This episode unpacks the seismic shifts in the crypto landscape, from the landmark GENIUS Act propelling stablecoins mainstream to JP Morgan's foray into tokenized deposits and Coinbase's aggressive product expansion, signaling a new era of institutional adoption and regulatory clarity.
Episode Introduction
This episode dissects the rapidly evolving crypto landscape, highlighting the mainstreaming of stablecoins through the GENIUS Act, JP Morgan's surprising entry with JPMD on Base, and Coinbase's strategic product launches, all set against a backdrop of geopolitical uncertainty and a shifting regulatory environment.
Market Pulse: Stablecoin Summer Amidst Broader Cooldown
- David and Ryan kicked off by noting the "stablecoin summer" phenomenon, a term gaining significant traction, even appearing in Coinbase emails. This enthusiasm contrasts with a broader market dip.
- Bitcoin (BTC): Down 3.4% to $104,000.
- Ethereum (ETH): Down 9% to $2,500. Ryan humorously disclaimed credit for this downturn.
- Circle (USDC issuer) Stock: Experienced a dramatic surge, hitting an intraday high around $230, translating to a ~$55 billion market cap, before settling near $199 (a $48 billion market cap). David noted, "Circle is just it is starting to be completely dulu price action right now." This makes Circle's valuation approach that of Coinbase ($75 billion).
- Solana (SOL) vs. Ethereum (ETH): The SOL/ETH ratio is flat year-to-date, indicating recent SOL weakness or relative ETH strength.
- SOL/BTC & ETH/BTC Ratios: Both charts show altcoins "bleeding out since 2024" against Bitcoin, with David observing Solana's chart looks like Ethereum's from 1.5 years prior. This underscores Bitcoin's current dominance.
- Bitcoin Dominance: An unshown but referenced chart, remains very high.
- Actionable Insight: The divergence between surging stablecoin-related assets (like Circle's stock) and the broader crypto market dip suggests a flight to perceived stability and utility within the digital asset space. Investors should monitor if this trend signals a maturing market focusing on real-world applications.
ETF Developments: Expanding Access Beyond Bitcoin and Ethereum
- The conversation shifted to the expanding world of crypto Exchange Traded Funds (ETFs), which are financial products that track the price of an underlying asset or basket of assets, allowing investors to gain exposure without directly owning the cryptocurrencies.
- Trump's Truth Social Dual ETF: Filed for a combined Bitcoin (75%) and Ethereum (25%) ETF, ticker B.T., with crypto.com as custodian. This follows their previous Bitcoin ETF filing. The SEC has a 45 to 240-day review window.
- Bloomberg's Altcoin ETF Approval Odds (2025):
- Litecoin (LTC): >90%
- Solana (SOL): >90%
- XRP: 85%
- Dogecoin (DOGE): 80%
- Cardano (ADA): 75%
- Ryan noted, "We're just getting ETFs for all the things," reflecting the favorable regulatory outlook under the current administration.
- Staking in ETFs: There's talk of ETFs, like a potential Solana ETF, including staking rewards. This raises questions about an ETH staking ETF.
- BlackRock's Absence: Notably, BlackRock, a major asset manager, has not filed for any "down market" (non-BTC, non-ETH) ETFs. David interpreted this: "they don't think that there is demand down market beyond ether."
- Strategic Implication: The proliferation of altcoin ETFs could channel significant new capital into these assets. However, BlackRock's cautious stance suggests institutional demand might be concentrated at the top. Researchers should observe actual fund flows post-approval to gauge true investor appetite.
Federal Reserve Holds Rates Amidst Political Commentary
- The Federal Reserve maintained its target interest rate range at 4.25% to 4.5%, a move that was widely expected.
- Ryan highlighted Donald Trump's vocal criticism of Fed Chair Jerome Powell, playing a clip where Trump called Powell "not a smart guy" and "a political guy," suggesting rates should be lowered.
- Context: The Fed is designed to be an independent institution, making monetary policy decisions free from political pressure.
- Investor Takeaway: Stable interest rates provide a predictable macroeconomic backdrop, but political rhetoric could introduce volatility if it signals potential future interference with Fed independence.
Geopolitical Turmoil: Bitcoin as a "Risk-Off" Asset?
- The discussion covered market reactions to the escalating conflict in the Middle East (Israel-Iran).
- Traditional Safe Havens: Treasury yields (representing government bonds, typically seen as safe) barely moved, while gold and silver prices rose. Gold's market cap has now surpassed that of the Euro.
- BlackRock's Thesis: BlackRock presented data suggesting Bitcoin acts as a risk-off asset. Their chart showed Bitcoin's price performance 10 and 60 days after major destabilizing events (e.g., US-Iran escalation 2020, COVID outbreak, Russia-Ukraine invasion).
- David noted, "60 days from a destabilizing event... Bitcoin maybe it goes down, but days later it's back up."
- Actionable Insight: If BlackRock's thesis holds, Bitcoin could increasingly be viewed as a hedge against geopolitical instability, potentially attracting capital traditionally allocated to gold or bonds. Crypto AI researchers might explore how on-chain data reflects these capital flights during crises.
Tron's Public Ambitions and "Crime Season" Concerns
- Justin Sun's Tron Group is reportedly attempting to go public in the US via a special purpose acquisition company (SPAC) for TRX, essentially a MicroStrategy-like vehicle for Tron's native token.
- This development follows a paused fraud probe into Justin Sun and his companies, his significant investment in World Liberty Financial, and attendance at a Trump memecoin dinner.
- Eric Trump was initially reported to be involved, but he later denied having "public involvement in this company."
- A tweet highlighted the sequence: Tron's SEC investigation, Sun's pro-Trump financial activities, the investigation being dropped, and then the public listing attempt with alleged Trump family ties, leading to the comment: "Crime season is here."
- Speaker Analysis: David and Ryan discussed this with a tone of concern, acknowledging the optics and potential implications for crypto's reputation.
The Politics of Crypto: Quid Pro Quo Allegations
- Molly White, a prominent crypto critic, tweeted a chart alleging a "quid pro quo" between crypto firms (Coinbase, Circle, Ripple, etc.), the Trump administration, and Trump family ventures, listing benefits received versus contributions made.
- David found this criticism "uncharacteristically weak," arguing White uses the "Biden chokeoint 2.0 oppression" as an unfair benchmark. He stated, "you're just criticizing the notion of money and politics, which I'm also a critic of, but you don't get to say that this is a uniquely crypto thing."
- Ryan added that the previous SEC and FDIC actions against crypto were "completely weaponized," forcing the industry into political engagement.
- Strategic Consideration: The crypto industry's increased political engagement is a double-edged sword. While necessary for survival and favorable regulation, it opens the door to criticisms of influence peddling and may alienate parts of the community.
The "Soul of Crypto": Navigating Ethical Dilemmas
- The conversation delved into the perceived rise of unethical behavior in the crypto space.
- ZachXBT, a well-known on-chain sleuth, tweeted: "The crime super cycle is indeed very real... [it] has noticeably increased since politicians launched memecoins and numerous court cases were dropped."
- Taylor Monahan (founder of MyCrypto) tweeted that crypto is "attracting and retaining more antisocial selfish corrupt people while excluding demoralizing and wrecking those who are good faith."
- David acknowledged the Overton window (the range of ideas tolerated in public discourse) might have shifted towards crime, making some tokens "uninvestable." He expressed hope this is a temporary swing in the "corkscrew of progress."
- Researcher Focus: The tension between innovation and illicit activity is a critical area. AI tools could play a role in identifying and mitigating on-chain crime, enhancing the legitimacy of the ecosystem.
The GENIUS Act: Stablecoins Go Mainstream
- A major focus was the GENIUS Act (Genuine Economic Nurturing Innovation and Unlocking Stability Act), a bill aimed at providing a clear regulatory framework for stablecoins in the US.
- The Senate passed the GENIUS Act with overwhelming bipartisan support (68-30).
- President Trump urged the House to pass it quickly "with no delays, no add-ons."
- Treasury Secretary Scott Bessant projected stablecoins could become a $3.7 trillion market by 2030. He argued, "stable coins could reinforce dollar supremacy... crypto is actually one of the things that locks in dollar supremacy."
- Implications for Stablecoins:
- Circle (USDC): Highly bullish, as it positions USDC for mainstream US adoption.
- Tether (USDT): Faces a choice. Without an OCC (Office of the Comptroller of the Currency) license, it could be banned from US exchanges and banks within 3 years. Paulo Ardoino (Tether CEO) indicated plans to seek a license and issue a domestic US stablecoin, while maintaining Tether's focus on the much larger foreign market. David interpreted Paulo's stance as "indifferent" due to Tether's existing scale.
- Potential Losers: Incumbent payment processors like Visa and Mastercard, who charge high transaction fees, could see their models disrupted.
- Actionable Insight: The GENIUS Act, if passed into law, would be a landmark piece of legislation, legitimizing stablecoins and potentially unlocking vast institutional and retail adoption in the US. This could drive demand for underlying assets like Treasuries and create new financial infrastructure.
JP Morgan's JPMD: A Tokenized Deposit on Base
- JP Morgan is launching JPMD, described as a tokenized bank deposit, on the Base network (an Ethereum Layer 2 incubated by Coinbase).
- JPMD (JP Morgan Deposit token) is not a traditional stablecoin accessible to the public. It's a permissioned token for 24/7/365 settlements between JP Morgan and its institutional clients.
- David questioned why JP Morgan is pursuing this rather than a standard stablecoin under the GENIUS Act, speculating it might be a "stepping stone."
- Alex Krüger's (misattributed in transcript, likely an analyst like Alex Krüger) skeptical take was quoted: "It's very possible that this is innovation theater... and not much more than that."
- Strategic Implication: While JPMD itself isn't a direct competitor to USDC or USDT, a major bank like JP Morgan using a public blockchain (Base) for internal settlements is a significant validation of the technology. It signals growing institutional comfort with blockchain infrastructure.
Kraken's INC Token for its Layer 2
- The INC Foundation, supporting Kraken's Layer 2 blockchain, announced the launch of its native token, INC.
- The token aims to "bootstrap the marketplace through a liquidity first strategy," with utility in DeFi and incentives for Total Value Locked (TVL).
- A fixed supply of 1 billion INC tokens will be minted, with an airdrop for early users.
- Ryan noted Kraken's Inc. L2 has struggled with adoption ($7 million TVL) compared to Coinbase's Base ($3-4 billion TVL), suggesting the token launch might be "coming from a place of weakness."
- Investor Watchpoint: The success of the INC token in driving adoption to Kraken's L2 will be a key test. L2 tokenomics and incentive programs are crucial for attracting users and liquidity in a competitive landscape.
EigenLayer Launches EigenCloud with A16Z Backing
- EigenLayer, a protocol for restaking ETH to secure other networks and services, launched EigenCloud.
- EigenCloud is described as an "AWS but with all of EigenLayer's services built right into it," packaging up access to AVSs (Actively Validated Services) that offer cryptoeconomic security (security backed by staked assets that can be slashed for misbehavior) and verifiable compute (the ability to mathematically prove that a computation was performed correctly).
- The launch was accompanied by a $70 million token investment from A16Z.
- David acknowledged the difficulty in grasping the full scope of verifiable compute use cases beyond asset registries, but emphasized EigenCloud makes these complex services more accessible to developers. "You don't have to actually understand how a carburetor works to drive the car."
- AI Researcher Relevance: Verifiable compute is highly relevant for AI, particularly for ensuring the integrity of AI model training and inference, or for decentralized AI systems where trust is paramount. EigenCloud could lower the barrier to building such applications.
Blockworks Token Transparency Framework
- Blockworks introduced a Token Transparency Framework, a 40-point grading rubric for token projects.
- It covers criteria like supply schedules, market maker agreements, and equity-token alignment, with projects self-reporting.
- David described it as "Layer 2B for token disclosures, token transparency," aiming to combat "lemon markets" where bad actors taint the perception of good projects.
- Call to Action: Token issuers are encouraged to participate to demonstrate transparency. This could lead to a trusted source of information for investors.
- Investor Benefit: This framework provides a standardized way to assess the transparency and potential risks associated with token investments, crucial for due diligence.
Coinbase's Barrage of Product Announcements
- Coinbase held its "State of Crypto" event, unveiling several new products and services aimed at expanding its ecosystem.
- Coinbase One Credit Card: A metal American Express card launching in Fall, offering up to 4% Bitcoin cashback (tiered by assets held on Coinbase) and boosted USDC yields.
- Perpetual Futures: CFTC-compliant perpetual futures for US traders, a significant first for onshore users. Perpetual futures are derivative contracts that mimic trading an asset without an expiry date.
- In-App DEX Access: Integration of Base DEXes (Decentralized Exchanges) into the main Coinbase application.
- Business Suite: Services for Small and Medium Enterprises (SMEs) including global payments, custody, trading APIs, and USDC rewards.
- Shopify Integration: Merchants on Shopify can accept USDC on Base with 1% cashback directly into their Shopify accounts. This leverages a new "commerce payments protocol" using smart contract escrows on Base for features like reversible payments, mimicking credit card functionalities.
- On-Chain Stocks (Rumored): Reuters reported Coinbase is seeking SEC approval (no-action letter or exemption) to support tokenized stocks, presumably on Base.
- Strategic Thrust: David summarized, "Coinbase is going for a financial super app," positioning it in direct competition with Robinhood, which is also expanding its crypto and banking services.
- Actionable Insight: Coinbase's aggressive expansion into traditional finance (credit cards, futures) and deeper integration of on-chain services (DEXes, USDC payments) signals a major push for mainstream adoption and a blurring of lines between TradFi and DeFi.
Coinbase's US Army Parade Sponsorship: A Divisive Move
- Coinbase's sponsorship of a US Army parade sparked considerable debate within the crypto community.
- While some Coinbase employees reacted positively, many in the broader crypto space viewed it as antithetical to crypto's anti-establishment and counter-cultural roots.
- David resonated with the sentiment that "the cool thing about Bitcoin proof of work and Ethereum proof of stake is that we can create a money without a military."
- Ryan presented the counter-argument that it's part of "crypto going mainstream" and reaching new audiences.
- Community Impact: Such moves can alienate OG crypto users who value decentralization and sovereignty above mainstream acceptance or perceived co-option by state apparatuses.
Roman Storm Legal Defense: Call for Support
- An update was provided on the legal defense fund for Roman Storm, a developer of Tornado Cash, who faces charges related to the mixer's use.
- The Ethereum Foundation is matching donations up to $1.25 million.
- Roman Storm is still short $750,000 for his legal defense, with his trial approaching on July 14th.
- David emphasized the importance of the case: "If Roman Storm wins his case, the precedent that open-source software developers can't go to jail is set in."
- Actionable Support: Donations are critical to ensure a robust legal defense, with implications for all open-source developers in the crypto space.
Conclusion: Crypto's Expanding Horizons and Evolving Identity
The episode concluded with a reflection on crypto's evolving narrative, prompted by a tweet from Jason Choi questioning crypto's shift from "let's replace the banks" to "let's strengthen US dollar dominance." David argued it's a "yes, and" scenario: crypto can simultaneously offer alternatives to traditional finance, empower individuals, and, through innovations like regulated stablecoins, even reinforce existing financial structures where beneficial.
This episode underscores a pivotal moment where regulatory frameworks like the GENIUS Act and institutional adoption by entities like JP Morgan are legitimizing crypto, particularly stablecoins. For Crypto AI investors and researchers, this signals maturing infrastructure and increased mainstream engagement, creating new avenues for both investment and the deployment of AI-driven solutions on robust, regulated blockchain networks.
