Chief Investment Strategist, The Freeport Society
Yesterday was a huge day for crypto.
On Thursday, Congress passed the GENIUS Act, the CLARITY Act, and the Anti-CBDC Surveillance State Act.
These cement cryptocurrencies into the financial system.
And they have major implications for our spending habits, our portfolios, and even our financial freedom.
So, let’s unpack these one by one.
Then we’ll look at why I’m still wildly bullish on Bitcoin.
Get Ready for “WalmartCoin”
Let’s start with the GENIUS Act.
A month after the Senate passed the bill, the House got the GENIUS Act over the finish line with broad bipartisan support.
By the time you read this, it’s possible that President Trump will have already signed it into law.
GENIUS stands for “Guiding and Establishing National Innovation for U.S. Stablecoins.” This new piece of legislation targets stablecoins—cryptos whose value is pegged to the value of the U.S. dollar.
More specifically, it paves the way for stablecoins to claim a space in your wallet next to your credit and debit cards.
The GENIUS Act requires stablecoins to be backed by dollars or by equivalents such as Treasury bills. But it also forbids stablecoin issues from paying that interest out to the holders of those coins.
That makes them licenses to print money for their issuers. They collect interest on the bonds that back their coins. But don’t have to pay it out.
This is why Amazon and Walmart have already indicated that they’re planning to launch coins.
Mark my words: A year from today, these retailers will be offering discounts and incentives to shop in their stores using their in-house coins.
That’s great news for you and me.
It’s not so great for MasterCard and Visa.
Stablecoins will also disrupt traditional banking services.
Who in their right mind would pay exorbitant wire fees to send money when you can send stablecoins for next to nothing?
That wasn’t the only piece of pro-crypto legislation Congress passed this week.
Clearer Regulatory Picture
Yesterday, the House also passed the CLARITY Act.
This is more arcane, but it’s also a big deal for the mainstreaming of crypto.
The Security and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) both claim the right to regulate cryptos, and it’s never been clear who is in charge.
It’s an ambiguous mess, and the CLARITY Act settles it by clearly defining the two agencies’ responsibilities.
The big takeaway here is that it clears up the muddy regulatory picture that has persisted in the U.S. regarding cryptos for years. This paves the way for massive new investment and innovation in the industry.
Finally, the House passed the Anti-CBDC Surveillance State Act. It bans the Federal Reserve from issuing a central bank digital currency.
This is a much bigger deal than you may think.
Grave Threat to Your Financial Freedom
CBDC stands for central bank digital currency. These are a state-backed, programmable currencies.
Like a stablecoin, you’d hold them in a digital wallet… and transact with them like you transact with Bitcoin or other cryptos. But they’re meant to replace regular cash, not compliment it like stablecoins do.
That may sound harmless, but they pose a grave threat to your privacy and freedom.
With a CBDC, the government could track, log, and scrutinize every transaction—whether buying a book, buying groceries or, critically, donating to an unpopular political cause.
In the most extreme cases, a nanny state could control how you spent your money.
Did you drink a little too much when you were in college? Well, you might find that your digital dollars don’t work at the liquor store.
Are you ordering too many hamburgers? Bovine emissions cause global warming, you know. That next trip to the Whataburger drive through may not work out for you.
Or if you tweet the wrong comment, or anger the wrong people in the government, your digital wallet may not work at all.
If you think the Fed meddles with the dollar too much already, imagine how much worse it would be if it could program your digital dollar to “expire” if you don’t spend them fast enough.
Maybe some of that sounds farfetched. But so did QE (quantitative easing) and stimulus checks before they became a thing.
So we’ll chalk up the Anti-CBDC Surveillance State Act as a win for freedom.
Fatal Flaw
I’m a fan of stablecoins and of the crypto ecosystem in general.
Like PayPal or Venmo, it adds something new to a banking system that hasn’t changed much over the past 500 years.
But at the end of the day, stablecoins all have a fatal flaw. They’re still backed by the U.S. dollar—the same dollar our government works tirelessly to destroy with out-of-control deficit spending and central bank tinkering.
That’s why I continue to hold Bitcoin in the model portfolio at our Freeport Investor advisory.
It’s not tied to the dollar. And the Bitcoin algorithm strictly limits its supply. That makes it an extremely valuable hedge against a sinking U.S. dollar.
Since I recommended Bitcoin when we launched in December 2023, it’s up 183%.
And I see more upside ahead.
As crypto becomes more entrenched in the financial system, Bitcoin will only continue to see greater acceptance as a part of a typical asset allocation.
Governments are getting in on the action too, with the U.S. leading the charge with plans for a strategic Bitcoin reserve similar in concept to the country’s gold reserves.
Increased institutional and governmental demand combined with limited supply could send prices past $500,000 or even $1 million in short order.
To life, liberty, and the pursuit of wealth.