The Lever reports The GENIUS Act currently coursing through the Senate wants to use your savings account to prop up the untested, shifting cryptocurrency market.
After the family of President Donald Trump made about $1 billion in crypto this year the president made crypto a priority. Spurred by “at least $4 million” in lobbying since January, The Lever reports the Senate appears onboard with that agenda.
But included in their GENIUS Act legislation this week is a provision declaring that “if a financial institution goes out of business, it will be legally obligated to first make stablecoin depositors whole, even if it means using what remains of other customers’ money,” according to the Lever.
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“Congress is about to put the claims of stablecoin investors ahead of Ma and Pa’s bank deposits,” writes Georgetown Law professor Adam Levitan. “In other words, the GENIUS Act is subsidizing stablecoin issuance on the back of bank deposits.”
“The GENIUS Act is effectively letting FDIC insurance leak out to cover uninsured stablecoins, without any insurance premiums paid,” writes Levitin. “Whatever the merits of stablecoins, they shouldn’t be subsidized by the banking system.”
Critics say the stability of the platform is still very much in question. In 2022, the world’s largest stablecoin, Tether, lost its one-dollar value after the implosion of another cryptocurrency. The following year, the collapse of Silicon Valley Bank threatened to wipe more than $40 billion in customer savings –also partly due to stablecoin drama.
The Genius Act also stipulates that non-depository financial institutions that operate like banks, including highly volatile money market funds, will also have to prioritize stablecoin holders over other customers.
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The cryptocurrency industry outspent all other industries in this past election cycle, according to the Lever, “doling out more than a quarter of a billion dollars to help place crypto-friendly lawmakers in Congress and the White House.” During his presidential campaign last year, Lever reports Trump promised to make the U.S. the “crypto capital of the planet,” and has already delivered plenty of crypto wishlist items, including “installing crypto-friendly regulators, gutting crypto enforcement actions, and establishing Bitcoin reserves” reports Lever.
Read the full Lever report at this link.
