Michael Novogratz, CEO of Galaxy Digital, has hailed the recently passed GENIUS Act as a significant breakthrough for institutional adoption of cryptocurrencies. In a Bloomberg interview, he described the legislation as a crucial step that will enable traditional financial institutions (TradFi) to engage with the crypto market on a larger scale.
Novogratz, who founded Galaxy Digital in 2017 with a vision of capturing institutional interest in cryptocurrencies, expressed optimism about the new stablecoin bill paving the way for broader market participation. “We will get the stablecoin bill and hopefully a market structure bill, and it will bring TradFi into this technology,” he stated.
The GENIUS Act essentially establishes the first meaningful federal regulatory framework for dollar-pegged digital assets in the United States, addressing a previously unclear regulatory environment. Although there were attempts by Democrats to amend the bill to prevent Donald Trump from benefiting financially from his own crypto investments, it passed without these changes, marking a political success for both the industry and the current administration.
The passage of the bill comes as major financial institutions, including JPMorgan, have begun exploring tokenisation, with JPMorgan launching a pilot for a tokenised dollar deposit, JPMD, designed for internal transfers and settlements. This move indicates that the banking sector is already moving forward, despite regulatory uncertainties.
Novogratz stated that traditional institutions are beginning to establish their presence as the legal landscape for cryptocurrencies becomes more defined. Galaxy Digital recently made headlines by trading on the Nasdaq via a direct listing, supplementing its existing listing on the Toronto Stock Exchange.
Furthermore, Novogratz revealed that Galaxy is in discussions with the Securities and Exchange Commission (SEC) regarding the tokenisation of its own shares and potentially other equities for deployment in decentralized finance (DeFi) platforms. He envisions a future where “tokenized equities for crypto and non-crypto” are commonplace, and indicated that Galaxy will collaborate with partners to offer white-label solutions alongside its proprietary offerings.
Despite these advancements, Novogratz acknowledges that significant work remains in terms of developing comprehensive crypto regulations. He noted the challenges in advancing the GENIUS Act, labelled as the “easiest” legislation, and remarked on the considerable effort that will be required to refine market structures and DeFi protocols.
As the landscape for stablecoins evolves, it is clear that both the regulatory framework and institutional engagement will play pivotal roles in shaping the future of cryptocurrencies within the financial sector. The GENIUS Act marks a critical turning point, presenting new opportunities while also highlighting the need for ongoing progress in clarification and regulation in the crypto space.
