It's "Crypto Week" in Congress, and experts continue to warn that legislation Donald Trump wants passed quickly could give the president ample opportunities to grift while leaving Americans more vulnerable to scams and financial ruin.Perhaps most controversial of the bills is the one that's closest to reaching Trump's desk, the GENIUS Act, which creates a framework for banks and private companies to issue stablecoins.
After passing in the Senate last month, the House of Representatives is hoping to hold a vote as soon as Thursday, insiders told Politico.Stablecoins are often hyped as a more reliable form of cryptocurrency, considered the "cash of the blockchain" because their value can be pegged to the US dollar, Delicia Hand, Consumer Reports' senior director monitoring digital marketplaces, told Ars.But the GENIUS Act doesn't require stablecoins to be pegged to the dollar, and that's a problem, critics say.
The law's alleged flaws allow large technology companies to peg their stablecoins to riskier assets that could make both their cryptocurrency tokens and, ultimately, the entire global financial system less stable.For Americans, the stakes are high.
In June, Hand warned that Consumer Reports had "a number of concerns about the GENIUS Act." Chief among them were "insufficient consumer protections" that Americans expect when conducting financial transactions.Stablecoin issuers will likely include every major payment app, social media app, and e-commerce platform.
There is already interest from Amazon, Meta, PayPal, and Shopify.
But unlike companies providing traditional bank services, stablecoin providers will not be required to provide clear dispute-resolution processes, offer deposit insurance, or limit liability for unauthorized transactions on their customers' accounts.Additionally, with limited oversight, big tech companies could avoid scrutiny while potentially seizing sensitive financial data for non-bank purposes, pushing competition out of markets, and benefiting from other conflicts of interest from other areas of their businesses.
Last month, Congressional researchers highlighting key issues with the GENIUS Act advised that possibly restricting stablecoin regulation to only apply to financial institutions would likely have required big tech firms to divest chunks of their business to prevent them from using stablecoins to illegally dominate the digital payments industry.
But Republicans have not yet adopted any recommendations.