← Coin Stories with Natalie Brunell
Coin Stories with Natalie Brunell
News Block: Will Tether Be Forced to Sell Bitcoin? State Bitcoin Reserve Bills Could Spark $23B in Demand, Government Spending Surges 15% in 2025
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In this week's episode of the Coin Stories News Block, we cover these major headlines related to Bitcoin and global finance: Will Tether have to sell its Bitcoin? VanEck: Bitcoin reserve bills at state level could spark $23B in demand Government...
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Welcome to the Coin Stories news block. I'm Natalie Brunel, and in just 10 minutes, the time it takes to mine a bitcoin block will provide you with insightful updates on bitcoin markets and the global economy. Everything you need to know in one block. Let's go. Let's start off with some news on the stablecoin front. You may recall that last week, White House crypto czar David Sacks made waves when he announced that he's working with lawmakers to create a clear regulatory framework for stablecoins to thrive in the US and that very same day, Senator Bill Haggerty introduced a new stablecoin bill called the Genius Act. Now, here's where things get interesting this week. Analysts over at JPMorgan are raising concerns about how this bill might impact Tether, the world's largest stablecoin issuer. In case you missed it, Tether just revealed that it has a staggering $143 billion sitting in reserves, including 94 billion in T bills, nearly 8 billion in Bitcoin, and around 5 billion in precious metals. And since May 2023, Tether pledged to buy bitcoin every quarter with up to 15% of its net operating profits. This was obviously cheered on by bitcoiners everywhere because let's face it, that's some serious buy pressure. And last year alone, tether brought in $13 billion in profit. To put this into perspective, Goldman Sachs brought in $14 billion. Only a handful of companies have stacked more bitcoin than Tether since that pledge was made. And there's no sign of Tether slowing down unless new regulations force it to. According to those JP Morgan analysts, only 83% of Tether's reserves would be considered compliant under the new Genius Act. The bill would require stablecoin issuers to back their tokens with, quote, high quality liquid assets, aka U.S. treasury bills. And guess what's not considered compliant? You're right. Bitcoin. If this legislation passes, Tether might have to sell off billions of dollars worth of bitcoin and and replace them with T bills to legally service American customers and companies. Tether CEO Paolo Arduino took to X to respond to the report, writing, quote, even in the most extreme scenario, JP Morgan discounts the fact that Tether's group Equity is over $20 billion in other very liquid assets and is generating more than $1.2 billion in profits per quarter through U.S. treasuries. Adopting new requirements will be straightforward. He also added, quote, jpm analysts are just salty because they don't own Bitcoin. All right, so here's how I'm reading this. Tether isn't really worried about adapting to these new regulations because it has the profits and the financial cushion to make the necessary adjustments if they need to. But here's what stood out to me. Arduino never said Tether wouldn't sell bitcoin to comply with these new regulations. He also didn't say Tether wouldn't stop their quarterly bitcoin buys. And if Tether does end up having to dump billions in bitcoin, well, that's a major shift in the demand side of the market, removing one of bitcoin, Bitcoin's most reliable price insensitive buyers. And for this reason, I think this new stablecoin legislation definitely deserves every bitcoiners attention. All right. The legislation around crypto isn't just heating up at the federal level. It's also accelerating at the state level. It seems like every day now we're seeing states around the country introduce legislation to create their own strategic bitcoin reserves. Today, 23 states have announced bills that would use state funds to purchase bitcoin on their balance sheets. All eyes have been on President Trump's crypto working group, which is currently analyzing whether to create a national strategic bitcoin stockpile. But people shouldn't be sleeping on the states adopting bitcoin as a reserve asset. It could be another huge catalyst for bitcoin's price moving forward. Vaneck's head of digital assets research, Matthew Siegel, who was on the show in December, ran the numbers to estimate the potential impact that 20 of these state bills could have on bitcoin's price action and concluded that it could lead to 247,000 bitcoin being bought by state governments, or $23 billion in today's price. Siegel went on to say that this estimate does not include state pension fund allocations and that he considers it a conservative estimate given the lack of details around the bills. As it stands today, North Dakota is the only state that has actually voted on its bitcoin bill and it was unfortunately rejected in every other state. It's very early days. The bills have only just recently been proposed or voting is still in progress. And as all of this unfolds, it'll be interesting to see which states choose to embrace bitcoin and which don't, and how the pro bitcoin states will benefit from their very wise decision in the years to come. All right, let's switch gears and talk about inflation, because the January Data just dropped this week, and it came in hot. CPI, core CPI and PPI all came in above market expectations year over year. CPI came in at 3%. That's the highest since last June. And PPI was the highest since February 2023. Translation? Inflation is heating up again, and that doesn't bode well for investors hoping the Fed would continue cutting rates. In the last Fed meeting, Powell kept rates steady, and he said he wanted to see more progress on inflation before making any moves. But here's the problem. Inflation is still rising even though rates haven't budged. If you've been listening to the show, this shouldn't surprise you. As Sam Callahan and other recent guests have pointed out, the real driver of inflation today isn't monetary policy, it's fiscal policy. And the latest numbers are proving it. The CBO just reported that Federal spending is up 15% in the last four months of fiscal year 2025. That's right. The government is spending hundreds of billions of dollars more than last year. It's currently on track to run an annual deficit of $2.5 trillion. So should we really be surprised that inflation is back on the rise? And it's no wonder that the Government Accountability Office's recent report warned that we're currently on an unsustainable fiscal path. And Ray Dalio recently made headlines when he said that the US Needs to cut the fiscal deficit or face an economic heart attack. The usual suspects were to blame for the deficit increase. Social Security spending is up 7%, Medicare is up 5%, and Medicaid is up 9%. In my recent interview with Sam Callahan, he mentioned how 61% of federal spending last year was was spent on these entitlement programs. But the problem is, as you may know, none of these programs can be changed without an act of Congress. No one wants to change them. No lawmaker will risk that because they want to get reelected. And the GOP and President Trump have already promised not to make any cuts to Medicare or Social Security. This is something I actually discussed with my top downloaded guest on the show this week, Colonel Douglas McGregor. I highly recommend it. This is also why, even though Doge will drive some positive change in reducing fraud and corruption, it it will likely fail to put a meaningful dent in the fiscal deficit until Congress gets serious about entitlement reform. Until that happens, expect the spending to continue and with it, inflation. So, got Bitcoin? All right, the last bit of news we're going to cover. This week, President Trump finally announced who he plans to nominate as chairman of the cftc. Brian Quintenz Quintenz currently works as the global head of policy at a 16z crypto, the Silicon Valley based venture capital giant. Following the announcement, he tweeted, it is my great honor to be nominated by President Donald Trump as the next Chairman of the Commodity Futures Trading Commission. The agency is well poised to ensure the USA leads the world in blockchain technology and innovation. Now, considering Bitcoin is pretty much the only digital asset clearly recognized as a commodity today, I wish Quintenz had singled it out more. But given his experience in the digital asset space, this move is still being viewed as a major win for the broader industry. It's just another example of how this new administration is placing crypto friendly individuals in key leadership roles at the major regulatory agencies. Don't forget, just last month, crypto advocate Paul Atkins was nominated to head the sec. For years, digital asset businesses have been forced to operate in regulatory limbo, constantly looking over their shoulders, worrying about a potential enforcement action. But now, with crypto friendly leaders at the helm of two key agencies, the US Will likely move from stifling innovation to supporting it. And even though I do not invest in broader crypto, this is the kind of development we need to spark the next wave of Bitcoin adoption here in the us that's it for the News Block your weekly Bitcoin and economic news update. I'm Natalie Brunel. Make sure you're subscribed to Coin Story so you never miss an episode. This show is for educational purposes and should not be construed as investment advice. Until next time, keep stacking and make sure you check out our newsletter thenewsblock substack.com.