Factor Capital Update - July 2025

Friends of Factor,

I generally try to write with more of an opinionated lens to reflect what I’m seeing in early stage markets, but June was a pretty remarkable month of news for the crypto landscape. The sheer volume of market activity and its potential implications for the technology's future can be challenging to capture, but several key developments stand out. In this month’s update, I’ll parse through some of the major news and what I think it may mean for the market at large.

Wall Street's Stablecoin Validation

Arguably the most significant news was Circle's debut on the NYSE. The IPO was priced at $31, opened at $69, and then over the next several days peaked at nearly $300, equating to a market cap of about $75bn. Now trading somewhere around $200 (~$50bn market cap), it is an incredible thing to see. Beyond the eye-popping valuation for a company where more than half of its primary revenue stream (interest earned on treasuries held in reserves to back USDC) is paid out to Coinbase as a partnership agreement, it highlights the market’s excitement for exposure to crypto as an asset class. This success will likely spur every mature crypto business (Kraken, Gemini, Chainalysis, Fireblocks, Bitgo,…) to race to the public markets over the next 6 months.

With this new liquidity, Circle can also be a much more aggressive player in the market. Pre-IPO, discussions surrounded Circle potentially being acquired for $10bn or so. Now, Circle is positioned as the likely acquirer of strategic businesses that can help diversify its product lines and broaden its market influence. For example, just last week they applied for a banking license.

The Regulatory Backdrop

It is not coincidental that Circle’s IPO was timed almost to the day around the passage of the GENIUS Act, which I’ve discussed in prior updates. The Senate's 68-30 passage reflects an incredible change in political calculus and pushes the bill to the House for final approval. Representatives who once viewed crypto as a regulatory risk now see it as a constituent opportunity and an economic imperative.

Explicit endorsements from the Federal Reserve and Treasury Department took the support from Washington a step further. Fed Chair Jerome Powell's testimony that crypto has matured to become more mainstream along with revised guidance that “banks are free to provide banking services to the crypto industry” represented the clearest regulatory green light in recent memory from the Fed.

Meanwhile Treasury Secretary Scott Bessent's framing was even more strategic, stating after the passage of the GENIUS Act that it could “push the U.S. stablecoin market beyond $2 trillion by 2028” and explicitly published support for stablecoins as a way to reinforce US dollar supremacy.

By positioning USD-backed stablecoins as soft power exports that increase demand for Treasury bills, Bessent provided economic justification for continued adoption. This coordinated messaging aligns regulatory guidance with geopolitical strategy. When both monetary and fiscal authorities endorse crypto infrastructure as beneficial to U.S. interests, institutional resistance becomes untenable.

Fintech’s Response

The government’s green light has been met by fintech leaders as an opportunity to step on the gas. Robinhood stole the show at this year’s ETHCC event in Cannes, unveiling plans to tokenize over 200 stocks, including pre-IPO shares for companies like OpenAI and SpaceX, on their own Arbitrum-based Layer-2 blockchain, with CEO Vlad Tenev stating “Our latest offerings lay the groundwork for crypto to become the backbone of the global financial system”.

Robinhood's move into tokenized securities represents just the beginning. While Robinhood is starting with 200 tokenized equities in Europe, our portfolio company Dinari last month became first FINRA-approved Broker-Dealer able to tokenize public stocks and will soon enable any US equity to be tokenized and offered to customers globally in a compliant way. With Dinari’s infrastructure now approved by regulators, look for all types of retail brokerages to begin offering similar services of 24/7 tokenized stock trading, with real estate, commodities, private equity, and other asset classes quickly following.

Stripe's announced their nine-figure acquisition of wallet infrastructure company Privy, following their earlier $1Bn Bridge purchase. These back to back major acquisitions are a major signal that the payments company that processes transactions for half the internet has decided crypto infrastructure is a mission-critical part of their future plans. They now allow businesses in 100 countries to accept payouts in stablecoins and hold stablecoin balances for operations.

Shopify is among the first to take advantage of Stripe’s support, with CEO Tobi Ludke stating he believes “stablecoins are a natural way to transact on the Internet” and announcing their partnership with Coinbase and Stripe to power stablecoin payments for all Shopify merchants. Customers can pay with USDC on Coinbase’s Base Layer 2 blockchain, from hundreds of supported crypto wallets. Highlighting the opportunities afforded by these new rails, he called out the fact that this migration allows them to offer buyer incentives like 1% cash back in the future, which will be a growing driver of merchants shifting towards these new rails.

How do the legacy players respond? Visa expanded stablecoin debit cards to six Latin American countries, enabling seamless USDC and USDP spending at 150 million merchant locations. Mastercard went further, joining Paxos' Global Dollar Network to support USDG, and enabling member banks to mint their own stablecoins. These card networks now view stablecoins as new currencies to clear rather than competitors to block.

The next phase of opportunity is even bigger

The mere fact that the week of July 14–18 was labeled "Crypto Week" in the House — a dedicated period when lawmakers focused on cryptocurrency legislation — is a bit mind-blowing. The main goal was to pass two key bills: the aforementioned GENIUS Act and the Digital Asset Market CLARITY Act to establish rules for other digital assets. These bills will determine which tokens are regulated by the CFTC versus the SEC, set standards for crypto businesses, and block the creation of a retail Fed digital dollar. If successful, this legislation will create a clear regulatory framework for the U.S. crypto industry.

It is hard to overstate what a remarkable 180 all of these developments represent from when I started Factor in early 2023, just weeks after the collapse of FTX. Despite the headwinds the industry faced at the time, the core value proposition of the underlying technology was always clear to me.

The focus was on supporting builders who saw the same and were setting up ways to use this infrastructure to create value for traditional businesses and consumers. The clarity that will come from these regulations should create a wave of opportunity in this sector. The regulatory clarity and policy endorsements will accelerate bank partnerships and drive institutional adoption for even the most resistant players. Banks may soon be compelled to accept crypto as collateral for mortgages whereas even today Blackrock’s $75Bn IBIT ETF doesn’t count as collateral for a line of credit at JP Morgan. Things are changing fast.

As traditional finance embraces crypto rails, by force or by choice, protocols that bridge centralized and decentralized finance - offering familiar interfaces with programmable money benefits - become increasingly valuable.

The Next Phase

Following the immense activity this past month, the key question is where these new services will first achieve widespread adoption to answer the longstanding question of “what is crypto good for?”.

The institutional validation is complete. The regulatory framework is emerging. The technology has proven its utility at scale. What remains is execution.

Who will be the biggest drivers and users of these solutions, and where will the public first see the benefits that are attracting such mindshare from some of the smartest and most forward-thinking companies in the world? June was a pivotal month, and the rest of the year promises to bring even more attention to the genuinely valuable applications of this technology that are being rolled out each day and will continue to be produced in the months and years to come.

Thanks as always for reading,

-Jake

Jake Dwyer
Managing Partner
Factor Capital