The Clarity Act and the bank lobbying push
The Clarity Act will pass into law this year. Former House Financial Services Committee Chairman Patrick McHenry, an insider on how financial policy gets made in Washington, said on Bloomberg that the sudden wave of big-bank media appearances is the clearest sign the bill will get signed.
Banks are pushing two messages. First, that they now support blockchain, crypto, and clarity, and call themselves leaders in digital assets. Second, they are stressing their view on the stablecoin yield issue and still want changes to the act.
Two main sticking points have held the bill back: the Trump ethics issue, and Coinbase versus banks over stablecoins. The Clarity Act failed to reach a Senate vote before summer recess, but the Senate vote is still scheduled for September 15th.
Why are banking CEOs suddenly making time for mainstream media? Because they know the bill will get signed into law, and this is a last-ditch effort to change public opinion before the Senate votes. Banks can only bring this up at town hall meetings while people are home and out of Washington, and it is falling on deaf ears.
The deposit flight argument is a myth
The core of the banks' lobbying is that allowing yields on stablecoin products will cause massive deposit flight - money leaving bank accounts. That claim does not hold up.
Stablecoin yield products have been in the market for four to five years, and there has been no deposit flight. Studies from universities, the Federal Reserve, and other government bodies show the deposit-flight fight is a fiction of the banking industry.
The real problem the banking lobby ignores: there are 2,000 fewer banks than before the financial crisis, driven largely by the high cost of running a bank in the United States. The lobby has not addressed that, so it is turning its attention to crypto to hold the banking associations together and keep their political power. Once the establishment gets in power, it gets entrenched, and that is what is happening in this lobbying effort. Banks are showing off their political power loudly this August. Whether that matters to the fall votes remains to be seen, but likely it will not.
People treat transaction money differently than savings
People think of money market funds and savings accounts differently from transaction accounts. Stored value on PayPal feels different than long-term savings in a money market mutual fund.
The banking industry is still refighting the money market mutual fund war from the early 80s. Fidelity invented the product, banks fought hard against it, and banks lost - money markets are now offered by banks. The same thing will happen with stablecoins: yields or some return of value will go to stablecoin users, and banks will offer it, likely very soon after the Clarity Act passes. That is what the market and consumers are demanding.
Regulators are already acting pro-crypto
Agencies are creating pro-crypto rules as if the Clarity Act already passed. The SEC and CFTC are making sweeping pro-crypto and pro-innovation changes. Washington is finding its way to clarity one agency at a time.
VanEck, with 230 billion in assets under management and 230 billion of wealth clients, is recommending 1 to 5% in Bitcoin and crypto, like many TradFi institutions. Its latest report to those clients says Bitcoin is approaching a cyclical bottom and investors are ready to scale back in.
Coins cutting supply and capturing value
This makes me bullish on Ethereum (ETH) and Solana (SOL). A new proposal on both networks aims to burn more tokens and cut inflation, lowering future supply. If they pass, annual inflation for ETH and SOL could fall below gold and US CPI - 1.8% and 3.3% by 2031.
TradFi is now recommending altcoins. Matt Hogan, CIO of Bitwise, reminds Wall Street that tokens do capture value, and the market may just not have priced it in yet.
Seven coins tied to real value capture:
- Hyperliquid (HYPE): 97%+ of fees go back to buyers, two billion and counting.
- Pump (PUMP): burned 36% of supply, locked 50% of revenue into burns.
- Uniswap (UNI): burned 170 million UNI, fee switch on for automatic buybacks.
- Aptos (APT): hard-capped supply, 10x'd fees, burns them.
- Solana (SOL): current proposal to raise the fee burn 12 to 14x.
- Ethereum (ETH): part of the burn-and-cut-inflation proposal above.
Look for altcoins aligning with Wall Street. From a technical view, Ethereum (ETH) and altcoins look bullish.
The current market is a slow grind, not a crash
This bear market feels harder than the 2022-2023 one. Back then there were obvious capitulation events - Luna collapsed, FTX collapsed, the whole market panicked. Now it is months of grinding, boredom, and depression. Where we are today is an opportunity for those who see where the industry is going.
Bitcoin has a way of making its price feel like it is going nowhere right before making you wish you could buy there again, writes Mr. Anderson. Bitcoin spent years at $200, years at $10,000, and now years at $60,000. We can't believe we had years to buy around 10K; earlier, people couldn't believe they had years to buy around 200 (early prices). One day we will say the same about these years when Bitcoin kept giving 60K.
TradFi belief and the ease-of-access shift
Charles Schwab and many of the biggest TradFi names believe in crypto value. Charles Schwab's Jim Ferohi says everybody wants Bitcoin at the top and nobody wants it at the bottom, but clients should allocate between 1 and 5%. Everyone wants to buy at $120,000, no one wants to buy at $60,000, because it is a cyclical asset.
Schwab offered crypto because clients were already interested and investing in it, and Schwab wanted to meet that demand in a secure way it is comfortable with, though it will never be first to launch. Having institutions like Schwab offer these products breaks down the trust barrier. You cannot easily tell parents to go to Coinbase, buy Bitcoin, and manage a seed phrase and wallet, but telling them to use Charles Schwab or Fidelity - brands they already know and may already use - is an easier sell. There is no need to self-custody, and it fits how people have always invested.
