BitMEX co-founder Arthur Hayes believes the US laws in search of to determine a framework for dollar-pegged stablecoins can be bullish for Bitcoin (BTC) and main banks.
In a brand new essay, Hayes says the Guiding and Establishing Nationwide Innovation for U.S. Stablecoins (GENIUS) Act will unlock trillions of {dollars} in liquidity and enhance markets.
In keeping with Hayes, the GENIUS Act, which was handed within the U.S. Senate final month and is now ready to be tabled on the ground of the U.S. Home of Representatives, will permit too-big-to-fail (TBTF) banks to problem stablecoins and unlock as much as $6.8 trillion in liquidity.
TBTF banks, which embrace megabanks comparable to JPMorgan Chase, Financial institution of America, Citigroup, and Wells Fargo, are massive monetary establishments so vital to the financial system that their failure could be catastrophic for the worldwide monetary system.
In gentle of the GENIUS Act, Hayes says the very best guess just isn’t investing in non-bank stablecoin issuers comparable to Circle.
“The true stablecoin play isn’t betting on crusty FinTechs like Circle—it’s understanding that the US authorities simply handed TBTF banks the launch keys to a multi-trillion-dollar liquidity bazooka disguised as ‘innovation’…
As an alternative, go lengthy Bitcoin. Go lengthy JPMorgan. Neglect about Circle.”
In keeping with the BitMEX co-founder, the elevated liquidity arising from permitting banks to problem stablecoins, in addition to different fiscal coverage measures, might ship “Bitcoin pumping 10x to $1 million.”
The shares of the megabanks, however, might soar by almost 3x on account of the GENIUS Act, per Hayes.
“If we take the typical price-to-earnings ratio of the TBTF banks at 14.41x and multiply that by the price financial savings and stablecoin NIM (internet curiosity margin) potential, it comes out to $3.91 trillion. The present market cap of the eight TBTF banks is roughly $2.1 trillion, which signifies that stablecoins might pump TBTF financial institution shares on common by 184%.”
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