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Over the Summer, The United States Congress passed a bill entitled: The Guiding and Establishing National Innovation for U.S. Stablecoins Act (dubbed the GENIUS Act). The bill is the first of its kind in the USA and, whilst it poses a variety of ethical dilemmas, it could change how other governments view their economic structures.
What the GENIUS Act has done is officially recognise stablecoin as a form of currency within the Federal Reserve, meaning financial crimes, such as theft, can be held in the same regard as other forms of federal currency. This, unsurprisingly, has meant stablecoins have drastically increased in value as an investors assets are not only protected by law, but are formally recognised by the institution it holds its value to.
Unlike other cryptocurrency, stablecoins place their value against existing reserve assets such as gold or the U.S. dollar. Given that their value is tied to an asset of universal credit, it is significantly more stable and safer form of cryptocurrency to invest or trade in then other cryptos such as Bitcoin, which hold their value on purely consumer value (hence the name ‘stablecoin’.
The impacts of this are twofold, as economic pragmatism wrestles with moral justifications. Those who credit the bill argue that it was necessary to generate greater regulation on a grossly unregulated industry, allowing more market control to reduce financial crimes and corruption within the U.S. economy. The GENIUS Act also clearly states that the price of stablecoin cannot exceed that of the U.S. dollar, as the Federal Reserve essentially ties them, thereby alleviating some concerns that President Donald Trump had in 2021 that cryptocurrencies would be a ‘scam against the dollar’.
Curiously, there may be some personal motivations that the Trump administration may have had to push this bill through Congress. In 2024, the Trump family portfolio, managed by his sons, Eric and Donald Jr., bought a majority stake in the stablecoin World Liberty Financial, following a crypto event in September 2024. Due to the GENIUS Act, the value of this stake increased exponentially, with World Liberty Financial becoming the 5th largest stablecoin in the world seemingly overnight. In an investigation conducted by Reuters, it was found that the Trump family’s profits soared seventeen-fold to $864 million in the first half of the year, compared to the $54 million made in the entirety of 2024. 90% of this was generated through crypto investments. Trump has further profited from his meme coin $TRUMP, generating $336 million, although these carry a higher risk as they are not deemed a stablecoin. The implementation of the GENIUS Act has not only increased the valuation of the Trump family assets exponentially, but has ensured that these assets are protected by the federal government, driving solid cash into the Trump family coffers.
In terms of legality, calls for corruption charges have been limited, as little legal precedent exists for ethical considerations relating to this type of legislation. There are laws within the Senate that prohibits the use of stablecoin whilst in office; however, this does not extend to the President or Vice President. The only significant calls have been from prominent Democrats Elizabeth Warren and Jeff Merkley, who have called for an investigation into cross-government bilateral transactions that could violate federal bribery laws. However, with the current government shutdown, this seems low on the congressional agenda sheet.
Despite there being some noticeable claims of crypto corruption in the upper echelons of government, there is a pragmatic precedence to the GENIUS Act which has governments taking notice of how they may treat digital currency going forward. The Bank of England has begun to reconsider its previously crypto-sceptic stance on stablecoins, although perhaps not going as far as the GENIUS Act, whilst the German Bundesbank has adopted a more open approach but remains restrained by their shared use of the Euro. So, with potential Euro backing and the continued global use of stablecoin, can we consider the GENIUS Act a piece of pragmatic policy, or another case of crypto corruption?
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