The priorities on the Hill are ass backwards right now.
I was on BlazeTV last month discussing bitcoin in the context of the US government and their legislative priorities as it pertains to the industry. At the time, I reiterated what I knew to be the consensus from the industry, which was that the House and the Senate were focused on passing a stablecoin bill, mainly the Stable Act or the Genius Act, and a market structure bill.
The stablecoin bill would create a regulatory framework that would give more clarity to stablecoin issuers. There are many questions about who can issue stablecoins, what their reserves need to look like, and what markets they can serve. However, there is also a regulatory moat component to this where some stablecoin issuers, like Circle, are attempting to cut Tether out of the equation because they're jealous of the success that Tether has had internationally. Tether currently has a $147 billion market cap, while Circle only has a $62 billion market cap.
The market structure bill is focused on making it clear distinction between what is a security and what is a commodity in the eyes of government regulators. In my mind, the market structure bill is more focused on making it easier for crypto VCs to dump liquid tokens on retail with some regulatory air cover.
It has become abundantly clear that the last priority is the Strategic Bitcoin Reserve bill, which has become a distant third in the eyes of the House and Senate. The consensus is that the House, the Senate and the Executive branch want to focus on the stablecoin and market structure bills first and then have conversations about the bitcoin strategic reserve. This is the wrong order of operations. The Strategic Bitcoin Reserve should be a much higher priority, the highest priority. The market for stablecoins and altcoins is pretty well established.
Stablecoins have product market fit and the way they've been implemented globally works for the free market. This is evident by the mutli-hundred billion dollar market cap they've amassed. There may be some questions from DC about who's using Tether and how they're using Tether, but I think it's clear the market is demanding Tether globally. And if the US were to pass a stablecoin bill that would give US stablecoin issuers favor over Tether, I think it would be a Pyrrhic victory. I don't think Circle or any other US-centric stablecoin issuer is going to find the customer base that Tether has globally. I think those Tether users, if they were forced to pick an alternative to Tether due to some regulatory crackdown here in the US would not flock to Circle or other US-centric issuers. Maybe they'd flock to Binance or, worse yet, they'd flock to a BRICS-centric digital stablecoin.
Paolo Ardoino, the CEO of Tether, was in Washington DC a couple months ago, explaining to US regulators that Tether is the only operator on the ground in emerging markets putting USD stablecoins into end users' hands. To think that by creating a regulatory structure that favors Circle and others over Tether would lead to Circle acquiring those users is completely idiotic.
When it comes to market structure, like I said, it's already been solved. The President of the United States has a meme coin out there and is inviting the largest holders of that meme coin to dinners. It's pretty clear, to me at least, that we live in the era of "go do what you want with these crypto tokens". And with that in mind, I don't think we need to prioritize stablecoins and market structure legislation. Those two problems have been solved pretty well by the free market. Yes, those who are issuing stablecoins and other tokens may want more long-term regulatory protections and clarity, but the marginal benefit of that framework and clarity is de minimis in my mind.
If we're thinking about legislation that could have long-lasting impact on the quality of life of American citizens and bold action that could set the United States on a path to dominate the 21st century and beyond, a bitcoin strategic reserve is way more profound than passing a stablecoin bill or a market structure bill.
The US government has already signaled that it wants to acquire as much bitcoin as possible, which has set off a bitcoin stacking arms race globally. And now that the arms race is underway, it is in our best interest to move as quickly as possible to create an official framework by passing laws that enshrine a bitcoin strategic reserve into the fabric of the US federal government and create pathways to acquire more bitcoin moving forward.
Those who are arguing for focus on stablecoins and market structure bills first because they're worried about the next administration getting into power and making it very hard to operate are missing the forest for the trees. The need for strategic bitcoin reserve is more pressing and will have more of an impact on the American economy in the long run. Stablecoins and market structure are temporary noise during this transitionary period to a bitcoin standard. Bitcoin is the signal. Focusing on stablecoins and market structure right now is picking up pennies in front of a steamroller.
This is what I believe the House and the Senate should be focusing on. As an industry, specifically the bitcoin focused industry, we need to draw more attention to this because the window of opportunity is narrow and we need to make sure that time isn't being wasted focusing on things that will have a less profound long term impact on the United States. All of the focus should be on the strategic bitcoin reserve, how we acquire that strategic reserve and how we implement bitcoin into the United States economy as aggressively as possible in the short to medium term.
The repeal of SAB 121 through SAB 122 represents a seismic shift in Bitcoin's role as financial collateral. As James Lavish highlighted during our discussion, this regulatory change allows major institutions like Chase, Citigroup, and Wells Fargo to hold Bitcoin without recording it as a liability on their balance sheets. This breakthrough opens the floodgates for Bitcoin integration into mainstream financial products - from lending solutions to mortgage collateralization. I believe this development is precisely what our debt-based financial system needs: an injection of superior collateral that isn't simultaneously someone else's liability.
"You will have banks like Chase and Citigroup and Wells Fargo start dabbling into this space, especially in Bitcoin... this is going to be a big deal. And I think it's under appreciated just how important it is that banks will now get into this game." - James Lavish
MicroStrategy's strategy (now simply "Strategy") already demonstrates how Bitcoin's volatility can be monetized through convertible debt markets. As I pointed out during our conversation, this creates a pathway for both private and public sectors to utilize Bitcoin as foundational collateral. When banks begin creating lending products, collateralized products, and lines of credit backed by Bitcoin, we'll witness a profound transformation in how capital is deployed across the economy. The integration of Bitcoin as premier collateral is no longer a distant possibility - it's happening now.
Check out the full podcast here for more on the dangerous basis trade, nation-state Bitcoin mining operations, and how Bitcoin is showing signs of decoupling from traditional markets.
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Final thought...
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