Ep 39 - July 23, 2025 - GENIUS act is now law
Welcome to another episode of the weekly crypto check-in recorded on 07/23/2025. I'm your host, Robert Swartout, and I'm joined by my cohost Andres Sedate. How's it going, Andres?
Andres Sandate:Good, Robert. It's good to see you. I'm taking this call this week or this recording this week on location. This is, guess you could say unofficially alternatives week in Atlanta. As you know, I serve as the president of the Southeastern Alternative Funds Association.
Andres Sandate:So we have a couple of lunches and some events. So I'm in Buckhead today at a at a lunch. But it's good to see you. Hope you're good. A lot to talk about.
Andres Sandate:Yeah.
Robert Swarthout:And it's kinda crazy. We recorded literally a week ago today, and we didn't have this much news after not recording for three weeks. But in the last week, it has been fast and heavy. So let's just dive in here so we don't turn this into an hour long episode. So this first one, a bit of a celebration moment for crypto as an industry.
Robert Swarthout:The Genius Act was signed into law by president Trump this last Friday mid afternoon. And, you know, it's a lighthearted affair. And, you know, so now the stablecoin bill, the Genius Act is now law of the land.
Andres Sandate:Yeah. I mean, I'm curious, you know, as we roll through some of these topics, this was the first one by design that we selected to talk about. This was, you know, obviously years in the making for the industry. We have another bill that we're gonna talk about next, the Clarity Act. But Mhmm.
Andres Sandate:I guess, give me your take. You know, we're a couple days removed from the passage and the signing. What's your take now that maybe the dust is settling for the industry and overall, like, the yeah. It's the the the the feeling you've gotten being an insider as this thing came together through multiple minutes.
Robert Swarthout:Yeah. You know, it it took a long time. Right? But once it started moving, it moved quick. They they didn't really start working on this thing until mid spring, and now it's in in the books at this point.
Robert Swarthout:You know, that's the serious side of it. The the joking side of it was during the ceremony where when Trump is signing it. You know, the the act is called the genius act. He's like, they named it after me. I really appreciate that.
Robert Swarthout:You know, Trump being Trump. But, you know, jokes aside, you know, I it's it's it's a small building block. The industry is really waiting waiting for the clarity act. That's the one that really matters. If anything, the crypto part the part of crypto that does more banking, traditional banking type stuff, this was a big deal, the Genius Act.
Robert Swarthout:But the clarity act is, again, our next topic, but it's also the one that will be, the most important because it puts guardrails in place for literally the rest of crypto or or or business or or it has ambitions too. I was reading and we can kinda segue into it. So the Clarity Act, again, the the regulations to the rest of crypto, was reading destroyed before we started recording, how the draft bill is only 35 pages, which I I think in, in DC terms is basically like a a short brief. And it it it leaves a lot to be desired right now. I think it's a starting point for conversation is is what I've been reading more so than actually, like, it's ready to be voted on by any sort of measure.
Robert Swarthout:So but we Yeah.
Andres Sandate:So as you yeah. We we you know, on the on the Clarity Act, the more the the fundamental bill of the two that the industry is excited about and has the most call sweeping and most impactful, know, most impact on the on the industry's ability to sort of take the next step, if you will. The the vote coming out of the house, though, was, you know, if it's any indication, if, you know, the legislators on Capitol Hill have gotten the message that at least the American public or if nothing else, the lobby, the crypto lobby is is pretty influential. It it was not a razor thin vote, right, coming out of the house. I mean, was it was two sixty, two eighty or more Yeah.
Andres Sandate:In favor of the Clarity Act. So a lot of momentum as it moves into the senate.
Robert Swarthout:Yeah. The so the clarity act, yeah, it was February to January. So largely by what we said. Yeah. Yeah.
Robert Swarthout:And the genius act only marginally a little bit more. It was three zero seven to one twenty two. So to kind of, I guess, zoom out a little bit and kind of help the listener understand. So the senate first voted on the Genius Act, then it went to the house. The house approved it, then the president signed it.
Robert Swarthout:Now the house voted on the Genius Act, the Clarity Act, and a third bill basically. I forget the name of it, but it's like basically an anti CBDC bill. It passed all three of those. So now the g Clarity Act and the anti CBDC bill go back to the senate for them to do their portion of it, assuming they pass one or both of those, then that would be on, obviously, to the president point. I think with a little bit of reconciliation in the process if needed.
Robert Swarthout:So, you know, we're making progress. From a timeline perspective, I've seen that, you know, obviously, congress is. Just so maybe markup that happens in September, potentially a vote on the Clarity Act in the senate by late September. So we maybe just be a couple quick months here from having some rules in place for all of crypto, which just seems odd. We've we've been wanting this for so long and never felt like it was gonna come and it could just be right around the corner.
Robert Swarthout:So
Andres Sandate:Yeah. Yeah. It's really remarkable when you like you said, zoom out the progress. It didn't appear we were going to get this far at some point earlier in the year. I, you know, never lost hope, but it felt like momentum coming out of the election in November had really petered out.
Andres Sandate:And now it it feels like the momentum is back. And and obviously, crypto has you know, if if you depending on what, you know, tokens you follow and what cryptos, you know, you're interested in, like, it it's performed. So there's some tailwinds there and some sentiments. So
Robert Swarthout:Exactly.
Andres Sandate:We'll have more updates, in the next several shows for sure as the Clarity Act makes its way through through the senate and back and forth. This third one, though, is also, you know, something to take note of that the SEC approved Bitwise's 10 crypto ETF. The Bitwise 10, I guess, as you call it.
Robert Swarthout:Yeah. And it this was a trust that was, you know, for credit investors. Now they're allowing it to convert into an ETF for all to have access to. And it's not all exactly the top 10 tokens. There's the biggest notable one missing is the Binance coin.
Robert Swarthout:I think it's understandable why that was has been missing for a long period of time. I wouldn't be surprised if as they do quote unquote rebalancing this thing over time that Binance ends up making it in and, one of these gets the boot if they're gonna keep it at 10. This is the first one that you're gonna see. I I bet you there's dozens of these things a couple years from now. Right?
Robert Swarthout:They're gonna be the S and P of 500 of crypto, and then there's gonna be, I guess, more niche specific ones. But it's it's a big day to kinda see this because this allows the average investor not to have to pick and choose winners. Right? Like, you start to get to be a little bit more of a passive investor much like you might be with your S and P five hundred ETF you might hold in
Andres Sandate:your Yeah. And we, know, we talked about on the last show the Vanguard because of its size and the fact that they are largely an index manager, one of the biggest owners of MicroStrategy or now Strategy. So, yeah, I think you're absolutely right. We're going see a lot more product development around index products whether it's a retail investor that just wants to get exposure in a more simplified way or it's institutions that are looking for diversification. You know, Bitwise was early on in creating this this Bitwise 10.
Andres Sandate:Remember meeting with Matt Hogan in New York, and as a accredited investor RIA, we, you know, we're kind of explaining the strategy. I thought one day, and this was three years ago or so, that that seems like it's gonna be in a in a retail friendly ETF wrapper, and here we are. So Yeah. Pretty pretty interesting how it's come together.
Robert Swarthout:Yeah. And, you know, what I think is interesting about this crypto index is for the average RAA out there that wants to start offering crypto to their clients as part of their portfolio mix, not having to just buy a Bitcoin or just buy Ethereum and do rebalancing and figuring out the ratios there, they can just kind of farm all that work out to Bitwise in this case or whatever ETF index comes along and that client gets exposure. So I think, obviously, this gives exposure to other assets that currently don't even have ETFs is spot at ETFs, which is interesting. So I'd imagine we start to see a bunch of those here in the next couple months would be my guess. So Yeah.
Robert Swarthout:I guess moving on. The next ones is about Coinbase and PNC, the bank. So I believe PNC is considered super regional or at least a regional. It's one of those two, but most listeners probably have heard that name before. They have a strategic partnership with Coinbase.
Robert Swarthout:So they will be providing banking services to Coinbase. And the other direction, PNC customers will soon have access to within their brokerage accounts to purchase crypto directly. So bit Coinbase does have, like, a white label product that's what's gonna be used here. This again, this is another thing. Seven I guess it's almost eight months now.
Robert Swarthout:Eight months ago, this was not gonna happen. And then all of sudden you have these kind of cool partnerships happening. Big day in crypto land.
Andres Sandate:Yeah. No. I mean, yeah, PNC is is is by all stretches a super regional. I mean, they're they I don't know if they fall under the SIFI designation of a systematically important financial institution, but I wouldn't be surprised if they do. No offense to to PNC, but they're they're a large, formerly East Coast bank that's grown substantially since the the two thousand eight financial crisis as the number of banks in the country has has shrunk.
Andres Sandate:These bigger regional, now super regional, know, as I call money center banks or national banks have have grown in terms of asset size for them to move in to, you know, to put really a pole position. I don't know if this will be one of multiple partnerships that Coinbase is is is gonna strike with traditional banks or traditional financial institutions. But, yeah, you have to think that the the cross selling and the data sharing, as you mentioned earlier when we were prepping between Coinbase and and a more traditional retail and some even ultra high net worth customers and everything in between, you know, pretty substantial. I feel like individuals are about to get much more educated on crypto products and and services here in the next couple of years.
Robert Swarthout:Via the via the marketing channel. Right.
Andres Sandate:That's right. Yeah. But we can't stop with just PNC. Our next one is is I know you have always found this one whenever these guys are in the in the headlines. JPMorgan, in this case, pretty interesting given some of the comments that, you know, their chairman and CEO, Jamie Dimon, really was not a fan of crypto, let's just say that.
Andres Sandate:Early days.
Robert Swarthout:Early days, but even now, I mean, we're with what we're about to share, he hasn't said that he's for crypto. I mean, obviously, he at some level he is because what I'm about to share, but, like, he hasn't said a positive statement. So the news here is soon JPMorgan clients will be able to pledge their Bitcoin and Ethereum and get borrow money against it. So up until this point in the admittedly, even till today, again, because I haven't heard a positive comment from Jamie, that it's basically a bunch of fraud. It's the it's the people doing nefarious things, all those things.
Robert Swarthout:But now they found a way to make money off of it, it's okay. And I guess we should back up. JPMorgan is I believe part of the ETFs that are happening. They're not a sponsor, but I believe that they are part of maybe an authorized participant in some cases. They
Andres Sandate:They help make the market effectively. Yeah. They provide they provide lubricant oil, whatever you wanna call it, liquidity to the that's that's the analogy I always use liquidity to ensure proper trading and that there's there's supply and demand are equalized. Yeah. I mean, look, I you you like to say this, so it it's it's best, I think, and most appropriate in this case, you know, watch what they do, not what they say.
Andres Sandate:And in this case, you know, we're we're about to see JPMorgan, and we, you know, saw in the prior headline with PNC, these are top you know, two two of the largest banks in the country. We're we're about to see a lot more of these traditional financial institutions, like furthering not getting into because they're already in it, but furthering their reach into crypto, which you just, like you said, you would not have seen a year ago. And so I think the floodgates are gonna open.
Robert Swarthout:Yep. Well, so our next topic is the SEC has been talking about they might update how KYC gets done and the regulations around that. And the the cool part to me here is not that we're talking about KYC. KYC, I think is largely a discriminatory framework. It does need revisited.
Robert Swarthout:But the way that they're thinking about helping solve some of the problems is using crypto tools. In this case, zero knowledge proofs. This is getting a little geeky here, but we can talk through it real quick. So what is a zero knowledge proof? Right now, if you want to prove that you live in Georgia and you are 18 years old, you hand somebody your driver's license or you hand them your passport.
Robert Swarthout:You send them a picture or whatever. So they all of a sudden they know your home address, they know your weight, they know your height, they know some other stuff that admittedly they don't need to know. And you can make the argument that if they just need to know you're 18, they don't really need to know your age outside of are you 18 or not? Yes or no. So zero knowledge proofs are basically an identity that would be on a blockchain.
Robert Swarthout:It would be verified. And then say, you wanna open a PNC account, they could come along and be like, is Andres 18 years old? And the system would return yes or no. Not that you're, you know, 40 years old. Or here's your home address.
Robert Swarthout:Here's all the other information. I think it's a great way to kind of bridge the gap of helping keep nefarious people out of the systems, but also not overexpose information for the good guys. So pretty cool stuff.
Andres Sandate:Yeah. I mean, yeah, the SEC is is is clearly looking, you know, to modernize tools. I'm I'm curious if if, you know, Atkinson was was kind of behind this clearly was a project that probably was in the queue of projects that, you know, could easily be pursued depending on who the the chair role went to and seems like there's if you look ahead a few a few bullets to his comments Yeah. Around the asset class, like, it just, you know, further evidence that he's very pro crypto, and we're gonna see more of this from him and their that leadership in the in the years ahead.
Robert Swarthout:Absolutely. This next one, like, they've had years to figure this out. So the American Bankers Association has written a letter, I believe, to the Fed or whoever does banking licenses. It's either the Fed or the OCC. And the, they're urging, them to pause the license approvals for Circle and Ripple because they both have applied to them separately.
Robert Swarthout:Again, both crypto companies. This feels like a headline that we might have gotten last year. To see it happening this time, this year seems a little bit odd. It'll be interesting to see how this shakes out. Like, do they do they get a pause, or what happens?
Robert Swarthout:Again, they've had years to figure out that blockchain's coming. Now that blockchain companies want to be have a banking license is, in my opinion, not reason for the the, the incumbents to kinda get more time to figure it out. They've had that time.
Andres Sandate:Yeah. Yeah. It's I I'm I'm sure this isn't the first time, that, you know, a competitive threat has been met with a tactic like this to the banking industry. You have to think that, you know, if you look back to how fintech and payments and other things have moved in, it it would seem that the better play would be what PNC is doing, which is, like, starting to think about partnerships and starting to think about ways that we could align because there's no I just don't see the the, you know, the community regional, and even all the way up to the large traditional banks, you know, the four big ones, the wells, the cities, the BofAs. I I don't see them opening up the, you know, branches at the scale that they used to open up.
Andres Sandate:I don't see them doing things in their traditional model. They've pulled back dramatically, on the lending side and really migrated up market to the largest enterprise customers and, you know, clearly are still in the market for deposits. But their their whole business model is and we do need banks. We do need a healthy banking system. But, yeah, I I I think this is sort of a maybe move of desperation more than anything else because I I don't I don't see how we don't see the likes of Circle and Ripple and others, you know, as long as they go through the process legitimately and meet the requirements and see how these companies are singled out for, you know, a bank license.
Andres Sandate:I if I'm there on their board, I'm thinking strategy and partnership more so than I'm thinking, you know, let's, as an industry, try to keep them out of the sandbox.
Robert Swarthout:Right. Because I don't know. It seems like you're poking the not to say poking the bear, but it it feels like that analogy. Like, you're if anything, you're irritating the guys that wanna come in and try to do something. So maybe you're giving them more fuel to want to battle you.
Robert Swarthout:So I know we'll we'll find out here, I would imagine, next month or so whether there's a pause or what happens. Anyways, so our next topic, a quick thing on the Clarity Act. So basically, how they're gonna decide who the regulators are of a token. I'm glad that they are at least appearing to head down a path that will be clear to help answer that. So if a blockchain is decentralized, it's a commodity, the CFTC regulates it, period.
Robert Swarthout:No other questions. What what needs to happen is a definition around what decentralized means. It's a very ambiguous term. You're gonna get some arguments over that, but I think that they they can work through that and come up with a concise answer. If it is not a commodity, then it's a security.
Robert Swarthout:The SEC regulates it. So it's kind of like the the SEC is not playing the first catch all even though it's the second catch all in this case. So
Andres Sandate:Yeah. And, I mean, it does make things much more simple at the end of the day, and that has been lacking in this in this industry for a long time. So I'm a I'm a fan. I'm a fan. Yeah.
Robert Swarthout:So I hope to I would imagine we don't hear much more about this until September when we start to see more meat put in that bill because right now, it sounds like it's more bullet points than anything else. So, hopefully, we can maintain some conciseness. Maybe a very great to have a concise answer for decentralization and then go from there. So jumping back to Paul Atkins. So he was on CNBC the other day and were talking about wide ranging things.
Robert Swarthout:They asked him, is Ethereum a security? He said, Ethereum is not a security. That was one answer that our friend from the previous administration could not answer, and he refused to, and he would give you every other answer. But in this case, the part that we're, I guess, highlighting here is not only did he answer a question, he also even went as far as to say, referring to the crypto rally that we're currently in, the rally looks set to continue. So, like, he's almost a bit cheerleading here.
Robert Swarthout:And to do it on TV, in the position he's in was surprising.
Andres Sandate:Right. Yeah. You're not you're not normally gonna see that type of candor from a appointed official. I mean, it's almost. Right?
Robert Swarthout:Right. I mean, outside of Trump saying the market goes up because he talks, this is this is kind of along that same vein a little bit. But, yes, it does feel Cramer ish for sure. So
Andres Sandate:Yeah. We've kind of moved past the days, though, I think of of, you know, having somebody come on who we all sit there, you know, on our hands and hope that we get a little bit of guidance and direction only to be, you know, frustrated, I guess, was the word, you know, over the last several years and disappointed that we couldn't get more straightforward answers from, you know, from Gensler. And it felt like we were just always avoiding confronting the more important aspects of the industry and took the, you know, regulation through enforcement approach would come on TV only when they were announcing, you know, a a case or an investigation or something not. Hey. We're gonna come on and talk about how we are, trying to promote innovation, promote, you know, market participation, promote, you know, all the things I think that the industry is just you know, serious players in the industry have asked for for a long time.
Andres Sandate:So Mhmm. Yeah. You know, he gets his time, Atkins, to, you know, to to hype, I guess, the the industry. I think the you know, a lot of people have opinions about the rally. You you probably have opinions about about the rally we that we are in.
Andres Sandate:But if if you're in his position, you have to think, okay. There there's probably a window through which we can get a lot of this legislation passed. It's harder to do coming on the heels of a FDX. It's harder to do on the heels of a of a of a, you know, a downturn. Now you have a little bit of your wind at your back and, you know, he's being a cheerleader.
Robert Swarthout:Yeah. I mean, at a minimum, and this might be the maximum, they have until the midterms. Right? Like, when all a sudden, either mix up and congress can change and make legislation a lot harder. So, anyways, our next topic is about some IPOs, which the SEC does certainly have a hand in.
Robert Swarthout:So they they're the ones that obviously review these applications. And literally in the last week, I've had two more companies, crypto related companies file for IPOs. The first one being BitGo. So they're a big custodian. They are a custodian for a few of the ETFs and a lot of institutional type clients.
Robert Swarthout:That's not something that I believe as a consumer that you would interact with directly. And the second one is a smaller firm, but it's a crypto company called Bullish. It's backed by Peter Thiel's VC company, but they have also filed with the SEC for the IPO process. So things that the IPO market is definitely heating up. And crypto, if anything, is revitalizing it for Wall Street, bankers because I'm sure they're liking the fees.
Robert Swarthout:They're getting off all this. So
Andres Sandate:Yeah. I mean, it's been a it's been a a pretty tough, you know, few years, you know, for for those that were looking to, you know, access the IPO market. If you were a, you know, private equity investor, for example, you know, you could count on there being more m and a activity. The IPO market was a potential, you know, path to liquidity. And, you know, we saw a lot of stakes in private equity portfolios that were sold.
Andres Sandate:You know, notably, if you look at some of the Ivy Leagues like Harvard, they've been in the news a lot the last six months, you know, selling some of the the private equity portfolio. All to say that the capital markets, you know, it's about timing. And is there demand? And right now, the, you know, market seemingly is there. There's more demand institutionally and retail for, for crypto related services, companies, etcetera.
Andres Sandate:So if you're a banker, you'd have to have your head in the sand. If you're a technology banker, not to be advising your clients to be at least doing the filing. Doesn't mean you're gonna ultimately go public, but at least start the process or continue the process so that if the week or two or three weeks, you know, present itself when you can, you know, execute, you know, you you you try to do that. And so that's what's going on here.
Robert Swarthout:Yep. Makes sense. So our last topic, this is just more for entertainment purposes. This obviously is not happening, least in this universe. But in a parallel universe, this would be the comparison had MicroStrategy chosen XRP versus Bitcoin for all their purchases.
Robert Swarthout:So somebody went back and did the analysis. For every dollar they invest in Bitcoin, had they bought XRP in that date, what would happen? And as of this was late last week. So this math is still probably pretty correct. The Bitcoin holdings for MicroStrategy were valued around $70,000,000,000.
Robert Swarthout:I think they're like maybe $72,000,000,000. Had they bought XRP with that same number of dollars over time, it would be worth, I think, a 125, a $130,000,000,000. So a huge delta. You know, again, this is all a bunch of jokes here. There's nothing really happening.
Robert Swarthout:It just goes to show that maybe there's better investments out there than just straight Bitcoin all the time, 100% of your portfolio. So
Andres Sandate:Yeah. I mean, it's it's worth it's worth seeing the counterpoint to the, you know, the the Bitcoin maximalist approach and knowing that there's just there's a lot more altcoins out there. XRP is just one. And, you know, we're not here giving advice. That's not the point of the show, and it's not what we do.
Andres Sandate:It's just Right. There are a lot of people still who, when you ask them about crypto, they, you know, will admit, like, oh, I was in that once. And Mhmm. You get to know what they were in. It was usually just Bitcoin.
Andres Sandate:And Point. Normally, it's the end of the conversation. You know? It's like Yeah. They're not in it anymore because they feel like they missed it.
Andres Sandate:And I feel like the more narrative and the more story and the more ultimately education and awareness they have of the space, the more, you know, things that change, like the SEC approving the Bitwise ten crypto ETF and these laws getting passed to bring it full circle. I again, I go back to, like, I think retail investors, individual investors are about to, you know, get a lot more marketing messages about crypto, digital assets, etcetera. For some, it may feel like deja vu, but, it's just that there's just a lot more out there
Robert Swarthout:as you
Andres Sandate:get exposed than than just Bitcoin.
Robert Swarthout:Yeah. And I think to your point, you know, the person that has done crypto one time is largely Bitcoin. They probably are buying it at one of the previous tops. They lost money on it. So that's been their experience in crypto.
Robert Swarthout:Just, you know, with anything, it's about timing in life, but, or just holding over the long term and staying interested. But, yeah, I I it's, we're early days still, but, I guess we're slightly less early days than we were when we started this podcast over a year ago. So, anyways, I think that's a wrap today. So thanks for joining us on this episode of the weekly crypto check-in. To stay updated on future episodes, you can find in a us in any podcast player by searching T Time Crypto Capital or the weekly crypto check-in.
Robert Swarthout:Take care.
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