Excerpt
As reported by FinTelegram, the U.S. Senate’s 68-30 passage of the GENIUS Act—the first federal rule-set for dollar-backed stablecoins—sent Coinbase (COIN) up as much as 16% and newly-listed Circle Internet Group (CRCL) up 34%. The rally signals Wall Street’s hunger for crypto-regulated clarity, but it also exposes both stocks to a looming squeeze on their plush interest-income stream if (or when) the Fed cuts rates.
5 Key Points
- Double-Digit Pops: Coinbase closed +16.3% at $295; Circle finished +33.8% at $199.59 (Source: Cointelegraph.com).
- Bill Mechanics: GENIUS Act forces a 1-for-1 reserve in cash or sub-3-month Treasurys and green-lights stablecoin issuance by banks and fintechs (Source: investopedia.com).
- Disruption Warning: Visa and Mastercard shed ~5% on fears that on-chain dollars will bypass card rails (Source: investopedia.com).
- Treasury-Market Ripple: Citi projects stablecoins could absorb $1 tn in T-bills by 2030, lowering short-end yields but raising run-risk volatility, per BIS. (Source: investopedia.com).
- Coinbase’s Hidden Dependency: COIN pockets 50% of Circle’s USDC interest revenue—$297 m last quarter—making both firms highly rate-sensitive. (Source: cointelegraph.com)
Short Narrative (Core Facts)
On June 18, 2025 the Senate approved the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. The bill imposes strict reserve, AML/KYC, and audit rules on issuers while explicitly authorizing banks and licensed non-banks to mint U.S. dollar stablecoins. Within minutes of the vote, Coinbase—USDC’s distribution partner—and Circle—the token’s issuer—spiked to the top of the tape, outpacing every S&P 500 component and dwarfing IPO-week gains. The legislation now heads to the House, where a competing STABLE Act is in committee.
Extended Analysis
Regulatory Lift vs. Compliance Drag. Clear federal rules slash existential risk discounts that once weighed on crypto equities. Yet the mandate for audited, 24-hour-liquidity reserves will crimp spread-gaming models and raise capital costs, especially for non-bank fintechs chasing Coinbase/Circle’s moat.
Interest-Rate Cliff. Both firms monetize idle USDC cash via overnight repos and T-bill ladders. With the Fed still penciling in two cuts for Q4—and the GENIUS Act barring >90-day paper—the juicy carry that fueled COIN/CRCL’s last four quarters could halve within a year.
Payment-Network Fallout. Stablecoins settle near-instantaneously at a fraction of interchange fees. Card networks’ sell-off underscores a structural threat to their $100 bn+ fee pool. Expect lobbying ramp-ups and potential House amendments aimed at latency, fraud-liability, or wallet-custody safeguards.
Macro-Market Knocks. BIS warns that fire-sale dynamics during a stablecoin run could yank hundreds of billions of T-bills into forced liquidation, spiking short-end yields and disabling the Fed’s rate-control levers—an irony for an act pitched as “innovation.”
Investment Implications
| Opportunity | Risk |
|---|---|
| First-mover equity stakes in USDC at scale; potential wallet fees, tokenized-equity rails, and custody mandates baked into GENIUS Act. | Compressed net-interest margins when Fed eases; heavy compliance spend; House revisions could cap non-bank issuance or hike capital buffers. |
| Possible migration of corporate treasuries to on-chain cash, boosting USDC float. | Antitrust scrutiny if Coinbase/Circle tandem dominates U.S. stablecoin flow; whistleblower risk if reserves or audits fail new thresholds. |
| Short-selling setups in legacy payment rails if House aligns with Senate text. | Valuation froth: CRCL has gained >540% since its June 5 IPO—ripe for mean-reversion once euphoria fades. omniekonomi.se |
Recommendation / Warning
FinTelegram Take:
Go long regulatory clarity, not hype. Trim into strength above COIN $300 / CRCL $200 and rotate proceeds into option-protected pairs: long COIN vs. short card networks until House language crystallizes. Whistleblowers should scrutinize reserve attestations—any slip could flip today’s euphoria into a liquidity run.
