The Big Beautiful Bill has been voted into law. Now we have the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, passed by the Senate, with the help of 18 Democrats.

 

If this is genius, what are the idiots up to? Other than thinking up ridiculous names, that is.

 

What is a “stablecoin”? It is a type of cryptocurrency. Crypto coins or tokens are privately created assets based on computer blockchain technologies (don’t ask). Boosters want them to be actual money to buy and sell stuff, but they aren’t. They are pure speculation, created out of thin air.

 

Crypto is great for money launderers, illegal arms traders, drug dealers and anyone engaged in fraud or bribery, since it is anonymous, with no traceable bank account. It has no use for anyone with a bank card or a payment app. Yes, those have fees that go to tech firms or bloated banks, but they are a lot more efficient than trading crypto, which takes huge amounts of computer power, and uses outsized amounts of fuel and water.

 

Cryptocurrencies are great for those companies that issue them and rake in fees from trading. Unregulated predatory operators pump up the value of their coins and then sell, leaving smaller purchasers with the losses.

 

Crypto also works well for corrupt politicians like Trump. Used to be you had to furtively hand a bag of cash to the politician you needed a favor from. Now, Trump and family have issued a whole array of crypto assets that tycoons buy, pump up their value, then announce on X that they have put $100,000 into $TRUMP. (That’s an actual case, not a hypothetical. In return, the SEC pauses your fraud case.)

 

They’re Stable, Right?

 

But back to stablecoins. Stablecoins are supposedly backed up one-to-one by liquid dollar assets like government bonds. So they are stable and safe, right? And then traditional financial institutions like banks and insurance companies can lend money to them, and pools of pension and government funds can “invest” in them. Which gives the crypto industry legitimacy.

 

To achieve that legitimacy, crypto super PACs put hundreds of millions into the 2024 election, nearly half of all corporate spending for political candidates that year. They defeated crypto skeptics and elected boosters. They brought in the Trump crime family. They bought the government.

 

The result? The GENIUS Act. Which very lightly “regulates” stablecoin- issuing companies. It will allow banks to issue coins, and lend money to firms who do. It requires minimal reporting of reserve assets of stablecoin issuers, with weak oversight. What could go wrong? Does anyone remember the 2008 financial crisis?

 

The GENIUS Act removes the Consumer Financial Protection Bureau from regulating or bringing fraud charges. It basically allows private issuers to create their own money, without any customer protections, such as deposit insurance.

 

Maybe it is OK to allow speculative trading in crypto, although many unaware folks are being fleeced of their money. But if that fraud and manipulation finds its way into the banking system, it threatens a financial crisis that affects all of us. And then the GENIUS Act will ensure that crypto speculators get bailed out by the government. Socialism for the rich. Supporting an industry whose main contribution to the economy is to scam people.

 

Monopoly Money

 

The GENIUS Act would also allow big tech firms – Apple, Meta, X – to issue their own stablecoins/currency. Musk, Zuckerberg, and others would have their own private currencies, locking you into their platforms and having access to your data. The rich get richer, and more powerful and in control. We have had laws for 200 years separating commerce and finance; this begins to break that separation down.

 

The huge surge in inequality at the very top (the 0.1%) we have experienced since the 1980’s has occurred in a couple of waves. The first was the rise of hedge funds and private equity. These are predators who buy and sell and break up productive firms, producing nothing themselves but accumulating wealth in fewer and fewer hands.

 

This has come at the expense of jobs and wages, and you would think there’s a limit. But now, notice that private equity firms have moved hard into health care, housing, and even kids’ sports leagues.

 

The second wave of tycoons is our tech overlords, who already control our data and our attention. Now they want a piece of crypto profits as well.

 

This is privatization run amok: from private schools and health care and privately held firms, and now to private weather forecasts and private currencies like crypto. It’s clear who benefits from all this privatization; it’s where our greedy billionaires come from.

 

Michael Righi is a retired economics professor and a member of the Retiree Advocate editorial board.