The Senate is set to pass the genius act early next week, a controversial piece of cryptocurrency legislation that critics say will hand an unodue love of financial power to the tech industry. On Its Face The Bill, Which Has Advanced with Bipartisan Support, Purpores To Offer A Regulatory Framework for the Expansion of “Stablecoins,” A form of Crypto Pages to an existing, Recognized asset – in Many Cases the US Dollar. In reality, IT COULD ENABLE CORRUCTAction, Screw Over TaxPayers, and Potentially Destabilize The Economy.
The Genius Act would allow Banks and Private Companies to Issue Stablecoins, Essentialy Their Own Currencies, with light oversight from Regulars. It mandates that issuers of stablecoins holds a reserve of the stable asset backing their cryptocurrency at all Times, and that firms abide by Certain Anti-Money Laundering Laws, AS Well As us Sanctions Against Foreign Bodies.
This Piece of Legislation is Working Its Way Through Congress As Sitting President Donald Trump and His Family Build A Cryptocurrency Empire That Steamrolls Anti-Corruption Laws and Ethical Norms-One They Hope Will Flourish Under The Industry-Friendly Policies and Laws Created Under The The Administration of the Trump Patriarch.
One of Trump's Priorities Has Been the Normalization of These so-he-healed Stablecoins-A Type of Asseet That His Family Is Now Hawking. Despite The Moniker, Stablecoins Can be extremely unstable. At 2023 Study Published by the Bank for International Settlements Found that of 60 Stablecoins Analyzed in Their Review, All of Them Had Become De-Pages from Their Underlying Asset at Least Once. The 2022 Crypto Crash was TrigGGed by the Failure of Terraform Lab's Terra/Luna “Algorithmic” Stablecoin – The Collapse of Which Saw $ 45 Billion Erased in the Span of a Week.
The Stablecoin Bill Comes as the Government ReorientS Its Approach to Crypto. Under the Biden Administration, Crypto Kingpins Began to feel the Sting of Consequces for Schemes Gone Wrong. FTX Crypto Exchange Founder Sam Bankman-Fried was sentenced to 25 years in Prison After Carrying Out One of the Largest Financial Scams Since Enron. Tether, The Largest Stablecoin in Crypto, Settled a Lawsuit Brough Against It by New York Attarney General Letitia James in 2021
Trump Pledged in New, Friendlier Regulatory Environment in Washington – and the Crypto Industry Poured Milons Into Super Pacs to Elects Allies Throughout Congress. Now, The Industry Has Its Moment To Push Through a Public Smokescreen of Barely-There Regulation, While Continuing to Rake in the Cash.
No one has been More Outspoken on the Failings of the genius Act Than Sen. Elizabeth Warren (D-Mass.), Who Told Rolling Stone Ahead of Key Votes On The Bill would “Create to SuperHighway for Donald Trump's Corruption.”
The Trump Family's Cryptocurrency Venture, World Liberty Financial – Which is Currently Being Operated by His Sons and Zach Witkoff, The Son of Trump's Middle East Envoy Steve Witkoff – Recently launched Its Own Stablecoin, Designated Usd1, Which is pages to the the US Dollar and Backed by Treasury Bonds. The Genius Act would Allaw Major Tech Companies, Banks, and Other Financial Institutions To Issue Their Own StableCoins, and Many Are Poised to Buy Treasury Bonds So They Can Back The Digital Currency With Real Assents, as is required.
According to a Report Issued Last Week by Ark Invest, The Stablecoin Market May Become One of the Largest Holders of US Debt in the Coming Years – Poteninlly Tying Swaths of Us Debt to A Dubiusly Regulated and Often Unstable Asset. (For Example, If Tether-The Largest Stablecoins in the Market-was a country, it would be the 18th-Largest Holder of Us Debt in the World.)
The Lines Grow Even Murkier Where Consider Trump's Habit of Using His Position in The White House to Enrich Himself, as well as to Tip Market Scales. World Liberty Financial Aldeady Landed A $ 2 Billion Transaction Deal to Help An Abu Dhabi-State Backed Company Purchase A Stake In The Binance Crypto Exchange use the USD1 Stablecoin.
“AS SOON AS THE PLAYERS Undersand That Trump's Interventions Is a Real Possibility, Then the Stablecoin Market is no Longer About a Careful Review of Wheer There are adequate dollar to back up a particle stablecoin, or when the stable coin issuer has an aaa rating,” Warren sats. “Instead, The Whole Game Becomes One of Trying to Engage the President to Weigh the End and Make One Set of Coins More Valuable, and Therefore Another Set of Coins Less Valuable. It's Corruption, but's Alse A Market Manipulation That Lasthery Drains Amy Development. … it Undermines All the markets at that point. ”
Warren appears the Development of the genius act to efforts to regular derivatives and the feverish Rise of Money Market Mutual Funds in the Early 2000s, Both of Which Were Major Factors in the 2008 Financial Crisis: “The Derivatives Industry Came to the Congress And Said, 'Regulata Regulato Us,' Andy Wrote a Sample.
The consequent was, in Warren's View, That Lay People Believed the Industry to be effects Regulated, when in reality Investors Essentially Tailored legislation to Their Own Priorities. “The Risk Kept Building in The System Until in 2008 It Blew Up the Entire Economy and REQUARRE A $ 700 Billion Bailout from TaxPayers,” Warren Says. “So Think About Why an Industry Comes to Congress and Says, 'Regulato Us.' They want the Imprimatur, they want the Gold Seal of the United States Government.
Warren Is Not Alone in Her Concens, and Has Found An Unexpected Ally in Republican Sen. John Hawley of Missouri. Last Week, Hawley Described the genius act as a “Huge giveaway to big tech” that would effect private tech companies to create their Own Currencies that compete with the dollar.
“The US Dollar is the Reserve Currency,” Warren Says. “The United States Does Not Gain from Creating A competing Electronic Currency. Getting More People To Hold Stable Coins Rather Than Dollar During Their Investment Transactions, Does Not Servi Serve Initests, but it injects Risk Into the US”
“Anyone Who Thincs That When a Financial Crash Hits [the value of stablecoins] Will Translate One to One Into Dollars Is Fooling Themselves, “She Adds.
The Ripple Effects Can Be Catastrophic When a Stablecoin Collapses. Existing Stablecoins are Already Buying Up Billions in Treasury Bonds, and in the Event of A Run On A Coin, or Any Type of Collapse Within Stablecoin, The Issuer would Sell Off Their Own Holdings – In This Case Treasury Bonds – To Pay Back Their Customers. Economists Warn That Such A Scenario Cound Destabilize The Underlying Treasury Securities Market that Serves As the Foundation of the US Economy.
AS Warren and Hawley Point Out, The Risks of Economic Destabilization Incasted Significantly If Legislation Like The Genius Act Passes. Paypal Has Already Launched Its Own Cryptocurrency, and Apple, Facebook, X, and Airbnb Have All Explored Releaseing Their Own StableCoins For Customers to conduct on-Platform Transactions in Crypto.
If, for Example, Elon Musk “Is Controlling a Significant Portation of Cash-Light Money Moving Through Our Economy and X Gets in Trouble, The Federal Government Will Face The Possibility of Bailing Out Not Just the Coin, But the Underlying Business, Because They're So Deedy InterWined,” Warren Explains.
“There's a Reason Why there has always Been a Wall Between Banking and Commerce,” Warren Says. “This Genius Act, for the first time, Destroys that wall.”
Nothing is too big to fail. Seemingly Secure, Lucrative Schemes Have Left the US and Global Economy in Ruins.
In Way, The Genius Act Has Almedy Built in A Bailout Fund for Crypto Traders Should the Bubble Pop: Your Deposits.
A Provision in The Bill Mandates that Financial Institutions Isssuing the Coins Prioritize Reimbursing Stablecoin Holders Over Other Checking and Savings Storers in the Event that the Bank or Financial Institution Becomes Insolvent. Essentially, as Georgetown Law Professor Adam Levitin Wrote Last Month, “Congress is about Put The Claims of Stablecoin Investors Ahead of Ma and Pa's Bank Deposits.”
Because Most Standard Bank Deposits Are Insured Under The Federal Deposit Insurance Corporation (Fdic), The Result is That deposit 'Checking and Savings would be used to pay off Lost Crypto Holdings and Everyone Else Can File For Insurance Claim. “Which Means,” Warren Warns, “The US TaxPayer is right in the crosshairs.”
