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TRU Capital | June Newsletter - Building A Stable Future

TRU Capitalists,

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June has been another big month in the world of digital assets.

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The Senate passed the GENIUS Act on stablecoins, Circle rose over 600% after its IPO, and Chainlink partnered with MasterCard to allow three billion customers to purchase digital assets directly on-chain.

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Also, World War III sort of happened in a week, and Bitcoin held up really well.

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Let's break it down.

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IRAN

The United States finally bombed Iran. Bitcoin barely noticed.

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This is a sign that Bitcoin is maturing as an asset class and that investors are holding it, not just trading it. As a result, the historic volatility of the asset has begun to stabilize relative to the rest of the market.

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All of this is very bullish for the long-term investment thesis of Bitcoin and the digital asset industry.

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CIRCLE IPO

The recent wave of crypto IPOs has drawn a huge amount of investor attention. The performance of many digital asset related equities has been outpacing many digital assets themselves. Circle's IPO in particular has been explosive, at one point it was up over 600% from its IPO price.

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This reflects a huge amount of pent-up demand for digital asset exposure and is proof that once the US government passes a market structure bill that gives lasting legal and regulatory clarity to this important asset class, there is going to be a huge wave of capital unleashed into the market.

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TEXAS BUYS BITCOIN

Texas became the third state to establish a strategic Bitcoin reserve. Governor Greg Abbott signed a bill that created a publicly funded fund and ensured its legal existence. The Texas Blockchain Council anticipates the state will be investing tens of millions of dollars into the fund because everything is bigger in Texas.

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Texas joins an ever-increasing number of entities that hold Bitcoin.

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Bitcoin Treasury Companies or Digital Asset Treasury Companies are attracting a huge amount of investment right now, but the more of them that launch, the more ordinary this will be. We anticipate a near future where there will no longer be "Digital Asset Treasury Companies" because holding digital assets will be so common for individuals, businesses, and governments that it will no longer be necessary to specify. It'll just be assumed that everyone holds and uses digital assets.

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Giddy-up.

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A VERY STABLE GENIUS

After many years of political skirmishes in both chambers of Congress, the GENIUS Act has passed the US Senate.

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The bill has been crafted to give legal clarity to the huge USD stablecoin industry. GENIUS still has to pass the House before it's the law of the land, though. There is a lot of contention between the House's STABLE Act, designed to keep the stablecoin business monopoly for the banks, and the Senate's GENIUS Act, which enables new competitors. Some critics also argue that GENIUS has been carefully designed to curb innovation.

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Trump has called for the House to just pass the GENIUS bill now so that the world can begin moving forward with USD Stablecoins, and to hash out further changes later if needed. US Treasury Secretary Scott Bessent has forecasted $3.7 trillion of demand for USD that this legislation could unlock. Which would be very bullish for the whole country.

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Senators Tim Scott and Cynthia Lummis plan to tackle a market structure bill next, targeting the end of September for a vote.

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Pay attention to this story.

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STABLE BUISNESS

While Congress legislates, businesses are already moving full force into USD stablecoin adoption.

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Shopify partnered with Coinbase and Stripe to integrate USDC payments. They released a report showing stablecoin payments already deliver higher implied gross margins (30%) than credit cards (22%) despite having a lower take rate. USDC offers cross-border rails that eliminate costly FX fees and settlement delays. This leads to faster and cheaper merchant payments. This endorsement from Shopify is expected to drive a lot of adoption and attention from retailers.

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SoFi also announced that it will introduce international remittances over blockchain networks using select USD stablecoins. The fintech also plans to relaunch crypto trading for Bitcoin and Ethereum later this year. They've indicated future plans to offer staking, digital asset collateralized borrowing, and more.

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This is a big shift because SoFi previously had exited the digital asset industry in 2023. Their return signals a direct impact of regulatory clarity around this asset class. Specifically, the new OCC guidance allowing national banks to provide crypto custody and stablecoin services.

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JP MORGAN HAS ENTERED THE CHAT

J.P.Morgan is clapping back at stablecoin issuers with their own strategy. Instead of a stablecoin, JPM’s issuing a token (JPMD) representing existing cash deposits for institutional clients to use onchain.

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There is a key difference here. JPM's Token may allow them to pay yield in the future, which should also make clear why there was such a fight about yield on stablecoins in the US Senate GENIUS Act.  Also, the token would not need to be fully reserve-backed since it is not a stablecoin under the bill. Bank deposits are only required to be backed by 10% in reserves. 

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One final twist. JPMD will be issued outside of their private Kinexys network. It will live on Coinbase's Base blockchain, making it more compatible with future applications.

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Three JPM team members met with the SEC Crypto Task Force this month. One topic being discussed was "the potential impact of existing capital markets activity migrating to public blockchain. Specifically, what areas of the existing model might change, and how firms could assess the risks and benefits of those changes.”

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It's clear that TradFi and DeFi are going to lock horns as they compete for dominance in the future of finance. Right now, new legislation and new products are being formed all the time. Pay attention to how this shapes up and to who benefits in the long run.

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EUROPE GOES ONCHAIN

Luxembourg became only the second nation to issue tokenized treasuries this month. They have been vocal about wanting to lead on digital assets and put their literal money where their mouth is. Their State Treasury issued €50 million worth of treasuries on HSBC’s Orion platform.

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They're not the only Europeans getting involved in digital assets and RWAs.

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Deutsche Bank, Memento Blockchain, and Axelar Network developer Interop Labs published a litepaper describing their Digital Asset Management Access (DAMA) 2 project in detail. The paper provides a blueprint for a next-generation tokenisation platform, built on public blockchains with regulatory alignment with MICA and privacy as core design principles. It's a platform built for tokenized funds, stablecoins, and other kinds of RWAs. They're targeting large wealth managers and issuers alike. This is a play by DB to try and capture the market onchain as the world moves in that direction. 

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Gemini also began offering tokenized US equities on its platform in Europe this week. So, the competition on the continent is heating up fast. 

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CHAINLINK X MASTERCARD

Chainlink and Mastercard have partnered to enable over 3 billion Mastercard holders to purchase cryptocurrencies directly onchain.

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They've done this through a unique integrated system. It uses Shift4 for payment processing, ZeroHash for custody, and XSwap/Uniswap for decentralized token swaps. Chainlink's industry-leading interoperability protocol, CCIP, facilitates the data exchange between card networks and multiple blockchains, finalizing the last crucial piece of bridging between off-chain and on-chain transactions.

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This partnership continues Mastercard's expansion into cryptocurrency infrastructure, following recent collaborations with MoonPay for stablecoin payments and Kraken for crypto debit cards.

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This is a huge unlock for both the legacy systems and the emerging digital assets industry. As the two industries grow to adopt one another more and more, expect ot see these kinds of collaborations continue.

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CRYPTO BACKED MORTGAGES

The U.S. Federal Housing Finance Agency has issued a directive requiring Fannie Mae and Freddie Mac to consider digital assets as an asset during single-family mortgage risk assessments.

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This is a major step forward in legitimizing digital assets within the traditional financial system. The move only considers assets held on regulated U.S. exchanges to count toward reserves without needing to convert to USD.

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This means investors can buy a home without having to sell their digital assets. Very bullish.

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ETHEREUM GROWING STRONGER

Next, I want to highlight some very bullish fundamentals for the Ethereum network. 

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ETH ETFs have seen sustained inflows in the last month, reflecting increasing investor appetite.

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Next, as stablecoin adoption increases, nearly $7B of stablecoins have flowed into the Ethereum ecosystem. This shows confidence in ETH and a clear preference among stablecoin users for the Ethereum network.

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The result has been sharp increases in activity across the Ethereum ecosystem.

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All of this goes to show that the broader digital asset industry is still gorwing and getting stronger. Bitcoin has had the lion's share of performance, but it would be amistake to think that the rest of the digital asset space won't also continue to grow and perform well in the short and long-term. 

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Don't sleep on $ETH.

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FORWARD GUIDANCE

There have been rumblings going around that the United States Federal Government is soon going to announce its long forehadowed plans to accumulate millions of dollars worth of Bitcoin in a budget-neutral way.

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In addition to this, we expect the continued announcement of trade deals and along with peace in the Middle East and potentially Ukraine.

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Jerome Powell is now also making indications that there could be rate cuts in July or September.

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All of these things combined are extremely bullish. They offer the market clarity, certainty, and a lot of liquidity. This will likely kick off the most dramatic and climactic phase of the bull run and a powerful alt season.

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Pay attention. Be prepared. And HODL.

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Until next time, remember that this is TRU Capital.

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We believe capital is value, cryptography is truth, and Truth is priceless.

"Buy the truth, and sell it not" - Proverbs 23:23 KJV

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HODL,

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The General Partners of TRU Capital

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P.S. If you'd like to allocate to TRU Capital Fund 1, click here to book your time and allocate today.

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—

Robert J Miller

Founder and General Partner, TRUCapital.Fund

Fundamental and Thesis Driven Digital Asset Investing for Investors.

John Gillen

Head of Fundamental Analysis and Market Research, TRUCapital.Fund

Fundamental and Thesis Driven Digital Asset Investing for Investors.

TRU Capital Management LLC, 1221 Brickell Ave, 900, Miami, FL 33131, United States