Weekly Top Stories - 7/18

In this week's newsletter, Alex Thorn discusses the passage of the GENIUS Act, Thad Pinakiewicz explains how the Trump family’s World Liberty Financial coin (WLFI) is set to become one of the world’s most valuable cryptoassets, and Lucas Tcheyan examines new regulatory guidance for banks that custody crypto.

Washington’s 'Crypto Week' Delivers

President Trump is expected to sign the GENIUS Act stablecoin bill into law at White House ceremony on Friday.

The U.S. House of Representatives passed three key crypto bills Thursday: the GENIUS Act (308-122) stablecoin legislation (which the Senate passed 68-30 on June 17); the CLARITY Act (294-134) crypto market structure bill, which has not yet been introduced in the Senate and faces a tricky path there; and the Anti-CBDC Surveillance Act (218-210), which was the subject of much consternation this week.

House leadership billed this week as “Crypto Week” and promised major legislation would pass the chamber, but much of the week was spent fretting over a last-minute rebellion by the House Freedom Caucus, a band of conservative members who obstructed the advancement of the bills on Tuesday and Wednesday. These members, apparently led by Marjorie Taylor Greene (R-GA) and Andy Harris (R-MD), argued that the GENIUS Act stablecoin bill should include strict prohibitions on the Federal Reserve issuing a central bank digital currency (CBDC). While they did eventually vote in favor of the resolution to bring the bills to the floor, the cohort ultimately voted against the stablecoin bill during final passage.

The bipartisan support for GENIUS and CLARITY was striking. Both received a veto-proof majority (though there is no threat of veto from the President), and CLARITY garnered more Democratic votes than FIT21 did during the 118th Congress last year (102 for CLARITY vs. 71 for FIT21 in May 2024). The increase in House minority-party support for Republican-led crypto legislation is demonstrative of the growing national adoption and political influence of the cryptocurrency industry.

CLARITY is a monumental bill that will determine regulatory jurisdiction over different types of tokens (such as securities vs. commodities), establish thresholds for decentralization, and chart a pathway for the mainstream financial industry’s adoption of digital assets. However, the bill faces a tough pathway in the Senate, where 60 votes are required to overcome a filibuster (and Republicans control only 53 seats), and Democrats have agitated to include an amendment that would ban the President’s family from engaging in various crypto-related ventures.

GENIUS is set to be signed into law by President Trump at a 2:30 pm ET White House signing ceremony today. Key legislators from the Senate and House will join the President, including bill author Sen. Bill Hagerty (R-TN) and Senate co-sponsors; key House members including Rep. French Hill (R-AR) and Rep. Tom Emmer (R-MN); and their staffs, including Luke Pettit, Sen. Hagerty’s former top Senate Banking aide, who was instrumental in drafting the bill and has since been confirmed Assistant Secretary for Financial Institutions at the U.S. Treasury Department, a senior role that will likely involve implementing some GENIUS Act regulation and oversight.

Other attendees at the White House signing ceremony will include Crypto and AI Czar David Sacks; Executive Director of the Presidential Working Group on Digital Assets Bo Hines; Counselor to the Treasury Secretary for Digital Assets Tyler Williams; as well as numerous crypto industry supporters.

OUR TAKE:

The signing of the GENIUS Act into law represents a historic moment for the U.S. dollar. As we have written many times, the GENIUS Act should be viewed primarily as a payments and dollar dominance bill, not a crypto bill. By creating a comprehensive consumer protection and regulatory oversight structure for dollar-backed stablecoins that allows their issuance by U.S. fintechs and traditional financial companies, the GENIUS Act will create major pathways for global dollar distribution that should maintain and grow dollar dominance worldwide.

While it’s true that crypto issuers like Circle and Tether (assuming the latter makes use of the foreign issuer pathway in the bill) stand to benefit, the net new entities allowed to issue dollar-backed stablecoins are really the nation’s banks. We expect that banks of all sizes will consider issuing their own stablecoins, which would bring faster settlement, transparency, and the ability to self-custody digital dollars to millions of Americans and global citizens. This will reshape the domestic and international payments landscape in disruptive and innovative ways.

Winners include fintech firms, banks, existing stablecoin issuers, merchants that can bypass expensive card swipe fees, and consumers who will see faster and cheaper payments. Losers could include card issuers, small banks without the technological capabilities to launch their own stablecoins, and governments seeking to impose capital controls, whose citizens will gain easier access to dollars. The biggest winner should be the U.S. dollar itself, which will find both easier distribution for payments but also a growing bid for U.S. debt.

Bitcoin and other cryptoassets could also benefit from the wider adoption of stablecoins that GENIUS will bring. Increased integration of stablecoins into the traditional payments and financial systems can simply result in positive sentiment for native digital assets such as bitcoin and ether. But more concretely, wider adoption of crypto-native wallets for stablecoins, whether custodial or noncustodial, will help grow the mainstream adoption of all digital assets, with the largest likely to benefit the most from incremental growth in the public’s knowledge of and proficiency with blockchain technology. The use of blockchains and crypto technology for stablecoins will seep and permeate through the population and ease pathways for learning about bitcoin, ether, smart contracts, and DeFi.

With GENIUS behind us, Congressional energy will turn to CLARITY, the comprehensive crypto market structure legislation. Gary Gensler’s SEC alleged that most cryptoassets were unregistered securities and pursued myriad enforcement actions against issuers and intermediaries predicated on this viewpoint. The current SEC has a different view and has already begun scoping certain cryptoasset types and activities out of its jurisdiction, such as mining pools, staking services, and memecoins, and has taken a more innovation-friendly approach to regulation. But industry advocates inside and outside government fear that a future hostile executive branch could undo these reforms, returning to a more hostile viewpoint, if the treatment and regulation of cryptoassets are not codified in federal statute. There is merit to this position, though many in the industry would admit privately that relaxation from regulators without legislation is actually preferable, save for the risk of future rollback. Nonetheless, market structure is technically complicated, with myriad stakeholders vying for jurisdiction and specific treatment, and legitimate intellectual disputes over which tests to apply to which assets. The threats from Senate Democrats to pursue amendments barring the President and his family from the industry also threaten to derail the bill in the upper chamber. Bloomberg Intelligence recently put the odds of passage at 70% in 2026, but we believe the odds are lower, closer to 35%, up from 25% before passage in the House.

This week is truly historic for the crypto and digital assets industry in Washington. No longer are the regulatory and legal reforms emanating solely from the executive branch and its various regulators. Now, the people’s representatives have voted overwhelmingly to upgrade the dollar and create comprehensive regulatory clarity for the digital assets industry. While market structure reform still has a tricky road ahead of it, these milestones show that the promise of crypto has captured the hearts and minds of the majority of the world’s most powerful legislative body, and there’s still more to come. – Alex Thorn

World Liberty Financial Is Free to Trade

On July 4 (Independence Day), the team behind the Trump family’s World Liberty Financial posted a proposal to “formally initiate the tradability of the (WLFI) token.”

The post is far and away the most interacted-with conversation on the project’s governance forum, with more than double the replies of the second most active thread. After an overwhelmingly positive response, the team posted the official vote on governance platform Snapshot on July 9, reaching a quorum in less than an hour. The vote closed on Wednesday, and the proposal was approved by 99.94% of the voting power from the 20,935 participants.

World Liberty Financial had launched its WLFI governance token in two tranches last fall and early this year: 20 billion tokens at $0.015 in October and a further 5 billion tokens at $0.05 in January, raising about $550 million. At the time of sale, WLFI could not be transferred or traded; holders could use their tokens only to vote on WLFI governance proposals.

Concurrent with enabling trading, the World Liberty team says it will also distribute “a portion” of WLFI supply to early supporters, with the remainder “subject to a second community vote” on the unlock schedule. Founder, team, and adviser tokens will remain on a longer vesting timetable. It is unclear what absolute quantity of tokens will be released, or what the relative amounts are between the first “portion” and the “remainder.” Detailed implementation steps, including specific unlock dates, eligibility criteria for trading, and exchange listings, are forthcoming, the team said. As of the time of writing, the World Liberty team had not yet posted the transaction to enable trading.

OUR TAKE:

We commend the World Liberty community for their passionate engagement, but are unsure what they are excited about.

85,000 individual wallets are holding WLFI, and almost a quarter (24.4%) of them voted on the recent proposal, a huge turnout for a DeFi governance vote. DeFi is replete with protocols and DAOs suffering tepid governance turnouts. Even major L2s such as Arbitrum have seen controversial votes passing due to torpid and sporadic governance participation. There have been attempts to more deeply align governance incentives to engage token holders, such as derivative voting markets via futarchy, but apathy remains an issue broadly for DAOs.

In that context, this week’s vote is promising for World Liberty’s future governance. Now the team has to deliver for this engaged community.

As of the time of writing, the developers had not launched their DeFi protocol licensed from Aave. Neither had they pushed the onchain transaction to enable trading. It is on the World Liberty team (which didn’t write the code for their stablecoin) to capitalize on the community momentum they have built and their place of privilege near the Trump administration.

Once the World Liberty team enables trading of WLFI, we will see true price discovery beyond the thin pre-markets, such as one on whales.market. That pre-market has seen about $15 million of volume since launch, with WLFI trading around $0.16 as of writing, a 10x multiple and 3x respectively to the two previous tranches sold by the team at $0.015 and $0.05. At current prices, WLFI would be the No. 11 cryptocurrency by market cap, right above HyperLiquid’s HYPE.

HYPE and WLFI make for quite a juxtaposition. The former's economics are tied to the most popular perpetual futures decentralized exchange, with $1.5 trillion of volume and $300 million of revenue over the last 12 months. The WLFI governance token, on the other hand, has no economic rights to a DeFi protocol that hasn’t yet launched.

Should a derivative of Aave with none of the economics be worth 3x Aave itself, especially with Aave clipping 20% of WLFI lending revenue? Or will WLFI be more like another $TRUMP memecoin? Time will tell. – Thad Pinakiewicz

U.S. Banks Get the Green Light for Crypto Custody

On Monday, the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System, and Federal Deposit Insurance Corporation published new guidance for banking organizations on providing safekeeping for crypto assets on behalf of customers.

The release coincides with "Crypto Week" in Congress, where lawmakers voted on bills like the GENIUS and CLARITY Act to further standardize digital asset rules.

The guidance outlines risk management expectations and supervisory considerations for banks seeking to custody cryptoassets, reaffirming that banking laws apply to these services. It addresses key areas such as asset-specific risk assessments, cryptographic key generation and storage, fiduciary versus non-fiduciary roles, third-party and sub-custodian arrangements, and cybersecurity protocols.

Banks that safeguard crypto-assets must comply with the full suite of U.S. financial crime rules, including the Bank Secrecy Act, anti-money-laundering and counter-terrorism-financing standards, OFAC sanctions screening, and know-your-customer checks. The agencies emphasize that cryptocurrencies often carry unique technological risks, requiring banks to monitor blockchain-specific events such as forks, airdrops, and smart contract vulnerabilities. Importantly, the guidance does not impose any new regulatory requirements. Instead, it consolidates and clarifies how longstanding rules apply to digital assets, giving banks a clearer compliance roadmap as they explore or expand crypto safekeeping services.

OUR TAKE:

The latest guidance underscores a growing shift in posture among federal regulators—from thinly veiled hostility to open-mindedness about responsible crypto innovation. Rather than introducing new requirements, the bulletin consolidates existing rules into a unified risk-management framework, giving banks a clear, actionable roadmap for offering crypto custody services within established regulatory boundaries.

This statement builds on a series of meaningful policy reversals over the past six months. In January, the SEC issued Staff Accounting Bulletin 122, reversing earlier guidance that had effectively barred banks from custodying crypto assets by requiring them to record customer holdings as their own balance-sheet liabilities. In March, the OCC released Interpretive Letter 1183, lifting the 2021 “non-objection” requirement and reauthorizing national banks to engage in crypto activities like custody and stablecoin issuance without prior case-by-case approval. In April, the Federal Reserve and FDIC withdrew 2023 interagency statements that had warned banks away from digital asset activity. Then, in May, the OCC issued Interpretive Letter 1184, clarifying that banks may buy and sell crypto on customers’ behalf and outsource crypto services to third parties.

Taken together, these actions represent a comprehensive regulatory reset. This latest guidance not only affirms the permissibility of crypto custody but also spells out how legacy custody, AML, and risk management rules apply in a digital-asset context, offering the operational clarity banks need to proceed with confidence.

With the path now open, momentum is already building. Citigroup told investors this week that it is developing its own stablecoin and plans to pair them with institutional-grade custody platforms. Bank of America, Morgan Stanley, and JPMorgan are exploring similar offerings. Meanwhile, outside the traditional banking sector, Circle has filed for a national trust bank charter to hold USDC reserves under the very framework this guidance codifies.

One by one, the regulatory barriers to institutional crypto adoption are lifting. As Congress moves closer to passing landmark market-structure legislation, and stablecoins soon to be properly regulated, crypto custody may soon become a standard service offering across the U.S. banking industry. – Lucas Tcheyan

Charts of the Week

Ethereum’s native currency, ether (ETH), has enjoyed one of its strongest weeks this year, rising about 30% from July 10-17. The rally was driven by a wave of publicly traded companies building Ethereum treasuries, channeling billions of newly raised dollars into ETH and sparking widespread market enthusiasm.

For example, BitMine Immersion Technologies (BMNR) announced July 17 that it acquired 137,000 ETH. With total holdings of 300,657 ETH worth more than $1 billion, the company is now the largest corporate ETH holder, overtaking SharpLink and the Ethereum Foundation.

BitMine began with an 81,762 ETH purchase in early June, then closed a $250 million private placement before executing two large spot buys on July 14 and 17. Those trades lifted its holdings to 300,657 ETH, making BitMine the single largest public-company owner of ether with an aggregate acquisition cost of about $939 million.

SharpLink Gaming (SBET) has financed its Ethereum treasury strategy through a series of equity raises (one $425 million PIPE and three follow-on ATM offerings), converting the proceeds into six separate ETH purchases. As of July 13, the company has accumulated 280,290 ETH across these tranches, spending roughly $724 million in total. (For more on this growing subset of crypto treasury companies, recent Galaxy Research’s recent alert on the topic.)

Other News

⚖️Tornado Cash developer’s federal trial begins (1,2,3,4)

👵🏻 Trump set to open US retirement market to crypto investment

🏦 Grayscale submits confidential IPO paperwork with $50b AUM

🧾Trump supports de minimis tax exemption for crypto payments

💰 Strategy boosts BTC holdings to $72B with continued purchases

🏙️ Citi CEO confirms bank is looking at issuing a stablecoin

🪙 Cantor Fitzgerald, Adam Back form a SPAC to buy billions in BTC

📊 Institutional trader Talos buys Coin Metrics to boost market data and analytics