The ominously named “Genius” bill to create Stablecoin is waddling through Congress, pushed hard by Trump and Big Tech. The terminology of the Genius bill is very broad and more than a bit starry-eyed.
Remember the last time the word “genius” got a workout?
A fixed value for a crypto? Sounds OK. You could question how or why anyone could possibly need a dollar calling itself something else. That’s not happening, either.
The stablecoin will be based on the reasonable expectation that it will maintain a stable value relative to the value of a fixed amount of monetary value.
Yeah, sure. This is American legislation. That means it’s phrased in the most ambiguous terms possible and can support generations of lawyers. The detail is in the devil, in this case. Imagine going to a court and saying that your reasonable expectation of payment had not been met. You could be there for decades.
Stablecoin is a weird-looking thing. Superficially, it looks quite harmless. It’s a crypto pegged to things like the US dollar, gold or some other fixed asset, hence the name. “Stable” allows for a bit of movement in values but in the “Genius” bill it means it’s US dollar denominated only.
The basic “rules” for Stablecoin aren’t exactly onerous, and actually pretty inevitable. They’re core valuations for any given stablecoin. Stablecoins are supposed to be backed by stipulated assets as “reserves.” You can also use stablecoins to purchase reserves. The “Genius” bill goes a bit further, but it’s the same basic mechanism.
See any holes in the bucket so far? Bingo. This is the first page of the Genius bill we’re talking about here. The currency can be used to ensure reserves for itself by purchasing its own reserves.
They can also be pinned to “financial instruments”, meaning just about any damn thing. That includes contracts, stocks, bonds, etc. It’s about as vague a definition as you can get. As above, this is a trader thing, and people make a lot of money out of trading.
Various stablecoins already exist in a very much smaller pond. These things are comparatively small fry, see the above link. They’re not really the model for the “Genius” bill, but they look like it. They’re more like an excuse.
The ridiculously complex and totally untrustworthy finance sector has clearly found a lot of uses for stablecoins as a moneymaking vehicle. If you’re somehow getting the impression that a lot of financial services are attached to the new big Stablecoin, that’s just one of the benefits for Big Fin.
What you have here is a secondary currency that looks and acts like a digital equivalent of normal currency. It’s not. It’s a way of creating a secondary process that makes money at the very minimum and can obscure values easily. Stablecoin isn’t even necessary. That’s how you know it’s a money-grubbing exercise.
Critics of stablecoin have, as usual, been hyper-verbose and haven’t hit any of the targets of this useless exercise. Examples of how stablecoin works are very thin on the ground. What are the protections?
The word “dispute” doesn’t even exist in the “Genius” bill on a word search. Presumably, and presumably isn’t anywhere near good enough, any issues are referred to the regulator. Meaning, get good at minimum wage work, because this thing definitely isn’t for the smaller investors.
There’s an unholy stench somewhere. Chicken salad?
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Disclaimer
The opinions expressed in this Op-Ed are those of the author. They do not purport to reflect the opinions or views of the Digital Journal or its members.
