PodcastThe Wolf Of All StreetsCaitlin Long

Bitcoin Is Winning As Treasury Takes Power From The Fed | Caitlin Long

Long argues that regulatory resistance from the Federal Reserve is shifting influence over financial-market infrastructure toward Treasury, while bank-backed tokenized deposits increasingly compete with stablecoins. She links tokenization's expansion across securities, derivatives, Treasuries, and commodities to shortcomings in existing settlement rails, including FedNow's transaction caps and Fedwire's lack of programmability. Long also connects Bitcoin's move from the low $60,000s to $80,000 with debasement concerns and predicts that tokenized deposits will eventually surpass stablecoins in transaction velocity and volume.

BitcoinTokenizationStablecoinsBankingFinancial RegulationMonetary Policy

Preview · 16 more points in the app

Read the Full Summary

Key Takeaways

Long distinguishes tokenized deposits from stablecoins based on their network location, legal characterization, and obligor: bank-to-bank tokens would be treated as tokenized deposits, while tokens operating outside the banking network would be characterized as stablecoins. She predicts tokenized deposits could eventually surpass stablecoins in transaction velocity and volume, even as banks, technology companies, and banking associations compete to build stablecoin networks.

Long views the GENIUS Act as more important to tokenized dollars than the Clarity Act, which she assesses as having less than a 50/50 chance of passage and sees as more relevant to exchanges, tokenized securities, and other tokenized assets. She says the Federal Reserve's failure to propose GENIUS rules ahead of the framework's automatic effective date at the end of January 2027 is creating uncertainty for Fed-regulated banks seeking to issue stablecoins.

Long argues that tokenized deposits are gaining an advantage over FedNow for tokenized-dollar settlement because FedNow has transaction caps and many participating banks are receive-only, while Fedwire is not programmable. She says stablecoins have already exceeded FedNow in transaction volume and value, citing Visa's roughly $20 billion in daily global stablecoin activity, with tokenized deposits potentially adding further volume.

Long says tokenization is expanding across securities, derivatives, Treasuries, and commodities, with the DTCC now discussing broader adoption after resisting earlier blockchain initiatives. In her view, tokenized securities need tokenized-dollar settlement to deliver their benefits, reinforcing the importance of the distinction between stablecoins and tokenized deposits.

GEO-POLITICS

Bank Classification — Long argues that stablecoin initiatives announced by major banks may ultimately be classified as tokenized deposits rather than stablecoins. The underlying token technology may be unchanged, but its legal characterization, obligor, and regulatory structure depend on whether it operates inside or outside the banking network.

“But the legal characterization and the obligor and the regulatory structure is very different depending upon whether the token is inside the network or outside of it…”—

Legislation Outlook — Long assesses passage of the Clarity Act at less than 50/50 and says the GENIUS Act was more important for tokenized dollars. She views Clarity as more relevant to crypto exchanges, tokenized securities, and other tokenized assets.

“Less than 50/50. Still possible, but far less than 50/50. The Democrats just don't want this. Does it do we need it?…”—

GENIUS Delays — Long says the Federal Reserve has not proposed its GENIUS Act rules, even though the framework is scheduled to take effect automatically at the end of January 2027. She contrasts the Fed's delay with other agencies' rulemaking and says the uncertainty is hindering Fed-regulated banks that want to issue stablecoins.

“All the Genius Act rules of course have been proposed by Treasury, by the other bank regulators like the FDIC and the OC, but the Fed has not proposed its…”—

TECHNOLOGY

Stablecoin Competition — Long says technology companies, community and regional banks, state banking associations, and major banks are launching stablecoin initiatives. She views the activity as evidence of broad competition to build stablecoin networks.

“Then, you know, I don't know if the order is right, bank chain from the community and regional banks, 39 state banking associations saying that because they're going to get…”—

Settlement Rails — Long argues that tokenized deposits are overtaking FedNow for tokenized-dollar settlement because FedNow has transaction caps and many participating banks are receive-only. Fedwire creates a separate interoperability problem because it is not programmable.

“Build tokenized deposits. And look what's happening now. It's overtaking Fed now…”—

Institutional Tokenization — Long says tokenization is spreading across securities, derivatives, Treasuries, and commodities, describing the trend as effectively unstoppable. She highlights the DTCC's current discussion of broad tokenization after resisting earlier blockchain initiatives.

“Now you have the entire securities market going tokenized and all the derivatives and treasuries and commodities going tokenized. It's it's unstoppable at this point, Scott.”—

ECONOMY

Refinancing Risk — Long argues that the United Kingdom reduced refinancing risk by issuing more long-term gilts, while the United States has relied more heavily on short-term debt. Short-term borrowing may have a lower current expense in some conditions, but it increases exposure to refinancing and changing interest costs.

“with most of it now shortterm we're headed to the point where the refinancing schedule for US government debt might be 40 trillion every 3 months that's an awfully heavy…”—

MARKETS

Peer-To-Peer Utility — Long argues that Bitcoin's most important practical feature is peer-to-peer transacting, rather than deep daily liquidity or tight bid-ask spreads. The key test, in her view, is whether holders can liquidate Bitcoin peer-to-peer when they need to pay living expenses.

“To me, the most important thing about crypto is the ability to have peer-to-peer transaction…”—

Payment Scale — Long says stablecoins have already exceeded FedNow in transaction volume and value and expects tokenized payment systems to handle most future volume and value. She cites Visa's global stablecoin activity at roughly $20 billion per day and says tokenized deposits could add further volume.

“And I saw it then that you know doing a web 2 247 real-time payments system which is what they ultimately built in Fed now was going to get overtaken…”—

FORECASTS

Deposit Growth — Long predicts that tokenized deposits will eventually surpass stablecoins in transaction velocity and volume.

“I came out and said, I think tokenized deposits are going to are going to elbow out stable coins in velocity and volume over time…”—

Tokenized Deposits Are Finally Taking Off

Caitlin Long says bank-backed tokenized deposits are gaining momentum as technology companies, regional banks, and major banks develop competing tokenized-dollar networks.

Why Tokenization Is Suddenly Moving So Fast

Tokenization is accelerating because securities, derivatives, Treasuries, and commodities need programmable settlement, while FedNow has transaction caps and Fedwire lacks programmability.

Tokenized Deposits Could Replace Stablecoins

Long predicts tokenized deposits will eventually surpass stablecoins in transaction velocity and volume because they access broader banking-system liquidity and existing bank networks.

Genius Act vs. Clarity Act

The Genius Act enables tokenized dollars, while the Clarity Act remains uncertain and matters more for crypto exchanges, yield, and tokenized securities.

What Crypto Was Actually Built For

Long argues crypto's foundational purpose is peer-to-peer transactions, not merely deeper liquidity, tighter spreads, or institutional market participation.

Bridging Traditional Finance and Crypto

Her career has focused on building a bridge between traditional finance and crypto, using tokenized dollars to settle tokenized assets.

Is Operation Chokepoint 2.0 Still Alive?

Long says Operation Chokepoint 2.0 continues because regulators still treat crypto as suspect despite regulated institutions meeting stringent bank-supervision requirements.

What Really Happened to Silvergate?

She argues Silvergate was deliberately forced into liquidation, triggering broader banking stress, while regulators obscured their actions through confidential supervisory information.

The Fed Investigation Into the 2023 Banking Crisis

An independent investigation into the 2023 banking crisis has been delayed, and Long expects evidence of coordinated regulatory pressure involving the Fed and political officials.

What Happens If the Fed Delays Genius Act Rules?

If the Fed delays its Genius Act rules, the statute still takes effect, but Fed-regulated banks remain uncertain about how to comply.

How the Midterms Could Change Crypto Regulation

Long believes the Fed may be delaying implementation until after the midterms, hoping a change in political control reduces crypto-regulatory momentum.

What If Elizabeth Warren Runs Senate Banking Again?

A Democratic electoral victory could restore anti-crypto influence, but the Genius Act itself would require congressional action to overturn.

Bitcoin, Bonds and the Debasement Trade

Long warns that Elizabeth Warren returning to Senate Banking leadership could revive coordinated efforts to restrict crypto and influence financial regulators.

The Bond Market Vigilantes Are Back

She argues Warren previously shaped financial policy through personnel choices and White House influence, making a repeat of that structure possible.

Is Another Bond Market Crisis Coming?

Bitcoin's rise from the low $60,000s to $80,000 reflects a broader debasement trade alongside gold, rising Treasury yields, and renewed macroeconomic concern.

Treasury Is Taking Power From the Fed

Long says bond-market vigilantes are returning after years of intervention suppressed market discipline and accumulated conditions for a larger eventual crisis.

Why All of This Is Bullish for Bitcoin

Heavy short-term Treasury issuance and refinancing needs increase Treasury's market importance, while intervention has distorted the natural upward-sloping yield curve.

Can the Fiat System Keep Surviving?

Treasury is taking authority from the Fed, including deciding which foreign stablecoins can enter the United States, partly because of the Fed's anti-tokenization stance.

Why Bitcoin Is Going Much Higher

The shift of financial-market infrastructure toward Treasury and tokenization is bullish for Bitcoin because traditional systems increasingly need to connect with crypto technologies.

Don’t Give Up on Self-Custody

Long says fiat can survive for decades because the United States still has substantial unencumbered asset value, though continued monetary expansion increases systemic fragility.

Final Thoughts

The guests conclude that Bitcoin remains highly promising, self-custody should not be abandoned after security failures, and personal knowledge is essential for navigating change.

Related Episodes

Important Disclaimers

Not Investment Advice: For education only — not financial, tax or legal advice.

AI-Generated: Made by AI from source transcripts and may contain errors.

No Guarantees: Past performance does not predict future results; investing carries risk.

Our Commentary · Request Removal