The crypto industry is still waiting for clear US market structure rules, with many arguing that regulatory certainty is the key to unlocking deeper institutional liquidity. But at the same time, stablecoins are evolving beyond trading tools into potential payments and settlement infrastructure. Joining me to weigh in on this is Paul Howard, Senior Director at Wincent. Paul, welcome back.
Hi Johnny. Thank you for having me.
From Wincent's perspective, what regulatory clarity is most needed to unlock deeper institutional liquidity in crypto?
The main purpose of the Clarity Act is to define the roles of the SEC and the CFTC. For the last five years, the conversation holding back liquidity has been the classification question — are these products securities or commodities? That ambiguity has been a significant barrier. We are now at a stage where, hopefully by mid-September, the conversation will come down to a vote in the Senate. The most interesting part of the legislation is the ability for companies like Circle and other stablecoin issuers to pay rewards — effectively yield — directly to users on-chain. What that means is moving debt on-chain. Rather than having money in high-street banks like Wells Fargo or HSBC, users will be able to hold stablecoins that pay yield directly — and those yields are likely to far exceed what we see from traditional banks right now.
Stablecoins are increasingly described as crypto's strongest real-world use case. Do you see them mainly as trading collateral today or as genuine payments and settlement infrastructure?
Satoshi's original idea was that Bitcoin would be used as a peer-to-peer payment system. And I think the last 12 years — through the DeFi summer, the meme coin mania — all of these narratives disrupted the space from what it was originally meant to be. I think we are getting to a stage later this year where stablecoins are no longer just used by market makers for exchange collateral, but actually for settling transactions globally. We have seen Circle's recent results and the volume they hold in custody. Large institutions are now seriously considering stablecoins for settlement. I think stablecoins will become what I call invisible crypto — where users do not know that behind the scenes, stablecoins are being used to flip currencies, provide remittances, and deliver instant cross-border settlement. We just see dollars or fiat in our bank account, while behind the scenes crypto is being used at the speed of light to move that money.
If regulated onshore perpetual futures develop in the US, how significant would that be for institutional adoption and market structure?
It is a major topic. The migration of this massive crypto product into the CME and CFTC world will bring these regulated products onshore in the US. And it is not going to take liquidity from offshore exchanges — it is actually going to create a new market onshore. Family offices and financial institutions across the US will be able to buy and short these products through regulated channels. It will give new hedging instruments and provide derivative liquidity for a space that has really not had that from onshore markets and onshore participants in the US.
US equities have been strong but Bitcoin remains range-bound. Why is crypto not participating more fully in the broader risk-on rally?
Crypto has always been a risk asset closely correlated with equities. But what we have seen in equities over the last couple of years is an increasingly concentrated narrative — something like 40% of the S&P 500 is now in just the top ten stocks. The big boom in AI has not translated into other risk assets like Bitcoin. We really need our own narrative now for cryptocurrency. And I think that will come — the regulations we discussed, and the onshore perps markets coming to fruition in the US, are going to be two big drivers. My expectation is that they will drive ETF flows, volumes will increase, and the crypto narrative will surface again. Not having that, and being dependent on the equity markets narrative, is certainly holding the sector back and is why we have such thin liquidity right now.
Are we still in a crypto winter or is the market quietly building toward the next institutional cycle?
We are definitely in a crypto winter — and over the last nine months it has been a real one. I was joking with a colleague the other day that there might be an ice age coming. But my personal view is that we are building the foundations for something much bigger. We are in a structurally more bullish position than the pricing and activity suggest. The pattern of crypto winters is nonetheless playing out — two exchanges have closed recently, BitMEX and BitMarks, and we have seen headcount reductions of 17, 18, 20% across some firms. But it is a silent winter, without the huge blowups we saw previously with FTX and others. For us as a large market maker and fund, it is leaning more toward a structural institutional story rather than the speculative punting we have seen in the market over the last five years. Whilst we are in this lull, the foundations are being made for a lot more institutional involvement. ETFs and stablecoins are the two things to watch as we come into Q4 off the back of the new regulations we expect.
Thank you so much, Paul. Always a pleasure to have you on.
Thank you Johnny.
