The House of Representatives passed the GENIUS and CLARITY Acts today by large bipartisan votes of Representatives purchased by $150 million in crypto business contributions to their 2024 campaigns, the biggest lobby trough of any U.S. corporate sector. Essentially, only Rep. Maxine Waters of California and Sen. Elizabeth Warren of Massachusetts are left leading a small band of Members warning against the unleashing of cryptocurrencies on the U.S. Treasury market and banking system. While described as “bringing cryptocurrencies under regulation for the first time,” these two acts involve regulation described by the sponsors themselves as “light touch”; in significant part it is delegated to the states.
The GENIUS Act authorizes proliferation of private-issue stablecoins claiming to be “dollars,” by tech companies and consumer markets claiming to be banks. In passing it, the House rolled over objections from the Independent Community Bankers Association that their banks would be “disintermediated"; i.e., replaced, by tech and other conglomerates whose stablecoin accounts would take away their depositors, in the way that money-market mutual funds wiped out savings-and-loan banks in the 1980s banking crisis.
The world of stablecoins keeps getting more “interesting.” The biggest issuer, Tether, Ltd. has announced—on its “transparency page,” no less—that as of Sept. 1 it will no longer “support” five named blockchains which have, in total, about $90 million claimed value in Tether tokens in circulation on them. The recent levels of transactions on these five blockchains are considered by Tether to be too small to deserve further support. The owners of the tokens have to get them moved onto the bigger block chains Ethereum or Tron, or lose them.
This is as if the Treasury were to order some smaller banks to close down because they didn’t have enough depositors.
Also, since the European Union introduced its Market in Crypto Assets legislation, which involves actual bank-like regulation, blockchain firms operating in the EU have been “delisting or depromoting” Tether’s USDT token on their platforms. Regulation seems to affect Tether, Ltd. in the way garlic is said to affect vampires.
