Watching for the Genius Act vote. Honestly can't think of any equity it is more bullish for than $GLXY After years of “regulation by enforcement” and uncertainty that pushed crypto innovation offshore, U.S. lawmakers are advancing comprehensive reforms for digital assets. Chief among them is the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, a bipartisan congressional bill aiming to establish clear rules for crypto and encourage innovation onshore. The GENIUS Act focuses initially on stablecoins – the $243+ billion market of digital USD tokens that facilitate over $700 billion in monthly transactions globally – but it is part of a broader regulatory push addressing key pain points in crypto policy. For the first time, Congress appears poised to deliver a “clear, durable framework” for digital assets that protects consumers while fostering growth. What does the GENIUS Act propose? In short, a holistic overhaul of digital asset regulation. For example: Stablecoin Oversight and Taxonomy: It creates a federal framework for stablecoin issuers, imposing strict reserve, auditing, and redemption standards under bank-like supervision. This not only clarifies that properly regulated payment stablecoins are not securities, but also enhances the dollar’s reach via blockchain by “bringing stablecoins into the regulatory purview of the world’s most advanced…capital market regime”. Issuers would be licensed (through the OCC or equivalent state regimes) and subject to high-quality collateral rules (akin to money market funds), making stablecoins safer and “bankruptcy remote” for holders. These measures “create pathways for innovation” in payments and fintech while safeguarding financial stability. Asset Classification Clarity: The legislation (alongside companion bills) tackles the long-standing confusion over what is a security vs. a commodity in crypto. Lawmakers seek to “deliver a clear definition of what is a commodity and what is a security”, ending overlapping SEC/CFTC turf wars. For instance, the proposed Securities Clarity Act explicitly states that a digital token sold as part of an investment contract does not make the token itself a security. Similarly, the House’s Financial Innovation and Technology for the 21st Century Act (FIT21) would delineate regulatory boundaries: most decentralized cryptocurrencies would default to digital commodities, under CFTC oversight, whereas tokens with security-like fundraises or centralized control would fall under the SEC. This categorization of digital assets into clear buckets is expected to “provide much-needed clarity” and end the era of ad hoc enforcement. Modernized Market Structure: The reform package updates rules for exchanges and trading platforms to fit crypto’s unique market structure. Under FIT21, for example, trading venues for crypto (dubbed “digital asset trading systems”) would register with both the CFTC and SEC, segregate customer assets from company funds, maintain robust records, and even hold wind-down capital to protect users in case of failure. These measures – inspired in part by preventing another FTX-style collapse – strengthen transparency and consumer protection without stifling trading. The net effect is a more institutionally friendly market infrastructure, where big players can participate knowing exchanges are well-regulated and oversight responsibilities are settled. Tax and Transaction Clarity: Recognizing that the tax code has discouraged everyday crypto use, lawmakers have introduced tax relief provisions. One bipartisan proposal, the Virtual Currency Tax Fairness Act, would exempt small personal crypto transactions (under $50) from capital gains taxes, removing a major friction for using crypto in daily life. “Our current tax code stands in the way,” said Sen. Pat Toomey when sponsoring the idea – treating minor buys like a cup of coffee as non-taxable would allow cryptocurrencies to “become an ordinary part of Americans’ everyday lives”. Such de minimis tax clarity, combined with IRS guidance on reporting, lowers compliance burdens and encourages broader adoption of digital payments. Innovation and Self-Custody Protections: Importantly, the legislative efforts seek to embrace innovation rather than drive it away. The GENIUS Act was described as an “innovation promoting, consumer protecting” win for both crypto and traditional finance. It balances reasonable pathways to compliance with strict penalties for bad actors. Meanwhile, to preserve the ethos of decentralization, Congress is moving to codify the right to self-custody digital assets. The House’s crypto framework explicitly protects consumers’ rights to hold their own crypto in private wallets rather than relying on third-party exchanges. By ensuring individuals can control their keys, the law provides an extra layer of security and maintains user empowerment, all while still encouraging the growth of regulated custodians and service providers. In sum, the U.S. is signaling that it wants responsible innovation to flourish onshore – “attracting talent back to the US” with a more predictable legal environment, rather than ceding fintech leadership to other jurisdictions. For the crypto industry, these reforms bring the regulatory certainty and legitimacy it has long craved. And no player is better positioned to capitalize on this sea change than Galaxy Digital, a diversified digital asset and AI financial services firm. Here’s how each of Galaxy’s key business verticals stands to benefit from the coming wave of clarity and why Galaxy’s unique profile could translate regulatory reform into outsized growth. Trading & Market Making: Higher Volumes, Broader Markets Galaxy’s Global Markets division (which includes its OTC trading desk and liquidity services) is set to thrive under clearer rules. Stablecoin legalization and oversight alone will be a huge boost to trading activity. Today, dollar-pegged stablecoins are the lifeblood of crypto trading worldwide – enabling fast, always-on settlement – yet in the U.S. they’ve operated in a gray area that kept many institutions sidelined. The GENIUS Act changes that by institutionalizing stablecoins: issuers would be federally approved, fully reserved, and subject to audits, making these digital dollars as trusted as money market funds. As a result, U.S. financial firms and investors will feel comfortable using stablecoins on trading venues, knowing they are safe and regulated. This broader acceptance should swell trading volumes. Galaxy’s traders will have more flow to internalize and more demand for OTC block trades as hedge funds, banks, and asset managers enter the crypto markets en masse, armed with fiat-backed tokens that regulators endorse. Moreover, asset classification clarity will expand the universe of coins and tokens that Galaxy can confidently make markets in. Clear definitions of what constitutes a security vs. a commodity mean Galaxy can avoid regulatory landmines when listing assets or facilitating trades. In the past, uncertainty over a token’s status (security or not) made U.S. broker-dealers hesitant to deal in anything but Bitcoin or Ethereum. With new laws likely defining most decentralized tokens as commodities by default, Galaxy’s trading arm can support a wider array of cryptocurrencies without fearing an unexpected SEC enforcement action. Regulatory “bright lines” will let Galaxy broaden its trading pairs and products (including potentially crypto derivatives or tokenized securities) under proper licenses. The result is more revenue opportunities and the ability to serve clients with a full spectrum of digital assets. Finally, the improved market structure – exchanges registering and adhering to stricter safeguards – increases confidence for big investors to trade at scale. Galaxy, as a firm that already operates with a high compliance bar and trading controls, will likely face lower incremental costs than less compliant competitors when adapting to new rules. In fact, Galaxy’s regulatory-friendly approach is a competitive advantage: the company’s U.S. listing approval by the SEC “highlights…strong regulatory compliance and dedication to transparency,” which boosts credibility with institutions. As more venues implement surveillance and segregation of funds, counterparty risk diminishes and institutional trading activity (and thus Galaxy’s volumes) can swell. In short, a well-regulated market is a bigger market – and Galaxy’s trading desk is primed to be a key liquidity provider in this larger pond. Asset Management: Unlocking Institutional Capital Galaxy’s Asset Management division stands to reap the rewards of reduced regulatory uncertainty through accelerating inflows and new product offerings. One of the biggest bottlenecks for institutional investment in crypto has been the murkiness of rules – many asset managers feared that investing in or offering crypto products could invite regulatory trouble if assets were later deemed unregistered securities, or if custody and accounting rules were unclear. With the GENIUS Act and related bills, those fears are set to ease. Explicit asset classifications and oversight frameworks give institutional investors and their compliance departments the green light to allocate to digital assets. As clarity emerges (and as high-profile steps like the SEC permitting Galaxy’s U.S. stock listing confirm crypto’s growing acceptance), pent-up demand from pensions, endowments, family offices, and sovereign funds can flow into crypto funds. Galaxy, which offers crypto index funds, passive trusts, and active investment vehicles, will be an obvious beneficiary. Greater regulatory legitimacy makes it far easier for Galaxy’s sales team to pitch crypto investment products to institutional allocators who previously sat on the sidelines due to fiduciary concerns. The reforms also enable product innovation in asset management. For example, with clear laws, the SEC is more likely to finally approve spot crypto ETFs (beyond just Bitcoin futures ETFs). Galaxy has been at the forefront of pursuing crypto ETFs and other regulated investment vehicles. A friendlier regulatory stance increases the odds that Galaxy can launch exchange-traded products, structured notes, or tokenized asset funds in the U.S., vastly scaling AUM. Likewise, tax clarity – like a de minimis exemption on small transactions – could encourage retail investors to use crypto and invest in funds without onerous tax complexity, indirectly boosting demand for Galaxy’s retail-facing funds or managed portfolios. Additionally, by codifying self-custody rights and improving custody standards, the legislation addresses a key due diligence concern for institutional investors: the safety of assets. With laws explicitly permitting self-custody and encouraging robust custodian frameworks, institutions can be confident that any crypto held in Galaxy’s funds is secured in compliant, bankruptcy-remote ways (a principle extended from stablecoin reserves). This reassurance makes institutions more likely to trust crypto fund managers like Galaxy with larger allocations. In sum, a combination of clarity, new investable products, and improved security norms will spur AUM growth and performance fees for Galaxy’s asset management arm. The ability to participate in the crypto upside “without sacrificing consumer protections” will attract a wave of new investors that Galaxy is well placed to serve. Investment Banking: A Boom in Deals and Advisory Opportunities Galaxy Digital’s Investment Banking unit (providing M&A advisory, capital raising, and consulting for crypto and blockchain ventures) could see a surge in activity once clear regulations are in place. Why? Regulatory clarity is the catalyst for the next phase of industry maturation – and that means more companies forming, expanding, merging, and going public, all of which drives banking deal flow. When the rules of the road are defined, venture capital and entrepreneurs will double down on U.S. crypto startups (rather than routing everything to offshore havens). We may witness an explosion of new fintech and blockchain businesses launching to leverage stablecoins, blockchain infrastructure, and tokenization in a legally compliant way. Galaxy’s bankers will be there to advise these firms on structuring token offerings in compliance with the SEC/CFTC guidelines, or obtaining licenses, or raising growth capital. In the absence of clear laws, many projects held back on issuing tokens or pursuing certain business models – that hesitation will fade, leading to more fundraising mandates for Galaxy (e.g. private placements for crypto startups, or helping established firms spin off compliant token subsidiaries). M&A activity is also poised to jump. As regulatory certainty draws in traditional financial institutions, we can expect strategic acquisitions: banks and payment companies might buy stablecoin issuers or crypto custodians to get a foothold, large exchanges might consolidate, and struggling players will be absorbed by stronger ones now that there’s a clear framework for licensed operations. Galaxy’s investment banking team, with its deep crypto expertise and Wall Street pedigree, is an obvious choice to advise on these complex deals. Indeed, as one of the few U.S.-regulated crypto-focused investment banks, Galaxy could corner the market on advisory roles for anything from a blockchain startup IPO to a cross-border acquisition of a crypto exchange. Regulatory green lights also mean public listings (via IPO or SPAC) become viable for more crypto companies – and Galaxy can underwrite or advise those offerings. In addition, the GENIUS Act’s stablecoin provisions will create opportunities in traditional sectors: for instance, fintechs integrating stablecoins into payment networks, or e-commerce firms issuing branded stablecoins. Galaxy can position itself as a key advisor at that intersection of crypto and mainstream finance. It helps that the legislation explicitly aims to bridge crypto with the traditional system (enhancing the dollar’s “distribution and reserve status worldwide” through stablecoins) – this will encourage collaborations where Galaxy’s dual knowledge (crypto tech and banking) is invaluable. Overall, Galaxy’s deal pipeline should expand significantly, powered by a larger, more dynamic crypto industry that finally has clear rules to build within. Advisory fees, underwriting revenues, and strategic investments (Galaxy often invests alongside the clients it advises) all stand to increase, making this vertical a big winner from the regulatory sea change. Lending & Yield: New Avenues for Credit and Financing Galaxy’s Lending business and its broader yield-generating activities (like structured lending, financing deals, and staking services) will gain from the regulatory reforms in multiple ways. First, formal recognition of digital assets and stablecoins opens the door for more traditional lenders and institutions to participate in crypto credit markets – but Galaxy has a head start. With clear laws, banks might begin to lend against crypto collateral or offer credit lines to crypto firms, but Galaxy is already an established crypto lender. As more borrowers enter the space (hedge funds seeking leverage on crypto trades, miners/data-center firms financing expansion, stablecoin issuers managing liquidity, etc.), Galaxy’s lending desk can expand its book. Clarity on asset status means Galaxy can more confidently accept various tokens as collateral (knowing how they’d be treated legally in case of default or bankruptcy). For example, if a token is firmly categorized as a commodity, using it as loan collateral becomes more straightforward and enforceable than if its status were dubious. The GENIUS Act’s impact on stablecoins also directly boosts lending: stablecoins under a strict regulatory regime will be seen as low-risk cash equivalents. Galaxy could increase its activities in stablecoin-based lending and borrowing – e.g. offering dollar loans against crypto collateral where loans are disbursed in regulated stablecoins, or providing liquidity to stablecoin issuers. Because the bill requires stablecoin reserves to be largely held in cash or Treasuries, stablecoin issuers might not be doing fractional lending themselves, leaving an opening for third parties like Galaxy to facilitate credit in the crypto ecosystem (for instance, lending stablecoins to market makers or investors). Now that those stablecoins are trustworthy and redeemable, Galaxy can confidently intermediate, knowing the assets won’t suddenly evaporate in a regulatory crackdown. Another aspect is derivatives and structured products. Clear regulatory assignments (SEC vs CFTC) could allow the growth of a regulated crypto derivatives market (swaps, futures on a wider range of tokens, etc.). With its lending and trading expertise, Galaxy can offer margin lending for crypto derivatives or structured yield products to clients (within the new compliance framework). For instance, Galaxy might structure a yield product where clients deposit stablecoins and earn interest from lending them to institutions – a business much more feasible once interest-bearing arrangements with stablecoins are explicitly lawful and perhaps not deemed securities themselves (depending on final rules). Additionally, institutional adoption fueled by regulatory clarity increases demand for borrowing crypto assets (for shorting, hedging, or working capital). Galaxy, being well-capitalized and diversified, can serve as a trusted counterparty in these transactions when others cannot. The company’s credibility will be crucial in a post-regulation era: players will prefer to borrow from a reputable, compliant lender. Galaxy’s recent uplisting efforts and SEC approval underscore that credibility (the SEC’s nod “demonstrates the regulatory progress made in the cryptocurrency sector”). All told, by reducing legal risk and attracting more participants, the GENIUS Act will help scale up Galaxy’s lending revenues and allow innovative financing deals that were off-limits in the regulatory void. Custody Services: Demand for Secure, Compliant Storage Soars In the digital asset space, custody is king once institutions get involved. Galaxy’s Custody arm – now bolstered by its acquisition of the secure custodian platform GK8 – is poised to flourish as regulatory clarity raises the bar (and the demand) for safe asset storage. Under the new laws, many investment advisers, banks, and companies will be required or strongly encouraged to use qualified custodians for crypto assets. By establishing standards for digital asset custody and explicitly permitting self-custody, regulators are essentially acknowledging crypto custody as a legitimate, essential part of the financial system. This is bullish for firms like Galaxy that have invested in top-tier custody tech. Galaxy’s GK8 platform enables institutions to securely store tokens (with features like offline cold vaults and multi-party computation) – exactly the kind of infrastructure that traditional fiduciaries will look for when entering crypto. As institutional adoption accelerates, big investors will entrust more assets to custodians who meet rigorous security and compliance benchmarks. Galaxy can attract those clients by offering custody solutions on par with traditional custodians, but specialized for crypto. With U.S. regulatory blessing, holding crypto with a custodian like Galaxy becomes as ordinary as holding stocks at a bank. We can also foresee corporate treasuries and fintech firms needing custody: for example, if a payment company issues a stablecoin or holds crypto reserves, it will need a secure, compliant third-party to safeguard funds. Galaxy can fulfill that role, especially since the GENIUS Act’s framework will likely require stablecoin reserve custodians to be vetted entities. This translates into new business lines (safekeeping stablecoin reserves, managing custody for ETFs or funds, etc.). On the retail side, the explicit defense of self-custody rights reassures crypto users that they can hold their own keys – a philosophical win – but many individuals and smaller institutions will still choose the convenience of professional custody if it’s trusted and regulated. By being a U.S.-based custodian with cutting-edge tech and regulatory approval, Galaxy can scoop up market share from less regulated competitors. Notably, some major exchanges and lenders lost trust due to mismanaging customer assets; new rules (like segregating customer funds and maintaining reserves) aim to prevent that. Galaxy has long championed best practices, and as a result, its custody services will appeal to institutions ensuring compliance with these new norms. In summary, the regulatory regime will greatly expand the addressable market for crypto custody – and Galaxy’s investment in GK8 and a forthcoming GalaxyOne prime brokerage platform integrating custody positions it perfectly to become a leading custodian in the United States crypto landscape. There’s also a geopolitical angle: the GENIUS Act and related policies aim to “promote the U.S. dollar…and help America succeed…in the shifting global economy”. A strong domestic crypto and AI sector is part of that strategic vision. Galaxy, with its 800MW (and growing) high-performance computing campus on U.S. soil, fits into a narrative of American leadership in both finance and technology. As policymakers encourage onshore development, Galaxy’s U.S.-based AI infrastructure could see support or partnerships (for example, government or academia renting space for AI projects, knowing Galaxy is a compliant partner). In short, Galaxy’s AI business benefits from the broader tailwinds of an innovation-friendly U.S. stance: it gains from the company’s strengthened finances, from new client opportunities at the crypto-AI intersection, and from being a cornerstone of U.S. digital infrastructure at a time when that is politically valued. Galaxy Digital’s Unique Position: A Well-Regulated, Diversified Leader While many crypto firms will benefit from clearer laws, Galaxy Digital stands out as uniquely positioned to capitalize fully on this regulatory renaissance. Galaxy is diversified across trading, investment banking, asset management, lending, and now AI data centers, giving it multiple channels to monetize the coming growth. Few competitors boast this breadth. For example, exchanges like Coinbase may gain from regulatory clarity in trading but lack Galaxy’s exposure to M&A advisory or mining-to-AI infrastructure upside; crypto miners pivoting to AI lack financial services arms; traditional banks interested in crypto don’t have in-house digital asset expertise. Galaxy’s structure – often likened to a “Berkshire Hathaway of crypto and AI” – means it can reap revenues at every layer of the value chain: advisory fees from new deals, trading spreads from higher volumes, management fees from larger AUM, interest from lending, and rental income from data centers. This balanced model also insulates Galaxy from volatility in any single area, making it a safer bet for institutional investors looking to gain exposure to the crypto sector’s growth. Notably, Galaxy has been consistently profitable, growing its book value per share from ~$1 in 2018 to over $6 by May 2025 – a rarity among crypto companies – and even returning capital to shareholders via buybacks. This track record of prudent management could attract new investors as confidence in the sector improves. Equally important is Galaxy’s regulatory readiness and credibility. This is a company that has proactively embraced regulation: Galaxy Digital Partners LLC is a registered broker-dealer and FINRA member, and the firm underwent the rigorous process of obtaining SEC approval for a U.S. stock listing. That SEC endorsement “is a clear indication of…strong regulatory compliance and dedication to transparency”, boosting Galaxy’s standing in the eyes of regulators and institutions alike. In an environment where compliance will be a key differentiator, Galaxy has already set itself apart as a trusted, compliant institution. This means Galaxy can integrate new regulatory requirements quickly (since many are extensions of what serious firms like Galaxy already do), whereas lesser competitors might stumble or be weeded out. For instance, when exchanges are mandated to segregate funds and keep audit-ready books, Galaxy will likely have minimal adjustments, having long operated with Wall Street-level internal controls. Its leadership team – CEO Mike Novogratz (a former partner at Goldman Sachs) and President Chris Ferraro (formerly of HPS Investment Partners) – deeply understand how to run a regulated financial business.