Sophia’s Thoughts on Crypto Week
This week, U.S. lawmakers are shaping the future of crypto. But, the real test lies in whether the monetary system can support the momentum.
These are Sophia's Thoughts:
Crypto legislation is moving, and the GENIUS Act may become the first crypto law in U.S. history, marking a major milestone for stablecoins and digital asset regulation.
But behind the scenes, a power struggle between Trump and Powell is injecting uncertainty into the very monetary system this legislation depends on.
Crypto Week could lay the foundation for mass adoption, but the Fed’s next move may decide whether this becomes a breakout moment, or just a brief policy rally.
🚀 Last week’s market performance
The crypto market rallied 12.6% this week, with Bitcoin (BTC) climbing 10.7% amid strong momentum. Stellar (XLM) led the gains, soaring 86.6% on news of a new PayPal partnership. On the downside, Maker (MKR) posted the weakest performance, slipping 2.4%.
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🏰 A Big Week for Crypto Policy
This week marks a turning point in U.S. crypto regulation as Congress launches what lawmakers have branded “Crypto Week.” The House is set to vote on three major digital asset bills: the GENIUS Act for stablecoins, the CLARITY Act for crypto market structure, and the Anti-CBDC Surveillance State Act.
The most imminent is the GENIUS Act, which has already passed the Senate with bipartisan support and is expected to clear the House on Thursday. If signed into law, it would become the first standalone crypto legislation in U.S. history, establishing a comprehensive framework for stablecoins. The bill goes beyond reserve backing: it requires issuers to be licensed, comply with AML/KYC standards, and offer bankruptcy protections for consumers, while enabling both banks and fintechs to participate under tailored rules. Together, these provisions aim to legitimize stablecoins, protect users, and position the U.S. as a global leader in digital payments and financial innovation.
Julia Demidova, Head of Digital Currencies at FIS, highlighted the bill’s broad industry impact: “Everyone is realizing… they need to have a stablecoin strategy.” She noted that banks and fintechs alike are now reassessing their positions as regulated stablecoins enter the mainstream.
The broader and more complex CLARITY Act also heads to a House vote this week. It aims to define when a digital asset is a security regulated by the SEC or a commodity regulated by the CFTC. While the bill faces a murkier path in the Senate, crypto firms like Coinbase are mounting a full-scale lobbying effort to push it forward. The company launched an ad campaign in Washington with 5,000 chocolate bars urging lawmakers to pass the bill, citing polling that “1 in 5” Americans now own crypto.
“When consumers buy and sell and trade these digital assets, they want to know what they’re getting and they want to know that they’re using a reputable intermediary,” said Kara Calvert, Coinbase’s VP of U.S. Policy. “And what this bill does is provide that construct to do that.”
Despite bipartisan committee support in the House, the CLARITY Act may face hurdles in the Senate due to concerns about Trump’s crypto-linked ventures. But the momentum is clear: lawmakers are positioning the U.S. to lead in digital assets.
🪫 The Power Struggle Behind Crypto Week
While Congress works to define crypto’s legal future, a parallel power struggle is playing out between President Trump and Federal Reserve Chair Jerome Powell, one that could determine how effective this new policy regime ultimately is.
Trump has aggressively pushed for steep interest rate cuts, arguing that slashing rates by 3–4 percentage points would save the government “hundreds of billions” on interest payments tied to the USD 36 trillion national debt. He’s even resorted to handwritten notes and public insults, calling Powell a “numbskull” and “a stubborn mule” to pressure the Fed into action. The conflict has escalated to the point where Trump is reportedly considering replacing Powell with a “shadow Fed Chair” as early as September, someone who would publicly advocate for rate cuts even before taking office.
Powell, for his part, has pushed back. He’s made clear that the Fed would have already begun cutting rates if not for Trump’s own trade tariffs, which he says are inflationary. At a July ECB conference, Powell emphasized the need for a “wait-and-see” approach, warning that premature easing could stoke persistent inflation.
This backdrop matters for crypto. As Jag Kooner of Bitfinex put it, “When lawmakers advance industry-backed frameworks, institutional sentiment strengthens,” and regulatory clarity can bring sidelined capital back into the market. But that momentum depends on macro stability and if Powell is removed or sidelined, markets could react sharply.
Polymarket currently puts the odds of Powell being ousted in 2025 at roughly 17%–19%, reflecting real investor uncertainty. For now, the Fed has signaled two rate cuts this year, but has not committed to a timeline. That hesitation could clash with Trump’s urgency. And, depending on who blinks first, it may either bolster Crypto Week’s gains or shake them loose.
🎢 Policy Meets Volatility
Crypto Week is being pegged as a turning point for U.S. digital asset regulation, but its impact won’t be defined by policy alone. The backdrop of Fed uncertainty, inflation risks, and political interference could shape whether this moment becomes a launchpad for institutional adoption or just another short-lived rally.
So far, markets are leaning optimistic. Bitcoin recently hit a new all-time high above USD 123,000, driven by both anticipation of regulatory clarity and renewed risk appetite. The GENIUS Act could open the door to broader stablecoin adoption, especially if banks and fintechs move quickly to issue regulated tokens. Meanwhile, the CLARITY Act, if passed, would give platforms firmer footing to list and trade tokens without fear of SEC reprisal.
But that momentum is fragile. If Powell is removed, or if political pressure triggers premature rate cuts, markets could swing. A weaker dollar might support Bitcoin in the short term, but long-term credibility of U.S. financial governance would come into question. That’s especially relevant as U.S. lawmakers seek to position the dollar-backed stablecoin ecosystem as a counterweight to rising global competition.
The opportunity is real, but so is the risk. Crypto Week may deliver the legal foundation the industry has long lobbied for. Whether it holds, though, depends on whether the monetary scaffolding beneath it stays intact.
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