A New Age of Money: Stable Coins
People have many views on President Trump, but his recent legislative initiative will likely make America stronger over the long term. This is one reason why the stock market continues to chug higher, even as valuations, debt levels and market technicals are historically stretched.
2 weeks ago, Trump signed into law The Genius Act, which establishes a regulatory framework for stablecoins. Stablecoins had been the Wild, Wild West of finance but a regulatory framework may help them transform the way we transact money for the rest of our lives. This law is one reason why I bought the Ethereum cryptocurrency last week (as highlighted in last week’s newsletter) and I also bought shares of Fiserv this week. Both of these investments should thrive because of the Genius Act.
But why?
Ethereum has a quality that Bitcoin doesn’t yet have: utility. Bitcoin is essentially a store of value and much of its hype comes from its scarcity: there will only ever be a maximum of 21 million Bitcoin, no more. But Bitcoin doesn’t have a lot of daily utility; even a Picasso can hang on the wall and look pretty.
Ethereum, in contrast, is more than a currency; it’s a platform on which to build applications. Specifically, Ethereum is the preferred platform of choice on which to build stablecoins, and this is why Ethereum utility will likely grow ever more important – and its value will increase over time.
Think of the utility of the Apple iPhone. Apple created a piece of hardware that was the perfect platform on which 3rd party developers could develop applications from their executive office or their home garage – and create a whole new era in mobile computing.
Similarly, the Ethereum platform is an excellent one on which to build smart contracts (more on this later) and digital currencies that are pegged to the US dollar, ie. stablecoins. Why is this transformative?
Because, in today’s world, money moves a little faster than the Pony Express. As all my clients surely know, whenever you have requested a money transfer you know that it either takes an ACH bank transfer – which takes at least one overnight to move money from your brokerage account to your bank, assuming we did it before the 1pm cutoff time – or a wire, which is same-day, but charges a big fee.
Or if you want to buy a McDonalds hamburger in Paris, you would have to convert US Dollars into euros, which would involve a 3rd party who charges a fee – along with an unfavorable conversion ratio – which means that your “Royale with Cheese” would cost more than face value.
Not so with stablecoins, which brings the promise of instant peer to peer digital transfer – no middleman - with very low fees whether you are rushing to send your money to an escrow account or to your cousin in Beijing.
It’s a matter of time before global companies like McDonald’s, Disney, Apple, Starbucks, Nike and more will accept payments via stablecoin so that travelers can buy anywhere in the world without having to fuss with 3rd party fees and nasty currency conversion ratios. These big global brands would also save money by not having to deduct 3rd party merchant fees: it’s a win-win and a higher stock market to boot.
Therein lies the appeal of Ethereum: it is the #1 platform on which to build digital tokens that we call stablecoins, a utility that will only grow as more companies utilize them.
This explains why I bought Fiserv (FI) for many clients this past week: FI is a payments company that is developing its own stablecoin called FIUSD and is also working with MasterCard and PayPal to build out a cryptocurrency infrastructure. That stock has sold off about 40% from its January 2025 all-time high, but that is all in the past. Fiserv is investing in the future, and I think I bought the stock at a great price.
America is currently in a race with China to build out artificial intelligence, robotics, drones, and even the future of finance – and it’s a race that should, in theory, drive markets higher into next decade.
Centuries ago, before America was on the map, China was the first county to establish paper currencies during the Tang Dynasty. Trump is trying to create an American dynasty by making our nation the cryptocurrency capital of the world.
The Genius Act is a big win for Trump, Wall Street and for Silicon Valley. Ultimately, it’s a big win, I believe, for America. However, if Trump rides high on his laurels and does things that a President really shouldn’t do - such as to force the Fed to slash interest rates – then he threatens his legacy. The Genius Act has given fuel to the fire of the stock market and the cryptocurrency market – much to the benefit of investors. But too much fuel – in the form of lower interest rates – may cause an explosion.