In the course of the large crypto bill, skeptics see a “slow car accident”.

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There is a “first of its kind” crypto law template, which is progressing through the Senate that they will be tried to commit themselves, because a) it is about “stablecoins”, a subcategory of crypto -a parallel financial system that almost nobody understands, and b) opponents focus on their criticism on corruption. Use of the power of the presidency to make profit? (Icymi: See here, here, here and here.)

But there is a large plants-seed-for-the-nex-financial crisis type why you should understand what this bill is.

So let's go into it.

The legislation supported by the crypto industry is called Genius or “Guide and Creation of National Innovation for US StableCoins”.

Stable coins are a digital asset that maintains a 1-to-1 pen with the dollar (or another conventional, “stable” currency). A stable coin should always reach a dollar forever. They are essentially a way for crypto investors to keep their money in the crypto universe in which tokens such as Bitcoin and Ether and Solana tend to swing wildly.

They are not nearly as well known as Bitcoin, the largest crypto according to the market value. With regard to the trading volume, stable coins are by far the largest players.

The crypto industry wants the genius bill because it would regulate the first time in the 16-year history of the industry for an important sector of its business. Of course, this promotes a greater introduction of crypto and makes it more money.

The legislation would require stablecoins, including the reserves of secure, liquid liquid assets such as US dollars and financial statements and publicly disclose these investments monthly.

It would also take some slight restrictions on publicly traded companies that would like to issue their own stable coins (more on that at one moment).

“However, the legislation is easy to issue protective measures and restrictions on the ability of companies to issue their own stable coins,” said Eswar Prasad, professor of international trade in Cornell University and author of the book 2021 “The Future of Money”.

“In addition, the Boosterism of the Trump government in crypto and light touch approach to regulation indicates that such protective measures and restrictions are not enforced with a lot of strength,” added Prasad.

So.

There is the potential for corruption, as the democratic Senator Elizabeth Warren and other critics screamed from the rafters. In fact, the Democrats initially refused to vote on the law on the law because Trump's crypto programs such as private dinner, which took place this week among the greatest owners of his $ Trump-Memecoin, a kind of token whose purpose is to attract money for his issuer. The White House has repeatedly pushed back all questions about the president's potential ethical conflicts, from his interest in accepting a luxury jet from Qatar to the crypto involvement of his family. (“This white house holds us the highest ethical standards,” said press spokeswoman Karoline Leavitt in the early this month.)

Not much has changed between then and now. But some Democrats dropped their opposition anyway, probably because they only accepted the “obvious inevitability of blockchain-based financing and crypto more”, “said Prasad.

One of these Democrats was Senator Mark Warner from Virginia, who defended his reversal on the law on Monday.

“Many senators that I have included have very real concerns regarding the use of crypto technologies by Trump to avoid it, to hide dodgy financial transactions and to benefit personally at the expense of everyday Americans,” said Warner in a statement. “But we cannot allow this corruption to blind the wider reality: Blockchain technology can be stayed here. If American legislators do not form them, others will become – and not in a way that serves our interests or democratic values.”

The Trump family has a crypto platform called World Liberty Financial, which provides a stable coin called USD1. A few weeks ago, an investment company in Abu Dhabi called MGX 1 USD1 chose for an investment of 2 billion US dollars in Krypto -Exchange Binance (see related crimes). This is “essentially a reduction in this enormous financial deal,” said Warren on Monday in prepared comments.

So, yes, it certainly looks like Trump could be richer from an industry that he supervises directly through a regulatory apparatus that quickly works to defuse himself. In the meantime, the crypto industry plowed millions of dollars in industries -super -Pacs, which last year strongly gave both the Republican and the democratic campaigns.

No, there is more!

A big focus on corruption is deserved, said Hilary Allen, a legal professor at American University, who studied the StableCoin policy in an interview on Tuesday. But she doesn't stop that at night.

She described the Bill genius as a “car accident in slow motion”.

“What makes me lose the most sleep is that this law would enable the largest technology platforms to become a functional equivalent of banks,” said Allen, who was part of the commission appointed by the Congress, to examine the causes of the financial crisis in 2008. “The last crisis was caused by” too great “financial institutions. The size of some of these tech platforms makes them look picturesque.”

Let's step back for a moment.

The invoice offers almost no resistance for a tech giant such as Meta or Amazon or Google to output its own stable coin. (In short, companies would have to obtain the approval of a regulatory triad that the Ministry of Finance, the FDIC and the Federal Reserve represents. As Prasad states, this is largely not a major hurdle under Trump's pro-crypto management.)

Meta tried to enter the Crypto BIZ in 2019 with a project called Libra (later renamed DIEM), but in 2022 there was a response to opposition by legislators and supervisory authorities. According to a report in Fortune this month, Meta is once again testing the stablecoin waters and discusses various ways to introduce stable coins as a means of managing in-app transactions.

The advantages for META (or whoever) are clear: StableCoin transactions keep users in the app, and the company then collects all kinds of valuable information about its users and how they spend their money.

But what happens if stable coins or another financial shock gives a run that leads to these financial companies fail?

Proponents say there is no reason to assume that there will be a run on stable coins if they have 100% cash reserves that support them. Of course, this thinking will be based on a “ridiculously optimistic assumption” that there will never be a run on a stable coins, says Allen.

She notes that money market investment funds are “almost identical in the structure” and are not immune to the type of panic that the bank runs caused.

“Money market investment funds experienced runs that required rescue campaigns again in 2008 and 2020.” I think runs on stable coins are likely. ”

In fact, the government had to sore a stablecoin when Silicon Valley Bank failed in 2023. The lender has a stable coin worth more than 3 billion US dollars called USDC to his huge non -insured.

“We may imagine saving these large tech platforms essentially,” says Allen.