Arthur Hayes Says Proposed Stablecoin Law Will Unleash Multi-Trillion-Dollar Liquidity Bazooka and Benefit Bitcoin, JPMorgan Chase – Here’s How
BitMEX co-founder Arthur Hayes believes the US legislation seeking to establish a framework for dollar-pegged stablecoins will be bullish for Bitcoin (BTC) and major banks.
In a new essay, Hayes says the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act will unlock trillions of dollars in liquidity and boost markets.
According to Hayes, the GENIUS Act, which was passed in the U.S. Senate last month and is now waiting to be tabled on the floor of the U.S. House of Representatives, will allow too-big-to-fail (TBTF) banks to issue stablecoins and unlock up to $6.8 trillion in liquidity.
TBTF banks, which include megabanks such as JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo, are large financial institutions so critical to the economy that their failure would be catastrophic for the global financial system.
In light of the GENIUS Act, Hayes says the best bet is not investing in non-bank stablecoin issuers such as Circle.
“The real stablecoin play isn’t betting on crusty FinTechs like Circle—it’s understanding that the US government just handed TBTF banks the launch keys to a multi-trillion-dollar liquidity bazooka disguised as ‘innovation’…
Instead, go long Bitcoin. Go long JPMorgan. Forget about Circle.”
According to the BitMEX co-founder, the increased liquidity arising from allowing banks to issue stablecoins, as well as other fiscal policy measures, could send “Bitcoin pumping 10x to $1 million.”
The stocks of the megabanks, on the other hand, could soar by nearly 3x as a result of the GENIUS Act, per Hayes.
“If we take the average price-to-earnings ratio of the TBTF banks at 14.41x and multiply that by the cost savings and stablecoin NIM (net interest margin) potential, it comes out to $3.91 trillion. The current market cap of the eight TBTF banks is approximately $2.1 trillion, which means that stablecoins could pump TBTF bank stocks on average by 184%.”
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