarthout:Mhmm. You know, and one thing I'll mention about this whole, you know, there's no yield to holders of a token of a stable coin. A line of thinking that I've heard there that explains why this is happening. So stable coins are back one for one. It's not fractional banking that you would get in a traditional bank account.
Robert Swarthout:Right. There might be concern that if you could get yield on a stable coin, you you would feel more safe because it's backed one to one. So you would not keep your cash in the bank, and you would use a stable coin. Whether that's true or not, you know, I'm not sure. But but it does have some weight to it, as maybe a reason that it could be being enforced the way it is.
Robert Swarthout:So
Andres Sandate:Yeah. And we've got a headline, you know, that that we did talk about, obviously, coming up here to talk about the IPO circle. But, you know, one that we didn't add in here is just the activity. You mentioned this before we went live around the banks. And one large bank, Bank of America CEO Brian Moynihan, announcing that there's more than a project, right?
Andres Sandate:It sounds like an initiative of players that are pulling together. To me, I'm speculating Clearly, there's no public comment here from him, from Moynihan at Bank of America. But think the banks are taking notice. There's likely going to be a role that they're going to want to play in stablecoin.
Robert Swarthout:Yeah. And and when it comes to crypto, just generally, you know, the banks work on a twenty four hour clock. Their settlement cycles, they settle once a day. Also, they're gonna be in a world that settles instantly. Like, how do they how do these two worlds collide?
Robert Swarthout:They gotta make sure they do it right or they could have major problems. Yep. And especially a big bank like BofA that, I guess, we as a country do not want whether whether you like these banks or not, you just don't want them to have problems because they could have huge cascading effects there.
Andres Sandate:So Yeah. Yeah. Those those systematically important financial institutions, I guess, as as we come to call them. Yeah. I think the the skeptic calls them the too big to fail banks.
Andres Sandate:Yep. Yep. They got caught up in in the GFC with all the bad mortgage paper that they that they traded or held.
Robert Swarthout:Yep. Awesome. Well, we'll move on here. So kind of staying with the SEC a minute here. So Paul Atkins was at the last of their six roundtables that the that the SEC put on about for crypto.
Robert Swarthout:And each one has had a specific topic. But this one, he gave a comment that's saying that he's a big believer that and basically that self custody because that's very important to crypto. But also just the idea that bear assets are something that you couldn't have. They've been trying to they being the system, we'll say it that way, has been trying to kind of make this harder for people to have since 1994, I've learned as part of this process in reading. But it looks like maybe we're turning a corner.
Robert Swarthout:The question is how much of a corner can be turned and how much can be put in place during a four year term. Right? It's, you know, assuming that the Republicans Republicans can kinda keep the momentum here another four years. So
Andres Sandate:Well, yeah, I mean, this kinda goes back to sort of the founding ethos, right, of of crypto. Right? This whole notion of self custody versus and and user, you know, user choice, user freedom. Right? Big departure signaling, you know, a move away from the Gensler SEC era of just kind of general enforcement.
Andres Sandate:And, you know, look, it is a positive sign. I know a lot of industry participants that have been vocal and notable on this topic came out and said that this is a sea change for DeFi, for open source, for staking and all sorts of other crypto digital asset initiatives. So I think it comes down to, yes, this posture could enable innovation. At the same time, the looser and more, I don't want say less regulated, but the more we enable the sort of permissionless open concept, I mean, just because of the fact that we have cyber criminals and we have that element out there, the more unfortunately folks are going to be susceptible potentially if they're not doing the self custody in a smart way, in an institutional kind of way. It could lead to fraud hacks, poor decisions, bad disclosures.
Andres Sandate:I mean, there's just a lot of things they're gonna have to get people are gonna to get educated around.
Robert Swarthout:Yeah. Absolutely. Well, sometimes those topics can be very boring, but right now they seem exciting.
Andres Sandate:Yeah. They are. I mean, custody is a hot one right now.
Robert Swarthout:Yeah. Yeah. Absolutely. Okay. Well, our topic here is Circle IPO this last week.
Robert Swarthout:And, you know, for those that have been listening for a couple episodes, you may have heard us talk about how Ripple was trying to buy them. There was rumored that they offered 5 to 7,000,000,000. And then, even crazy rumor I thought at the time is, oh, they offered 20,000,000,000 and rip and Circle turned them down. Well, obviously, that they didn't get a transaction done and they IPO ed, this last Thursday. They priced the IPO $31 a share.
Robert Swarthout:It opened at $69 and closed over a 100. And even today, it's at a 118. So a good gamble on their negotiating skills there.
Andres Sandate:Yeah. I mean, initial, a lot of, I don't wanna call it hype, but just a lot of enthusiasm. Right? Talked about before we went live, you know, just some of the ETFs that and or funds that are dedicated to focusing or covering or being a proxy for the digital asset space or buying up, the shares. So there's there's obviously support.
Andres Sandate:So I mean, yeah, fantastic opening, for Circle. Obviously, there's got to be a lot of companies crypto that are taking note of this. If an IPO or some type of capital strategic event was on the drawing board for '25, you have to think that they maybe see a window right here where there's crypto investor enthusiasm. And as you've noted, with Ripple and their attempt to, or at least the news that they wanted to buy Circle, I think the comments that Brad Garlinghouse came out with saying that this is bullish for stablecoin legislation when we've been talking about stablecoins here today in the episode is a lot of momentum. We also talked about the fact that the IPO market hasn't had a lot of big notable haven't been a lot of notable IPOs recently, and this has been one of the most successful ones in decades, regardless of industry in terms of performance.
Andres Sandate:So,
Robert Swarthout:yeah,
Andres Sandate:it's it's a when you take it combined with some of the some of the advancements of the legislation, it's it's been a good, you know, few weeks for crypto in in what is normally sometimes a slower period.
Robert Swarthout:Yeah. A 100%. Yep. So this next one maybe is a little click baity, but is so California passes a bill to seize Bitcoin. Okay.
Andres Sandate:Yeah.
Robert Swarthout:We need to unpack this a little bit because this was the headline that I saw. And I'm like, holy crap. of all, you can't just seize it on the blockchain. You you know, it's there's more it's more complicated than that. But what's happening here is they passed a bill that said that after three years of inactivity of Bitcoin being left on an exchange, it can be taken by the state under the unclaimed property law.
Robert Swarthout:Okay. Maybe that makes sense. So now it's not really about attacking the blockchain or anything like that. It's purely like, you know, it's it's not used. But people often buy stuff and just let them sit in their Coinbase account.
Robert Swarthout:There's people that have held stuff for ten years. So, like, what does inactivity mean? There's there's there needs to be a lot of definition around this stuff in my opinion that that that seems to be missing right now.
Andres Sandate:Yeah. I think that there's a long way to go here for this for this bill. I I There's a lot of criticism I could throw out. It undermines the whole notion of self custody. Again, if you're a Californian and you bought it and you're going to hold it in a trust or an account, for example, and your intention is to be a buy and hold, why should the state care?
Andres Sandate:Is my initial thought. And you get these notices every once in while about unclaimed property. You have 38 in an account from a decade ago. I mean, I get those every 10 And this feels a little different. This feels a little bit more proactive in some respects.
Andres Sandate:I haven't candidly done a lot of work on this, this AB ten fifty two.
Robert Swarthout:Yeah.
Andres Sandate:I I'm always curious where these things were born. Like, who sat down and thought of this and said, let's bring let's bring up this this crypto wallet seizure, idea. Yeah. Well, seizure may be not the right word, but, you know, you get my point. Like, this this notion of inactive counts for three years and why three years?
Andres Sandate:You know? So I just have to do more reading on it.
Robert Swarthout:At the end of the day, it's gonna be on a Coinbase. It's gonna be on a Kraken or something like that. So, yes, they the law could be put in place and, you know, if Coinbase wants to do business in California, they just need to follow the law or what whoever it may be. But, like, shouldn't they be the one deciding what inactivity is? Like, if they're fine custodying it, well,
Andres Sandate:why does the state
Robert Swarthout:of California need to care? Yeah. It it it does seem a little bit disjointed. Yeah. But, you know, it it is now headed to the senate in California, so maybe the senate is more level headed.
Robert Swarthout:I have no idea. And I'll I'll leave the politics alone on this one, but
Andres Sandate:it'll Yes.
Robert Swarthout:Pop and watch this one.
Andres Sandate:So. Yeah. Something to watch. I mean, the question is, you know, does it inspire or does it, you know, lead, like we saw with folks wanting to set up, you know, Bitcoin reserves. Right?
Andres Sandate:Six months ago, it seemed like there was this whole push by states to go and set up Bitcoin reserves. You know, we're not hearing much about that anymore, right? It seems like, if anything, these things sometimes lead to a domino. Somebody gets a kind of a zany, wacky idea from a self interested party and decides to go push, it feels like an agenda, and it turns into a bill. Does that bill ever become law?
Andres Sandate:Who knows? We'll report back, I think, if there's anything here.
Robert Swarthout:Yep. Absolutely. So next topic is the SEC's introduces a framework to clarify crypto tokens whether they're securities or not. And this is the early part of this the rules making stage. This is not actually like being enforced yet.
Robert Swarthout:But the idea is characteristics that may trigger something to be considered as security. If it's an ICO that is profit centric marketing, k, fine. That's probably pretty obvious. If it's a utility token with financial incentives. So I think that that may be a utility token that has a yield attached to it is another way that I am kinda reading that.
Robert Swarthout:I would like to see more definition around that because there's a lot of definition of yield. Is staking considered yield? That's just really securing a network. My guess is no because they've talked about staking not being a security or a security act. And the thing, we profit sharing governance tokens.
Robert Swarthout:That makes total sense. That's no different than obviously like a dividend if you wanna use more traditionally language and and just legal precedence for other court rulings. So some tokens are part of a DAO, and a DAO could be considered governance or it could be, considered ownership of something else. So I don't know. It's it's it's progress here.
Robert Swarthout:I mean, we we were begging for this kind of thing, for four years, and now we we almost get it on a weekly basis. So
Andres Sandate:Right. Yeah. I mean, I I I did a little digging here on this one to try to put it in more, I guess, digestible terms. I think easily when you start reading press releases and news from these regulators, it's easy to get lost in the weeds real quickly. To me, this kind of comes down to function over form, like what you just said.
Andres Sandate:What's the purpose behind the project or what's the purpose behind needing the token? And maybe it's a way to preempt and sort of head off some of the uncertainty that comes when these developers and companies are thinking about these projects, right? So that they can remove that shroud or that cloud of uncertainty in terms of enforcement or potential legal action that could come. I think it helps that developer early on that's kind of thinking through the design aspects. There's a reason in most contracts you read there's things like safe harbors, right?
Andres Sandate:And there's things that spell out for both parties, like what are exempt, what's the terminology, what are safe harbors, what are exemptions? Mean, that all through kind of case law has been developed over time, just haven't had that in crypto. And so I think for me, this allows, the beginnings of that conversation and hopefully that framework from the SEC around go you can go and do this, but you can't do that.
Robert Swarthout:Mhmm. Yeah. Absolutely. Cool. So our next topic is hidden road gains membership status with the DTCC.
Robert Swarthout:So we talked about the DTCC. The last episode of the one prior, they were talking about tokenization at that point. This is interesting to me because Ripple recently announced their purchasing Hidden Road that has not closed yet, but they're working through that at this point. The membership part gets basically elevates them to an extra higher level is my understanding. And the DTCC is settling $2,000,000,000,000 on a daily basis.
Robert Swarthout:That is a lot of volume. And to think that potentially with Ripple's plans with Hidden Road wanting to settle a lot of the XRP ledger, not saying this is all coming to the XRP ledger, but could be, some of it at least. Yeah.
Andres Sandate:It's just a partnership. Yeah. Yeah. Yeah. It gives them access to, you know, most a lot of treasury markets use the DTCC for settlement.
Andres Sandate:So obviously, this integration between, you know, like a global clearinghouse like DTCC and and and hidden road, which wants to put in place DeFi protocols to get more instant settlement, etcetera. Certainly big ramifications there. And then just this ongoing, bigger, I guess, discussion between us and hopefully those out there that really care is this convergence of traditional and decentralized finance, right, or TradFi and what we are talking about here is crypto and how these two ecosystems are continually beginning to overlap. Yeah, there's so much legacy plumbing and legacy operational. This is how it's kind of always been done with mental improvements.
Robert Swarthout:Right.
Andres Sandate:This is a watershed moment. Right. In terms of there's pretty dramatic shifts and changes that are going to take place or you got to think over the next year or two.
Robert Swarthout:Yeah. You know, you just said something that made me think, and this is more of a question I'm gonna pose. So we often refer to TradFi and crypto or DeFi, you know, these two worlds colliding at some level. Do you think that this ends up being TradFi absorbs this technology into the stays referred to as TradFi? Is there gonna be a new name that comes along?
Robert Swarthout:Because, you know, they're obviously not gonna be like, oh, TradFi is gone. It's only DeFi anymore. So I don't know. This is kind of a
Andres Sandate:Yeah. I I think much you know, maybe much to the chagrin of purists who wanna live in a utopia of open protocols and 100% self custody. I just there's too many dollars at stake. There's too much there's too many stakeholders that have powerful interests to think that TradFi won't be a big player here. I think they end up calling it what they want, you know?
Andres Sandate:And they used to be, you know, we used to use the term back in 02/1011, like the too big to fail, and we used that term moral hazard to mean these banks that took tons of risks, now we just say they're Ziffies. What the hell is a Ziffy? Well, somebody came up with the term, it's a systematically important financial institution. So now banks call that, that's a moniker. They want to be one of them.
Andres Sandate:Right? I mean, do and they don't. Right? So to me, that's just a way of saying, can't fail. The bank will always back us up, or The government, Right.
Andres Sandate:People will always back us up. I I think that's a way of saying the big powerful financial stakeholders and players are gonna decide what we ultimately call this. Innovative traditional financial institution.
Robert Swarthout:There you go. That's good. Cool. Well, our last topic here, is probably a quick one. So we've talked a lot about, over many episodes, companies buying Bitcoin and putting it on their balance sheet.
Andres Sandate:Yeah.
Robert Swarthout:They have all their different reasons, but we've only talked about Bitcoin. We started to see some, shoots of companies being like, no, we're not touching Bitcoin. It's gonna be something else, which raises other questions is like, okay, Bitcoin was the whole digital goal. That was their marketing angle for it. So we've seen on it.
Robert Swarthout:And I only pulled two examples. There's others. One for Ethereum and one for XRP, two separate companies. Webus is a AI driving company or vehicle driving company in China that they're buying $300,000,000 worth of XRP. And there is a SharpLink Gaming.
Robert Swarthout:I believe they're based here in The United States, bought a billion dollars of Ethereum for their treasury. So these seem more speculative. You you can try to, like, find this nuance when you're talking about Bitcoin. Like, it's the gold it's digital gold. I'm not really speculating on the price.
Robert Swarthout:Everybody's speculating price, to be very clear. But it's just interesting to kinda see these other ones have to pop up that are not marketed as digital gold. So
Andres Sandate:Yeah. I mean, there's a there's three or four things that I kinda wrote down to to mention here beyond the, you know, the the treasury angle of, you know, at the beginning of the year, was kind of really paying attention to these corporate treasuries and were they going to buy Bitcoin or other digital assets. So I think there's a couple of thoughts. You know, one is, you know, are corporate treasuries starting to look at utility? That's to me a trend because there's just clearly more utility for XRP and ETH and in this case- Everything but Bitcoin.
Andres Sandate:I think from the standpoint of just utility, that's a trend, I guess, to pay attention to. You talked about the allocations and some of the names, right? So it's not a lot in the grand scheme of things of corporate treasury assets, but I think the size and scope of those allocations is starting to be a trend. Historically, treasuries have relied heavily on kind of the money market, the treasuries, highly, highly liquid assets. So now you know, the notion of getting into some of these or just diversifying, like even a small percentage away into things that the market may perceive as illiquid is another trend to kind of pay attention to.
Andres Sandate:Because if they start adopting, they might that might be a signal or a shoot, to use your terminology, that there is more liquidity there than people are giving those tokens credit for. Because if you're a corporate treasury, again, rules and governance and all this is different country by country. But if you start seeing the G8 type markets where these treasuries are saying this stuff passes all of our tests from the standpoint of liquid, etcetera. That's got to be looked at by the market a, you would think, as a positive development, or at least if, for me, a trend you're paying attention to. Because I think that's one of the big question marks about some of these tokens is, is there liquidity?
Andres Sandate:Right? And is everybody talking their own book? And is everybody, you know, pumping and dumping, you know, if you will? So there's a lot of kind of institutional, I think, people paying attention here and something I think certainly a trend to, you know, three or four trends to watch, you know, beyond just the diversification headline.
Robert Swarthout:Yep. Awesome. Well, I think that's a wrap. So thanks for joining us on this episode of the Weekly Crypto Check-in. To stay updated on future episodes, you can find us and any podcast player by searching T Time Crypto Capital or the Weekly Crypto Check-in.
Robert Swarthout:Take care.
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