In This Newsletter

iConnections
Insights with Outerlands
MicroStrategy’s Treasury Plan
Stablecoin Legislation

Nicole Valentine Moderates at iConnections Global Alternative Assets

Nicole Valentine, FinTech director at the Milken Institute, joined leading industry figures in a panel to review the state of digital assets and their growing intersection with traditional finance. The panel, “Renaissance Opportunities in Digital Assets,” brought together top investors, asset managers, and technologists, including:

• Adam Back, co-founder and CEO, Blockstream
• Steve Kurz, global head of asset management, Galaxy
• David LaValle, global head of ETFs, Grayscale Investments
• Nathan McCauley, co-founder and CEO, Anchorage Digital

Panelists explored critical themes shaping the digital assets landscape, including crypto’s post-election market run and its implications for institutional strategy, spot Bitcoin ETFs and their role in accelerating mainstream adoption one year after their launch, the potential implications of a government-held Bitcoin reserve, repeal of SAB 121, and AI’s expanding influence on crypto mining efficiency and blockchain applications.

With digital assets now commanding greater attention from investors, institutions, and regulators, Valentine and her fellow panelists emphasized the importance of responsible
and inclusive industry growth.

Mike Piwowar on Insights with Outerlands

As the US undergoes a major political transition, Michael Piwowar, executive vice president of the Finance pillar at the Milken Institute, joined the Insights with Outerlands podcast to share his perspective on the evolving digital assets regulatory landscape with FinTech Advisory Council member Colin Jones, CEO of Outerlands Capital.

As a former US Securities and Exchange Commission (SEC) commissioner and acting chair, Piwowar outlined the legislative and regulatory roadmap for stablecoins and digital asset taxation, as well as the jurisdictional nuance between the SEC and Commodity Futures Trading Commission.

With the Trump administration making digital assets a policy priority, Piwowar said he expects legislative committees and regulatory agencies to begin work immediately on a policy framework for the industry. However, he noted that final legislative outcomes and rulemaking would take time, making 2025 a year of strategic groundwork rather than immediate implementation.

Bitcoin Treasuries and the MicroStrategy

MicroStrategy, under Executive Chairman Michael Saylor, has significantly expanded its Bitcoin holdings in recent months, reinforcing its strategy of using Bitcoin as a primary treasury reserve asset. As of February 7, 2025, the company owned approximately 471,107 Bitcoin, valued at more than $46 billion, making it the largest corporate holder of Bitcoin, according to Bitcoin Treasuries.

To fund these acquisitions, MicroStrategy has used a combination of equity and debt financing, the Financial Times reports. The company announced plans to raise $42 billion over the next three years through equity and debt offerings to acquire additional Bitcoin. The company has issued convertible bonds and other debt instruments to secure funds for Bitcoin investments. This approach leverages the company's assets to amplify returns, albeit with increased risk due to potential market volatility.

The appreciation of MicroStrategy's Bitcoin holdings has positively impacted its stock performance, resulting in what has been termed “Bitcoin dividends.” As Bitcoin's price increases, the company's holdings become more valuable, indirectly benefiting shareholders through stock price appreciation. However, it's important to note that MicroStrategy does not pay traditional dividends to shareholders; the returns are realized through capital gains on the stock.

While MicroStrategy's strategy has yielded substantial returns during Bitcoin's bull market, it carries inherent risks, the Wall Street Journal reports:

• Market volatility: Bitcoin's price is highly volatile. A significant downturn could adversely affect MicroStrategy's financial position and stock value.
• Leverage risks: Using debt to finance Bitcoin purchases increases financial leverage, which can amplify losses if Bitcoin's value declines. This strategy has led to scrutiny regarding its sustainability.
• Regulatory environment: Changes in cryptocurrency regulations could impact Bitcoin liquidity and valuation, affecting MicroStrategy's holdings.

MicroStrategy's aggressive Bitcoin acquisition strategy has generated significant returns in a rising market. However, the sustainability of this model depends on Bitcoin's long- term performance, effective risk management, and MicroStrategy's ability to navigate the ever-changing cryptocurrency landscape. Decrypt reports that this treasury management strategy has inspired more than 70 other publicly traded companies to explore adding Bitcoin to their corporate treasuries.

Stablecoin Legislation Introduced in US Senate

This week, a bipartisan group of lawmakers introduced the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, setting the stage for a long- awaited regulatory framework governing payment stablecoins. Led by Senator Bill Hagerty and cosponsored by Senate Banking Chair Tim Scott, Senator Cynthia Lummis, and Senator Kirsten Gillibrand, the legislation builds on efforts to provide regulatory clarity in the digital asset space, such as last year’s Lummis and Gillibrand stablecoin bill and Hagerty’s discussion draft, on which the Milken Institute published a comment letter last fall.

The GENIUS Act aims to position the US as a global leader in stablecoin innovation, addressing concerns over consumer protection, financial stability, and competitiveness. The bill reflects the growing bipartisan recognition that stablecoins—digital assets pegged to the US dollar— can play an integral role in modern payment infrastructure. “This legislation will expand financial inclusion and provide much-needed clarity to ensure the industry can innovate and grow here in the United States while protecting consumers and promoting the US dollar’s global position,” said Scott, according to a press release from the Senate Banking Committee.

The GENIUS Act establishes dual federal-state oversight, differentiating between large and small stablecoin issuers. The bill:

• Defines a payment stablecoin as a digital asset used for payment or settlement, pegged to a fixed monetary value.
• Establishes clear procedures for institutions seeking licenses to issue stablecoins.
• Requires issuers to back stablecoins with 1:1 reserves, adhere to Bank Secrecy Act requirements, and publish regular transparency reports on their reserve holdings.
• Applies the Federal Reserve’s regulatory framework to depository institutions and the Office of the Comptroller of the Currency’s framework for nonbank issuers of stablecoins exceeding $10 billion in market capitalization.
• Allows for state regulation of issuers under $10 billion in market capitalization and provides a waiver process for issuers exceeding the threshold to remain state- regulated.
• Establishes supervisory, examination, and enforcement regimens with clear limitations.

The bill also explicitly exempts payment stablecoins from securities classification. Additionally, the Treasury Department is tasked with studying algorithmic stablecoins—a move that stops short of an outright ban but underscores ongoing concerns about their systemic risks, like markets witnessed during the Terra Luna collapse. Hagerty emphasized his commitment to working with House Financial Services Chair French Hill to move the bill forward. Hill recently announced a bicameral working group, bringing together key committees—including House and Senate Banking and House and Senate Agriculture—to align regulatory efforts.

Last week, Hill and Subcommittee Chairman Bryan Steil released a discussion draft for a House version of a bill to establish a framework for the issuance and operation of dollar-denominated payment stablecoins in the US, The Block reports.

Further bolstering the bill’s prospects, White House AI and Crypto Czar David Sacks has signaled support for advancing stablecoin legislation in the coming months during a joint press conference with congressional leadership, CoinDesk reports. During the press conference, Scott prioritized passing stablecoin legislation within the first 100 days of President Trump’s administration.