GENIUS Passes The Senate

Daily Updates:

• In a 68-30 vote yesterday, the US Senate passed the GENIUS Act – the first stablecoin legislation and first crypto legislation in the US, setting up a regulatory framework for crypto stablecoins. 
• The bipartisan support for the bill means a “permitted payment stablecoin issuer” would be required to maintain reserves backing all outstanding payment stablecoins on “at least a one-to-one basis” and will be overseen by state or federal regulators. 
• According to Senator Kirsten Gillibrand, one of the sponsors of the bill, “The GENIUS Act will protect consumers, enable responsible innovation, and safeguard the dominance of the US dollar”. 
• While the bill has passed in the Senate, it now also needs to be passed in the Republican held House – Senator Bill Hagerty, the lead sponsor of the measure, has said he hopes the House passes the bill “as quickly as they possibly can”. 

• Despite the landmark progress on the bill, cryptocurrencies have still mostly been in a downtrend amid continued escalating conflict in the Middle East. ETH, XRP and SOL are all down over the past 24 hours, with Ether falling as much as 8% yesterday evening before paring back some losses. BTC once again touched the $103K mark, before also paring back some losses and currently trading slightly above $105K.
• Those signs of derisking in crypto assets came amidst a number of Truth Social posts from President Trump regarding potential US involvement in the Middle East. 
• Trump said in one post “We now have complete and total control of the skies over Iran” and in another post he called for “UNCONDITIONAL SURRENDER!”. Separately, Fox News reported that US strikes against Iran “are on the table”. 

• BTC and ETH funding rates pared back the slight positive gains they made yesterday and funding rates for both are now neutral. 
• Compared to yesterday, outright levels of implied volatility for ETH across the term structure have dropped, led by moves at the front-end of the curve, though 7-day ETH options continue to maintain their almost 2x premium to similar-dated BTC tenors. 
• It is not just in options markets where BTC and ETH’s term structures are diverging however – the futures term structure for BTC continues to maintain a positive upward slope, compared to ETH’s futures term structure which has now flattened as all tenor trade with a spot yield around 5.5-5.8%.
• Volatility smiles for BTC expiries in less than 30 days are all still holding a premium towards OTM puts as options traders appear to show a more firm willingness for downside protection compared to traders in perpetual futures. 

• We recently highlighted the strong demand in ETH ETFs that began in mid-May. Since May 16, Ethereum Spot ETFs have recorded positive inflows on every trading day (excluding the recent June 13 outflow of $2.1M). The increased demand for ETH via ETF exposure is also currently being met with a supply squeeze.
• According to data from Dune Analytics, the supply of staked Ether reached an all-time high this week as over 35M Ether tokens are now being staked – which is 28.3% of the total supply.

• Concerns that the US may more directly intervene in the Middle East also spurred risk-off in US equity markets yesterday. The S&P 500 ended the day down by almost 1%, while the Nasdaq-100 dropped by a further -1.25%. 
• US treasuries rose, as the 2-year and 10-year treasury yield fell 3bps and 7bps respectively to 3.94% and 4.39% amidst weaker-than-expected US retail sales, bolstering bets of at least one more Fed rate cut before the year-end. 
• Current expectations for tomorrow’s FOMC meeting show a 99.9% probability of a fourth consecutive pause. 
• Chair Powell and a slew of other Fed speakers have advocated for a wait-and-see approach which has attracted a tirade of criticism from President Trump on multiple occasions – however conflict in the Middle East currently adds to the uncertainty in the economy that many Fed speakers have cited as the reason for moving slower.

• The decline in US retail sales for May marks the second consecutive monthly drop, with retail purchases decreasing 0.9% compared to the previous month – the largest monthly decline since the start of the year. 
• In the retail sales report, 7 of the 13 categories saw drops, dragged down by particularly by building materials, gasoline and motor vehicles, which surged after a buying spree in previous months in anticipation of tariffs. Spending at restaurants and bars, the only service-sector category in the retail report, fell by the most since early 2023.

• Cathie Wood's Ark Invest continues reducing its stake in Circle, selling an additional $44.8M worth of shares following a previous $51.7M sale, still only a fraction of their estimated $373M IPO investment for 4.5M shares.

• Nasdaq listed Eyenovia Inc (EYEN) surged 134.68% in 24 hours after unveiling a $50M PIPE deal to establish the first U.S.-based Hyperliquid (HYPE) treasury. The company plans to purchase up to 1 million HYPE tokens and rebrand as Hyperion DeFi (HYPD).
• Yet, Eyenovia has committed to continue operating its core business alongside the new HYPE-focused treasury strategy.

• JPMorgan’s JPMD has been confirmed as a “deposit token” a nod to traditional stablecoins yet representing a commercial bank deposit.
• The token is set to launch on Ethereum layer 2,  Coinbase’s public blockchain Base but has extra permissions to make it only available to JPMorgan’s institutional clients.

• Coinbase is seeking an SEC exemption from broker-dealer rules as part of plans to bring equites on-chain through the use of tokenisation.

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