Crypto Current #84

This week, we examine how the passage of the GENIUS Act through the Senate, combined with Circle's groundbreaking partnership with Nodal Clear to make USDC eligible collateral for US futures trading, further reinforces the stablecoin market segmentation we've been tracking across recent newsletters. With Trump's characteristically enthusiastic endorsement calling the legislation "American Brilliance at its best," may have started "stablecoin summer," reflecting the political tailwinds accelerating institutional adoption of what industry projections suggest could become a multi-trillion-dollar market by decade's end. The real story isn't just regulatory progress—it's the crystallization of distinct use cases that confirm stablecoins are bifurcating into specialized infrastructure rather than competing for the same deposit markets.

The crypto market faced headwinds this week, as escalating geopolitical tensions between Israel and Iran contributed to a broader risk-off tone across global markets. Bitcoin declined 1%, holding above the key $100,000 psychological level, while Ethereum fell 4% to $2,530. The total crypto market cap contracted 2% to $3.21 trillion. Select altcoins that had recently outperformed saw sharper pullbacks, with HYPE and AAVE down 8% and 12%, respectively. Bitcoin dominance held steady at 65%. Despite the broader weakness, infrastructure developments continued, with Circle (CRCL) shares surging to $211.87 in after-hours trading following news of a partnership with Nodal Clear, while Coinbase rallied 20% over five sessions as investors reassessed the embedded value of its USDC revenue-sharing agreement.

What's happening in crypto?

GENIUS Act passes Senate 68-30 - Stablecoin regulatory framework moves to House
Circle partners with Nodal Clear for futures collateral - USDC becomes first regulated stablecoin accepted in US derivatives markets
JPMorgan files "JPMD" trademark for digital trading and crypto payment services
JD.com applies for global stablecoin licensing - China's largest retailer targets 90% cost reduction
VanEck Solana ETF listed on DTCC with ticker $VSOL
First XRP ETF launches on Toronto Stock Exchange
DDC Enterprise plans $528M Bitcoin raise - Corporate adoption continues

Chart of the week

Circle +544%* vs. Coinbase +14% stock performance since Circle IPO

Source: TradingView. *Performance measured since Circle’s recent IPO at $31 on June 5.

The stablecoin infrastructure moment: From regulation to revenue

This week's developments validate the market segmentation we've been tracking, while Trump's "GENIUS" endorsement signals the political tailwinds driving multi-trillion-dollar growth projections.

The passage of the GENIUS Act through the Senate this week, combined with Circle's groundbreaking partnership with Nodal Clear to make USDC eligible collateral for US futures trading, marks a decisive moment in stablecoin market evolution. What we're witnessing isn't just regulatory progress—it's the crystallization of distinct use cases that validate the market segmentation we've been analyzing across our recent newsletters.

Source: @realDonaldTrump - Truth Social

The political momentum is unmistakable. Industry projections now suggest stablecoins could grow from today's $250 billion to multi-trillions by decade's end, driven by their unique position as both private sector innovation and government policy tool. Tether already ranks as the 7th largest holder of US Treasuries globally, and expanding stablecoin adoption could create massive demand for front-end Treasury issuance, potentially lowering government borrowing costs while preventing e-yuan dominance in digital payments.

Market segmentation validated

Circle's partnership with Nodal Clear represents the clearest validation yet of our thesis from newsletter #81 that stablecoins are bifurcating into distinct market segments rather than competing for the same use cases. By becoming the first stablecoin accepted as collateral in regulated US derivatives markets, USDC has carved out institutional infrastructure territory that doesn't require displacing Tether's $155 billion dominance in crypto-native payments.

As we analyzed last week, Circle's revenue-sharing arrangement with Coinbase—while seemingly punitive—makes strategic sense when viewed through this segmentation lens. The market recognized this dynamic immediately, with Coinbase surging 20% over five trading days as investors understood the distribution value embedded in their partnership.

This validates our framework from newsletter #73, where we identified five distinct stablecoin categories serving different economic functions. USDC's collateral approval confirms that fiat-collateralized stablecoins can create value through infrastructure positioning rather than deposit market share competition.

The collateral breakthrough also opens possibilities for financial innovation we haven't yet imagined. While immediate applications may seem incremental, history suggests that new infrastructure often enables use cases that weren't initially apparent—the real value may emerge from innovations we can't yet envision.

Infrastructure winners emerge

The regulatory clarity is already benefiting the infrastructure protocols we identified in newsletter #81, as positioned to capture value from stablecoin growth. Aave presents a more mixed picture—up 48% over three months but down ~12% this week—reflecting the complexity of infrastructure plays in volatile markets. However, it is the dominant lending protocol, with over 60% of volume consisting of stablecoin lending.

The other infrastructure beneficiaries we identified—Curve for stablecoin liquidity and Pendle for yield optimization—continue building the foundational layer that institutional stablecoin adoption requires. These protocols represent the "picks and shovels" of the digital dollar economy rather than direct stablecoin competition.

The Treasury demand multiplier

The broader economic implications deserve attention. Each dollar of stablecoin issuance creates direct demand for US Treasuries, as regulated issuers must maintain full backing through cash equivalents or short-term government securities. The current stablecoin market capitalization of $250 billion already represents substantial Treasury demand, but multi-trillion dollar projections suggest this could become a significant factor in government funding markets.

This creates alignment between private innovation and public policy objectives. Stablecoins offer the US a tool for maintaining dollar dominance in digital payments while creating price-insensitive demand for Treasury securities. Trump's explicit endorsement signals recognition of these strategic benefits: "Digital Assets are the future, and our Nation is going to own it."

For Treasury markets specifically, stablecoin growth could provide stable demand for front-end issuance, potentially reducing borrowing costs and supporting debt sustainability. Unlike traditional Treasury buyers who trade tactically, stablecoin issuers maintain consistent reserve requirements regardless of market conditions.

Source: Delphi Digital, Token Terminal

Specialized players find their niche

The developments this week confirm that stablecoin success increasingly depends on use case specialization rather than winner-take-all competition. As we noted in previous newsletters, niche stablecoins serving specific market segments can coexist with major players by serving distinct economic functions, similar to how certain trading relationships develop bilateral currency arrangements to bypass dollar dominance.

JD.com's application for global stablecoin licensing to reduce cross-border payment costs by 90% exemplifies this trend. China's largest retailer isn't competing with Tether for general crypto trading—they're creating infrastructure for their specific supply chain relationships.

Meanwhile, Frax's positioning as a regulatory insider—with founder Sam Kazemian directly involved in drafting the GENIUS Act—demonstrates how compliance-first approaches can create competitive advantages in the emerging institutional landscape.

Political tailwinds accelerate adoption

Trump's characteristically enthusiastic endorsement of the GENIUS Act as "American Brilliance at its best" reflects a broader shift in political sentiment toward digital assets. The administration's support for stablecoins as tools of dollar hegemony rather than threats to monetary sovereignty creates unprecedented regulatory tailwinds.

The GENIUS Act's passage through the Senate provides the regulatory foundation for institutional adoption to accelerate. Clear rules around reserves, compliance, and operational requirements favor different business models for different use cases, enabling the market segmentation we've been tracking to develop more rapidly.

This political support, combined with practical developments like the Nodal Clear partnership, suggests stablecoin infrastructure is moving from experimental to essential for institutional markets.

Market implications

For institutional investors, this week's developments validate positioning around infrastructure adoption rather than trying to pick winners in deposit market share battles. The protocols building essential infrastructure for the digital dollar economy—whether lending, liquidity, or collateral management—benefit from growing stablecoin adoption regardless of which specific stablecoins succeed.

The regulatory clarity also reduces risk for sophisticated allocators who have been waiting for clearer frameworks before increasing digital asset exposure. Institutional-grade infrastructure backed by regulatory approval creates the compliance foundation that family offices and institutional investors require.

However, the copycat risk remains significant. Industry observers predict numerous stablecoin IPOs attempting to replicate Circle's success without understanding distribution realities or regulatory requirements. Most will fail because they lack the institutional relationships and compliance infrastructure necessary for meaningful adoption.

Conclusion: Infrastructure over ideology

The stablecoin market has evolved beyond binary narratives of disruption versus regulation. This week's developments demonstrate mature ecosystem development where different protocols serve distinct functions in an increasingly digital global economy.

The multi-trillion-dollar projections may prove optimistic, but the directional trend is unmistakable. Stablecoins are becoming essential infrastructure for digital commerce, and the regulatory framework is finally in place to support institutional adoption at scale.

For sophisticated investors, we believe the message is clear: focus on infrastructure positioning and use case specialization rather than competing for the same deposit markets.

The companies and protocols building the foundational layer of the digital dollar economy will capture disproportionate value as adoption accelerates.

The future isn't about one stablecoin to rule them all—it's about a diversified ecosystem where regulatory clarity enables specialized value propositions. This week marks a decisive step toward that future.

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Established in 2017, DACM is an institutional investor focused on the digital asset sector. Our team invest across the digital asset sector, from early-stage venture partnerships to listed and derivative markets. DACM has developed a fundamental investment philosophy designed for family office and institutional investors, tested across multiple market cycles.

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