Legalized CBDCs In The Form Of Stablecoins: Get Ready

Legalized CBDCs In The Form Of Stablecoins: Get Ready

THE WINEPRESS

Last Friday, President Donald Trump signed the controversial GENIUS Act into law. This bill was passed very late at night after a historic 10-hour plus session trying to get the vote passed (and bribing some holdouts), and it is easily one of if not the most substantial bill signed by a sitting President in a long time as the Genius Act forever radically transforms the financial system. Yet most Americans still have not the foggiest idea what just happened, what the bill does, and why it is important.

I am not going to recap everything that is contained in the bill (and two other sister bills that passed the House, but still require a Senate vote), but as a brief overview: 

The Genius Act creates and legalizes a digital dollar, a central bank digital currency (CBDC), but in a different form called a stablecoin. A stablecoin is a programmable token, “money” so-called, that is traded on a blockchain ledger. It is identical to a CBDC, but these coins are managed by third-party corporations, and these corporations who register to create and distribute their own stablecoins will be legally considered as a “bank.” These stablecoins are backed on a “one-to-one basis using U.S. currency or other similarly liquid assets,” the bill states.

Some have said this path is objectively worse than a CBDC because the privatization of these digital tokens allows for less structured and legal oversight, while still working in collaboration with the U.S. Treasury and the Federal Reserve to facilitate them. 

Moreover, these stablecoins have throttle controls, rules, and other terms and conditions built into them, allowing the custodians, these “banks” (the corporations and even some actual banks), to track transactions in real-time and can place purchase controls on the coins, dictating how the coins can be spent, when, how, where, and thus influencing the behavior of the holder of the tokens. 

Be sure to check out that report for more details and why it is such a big issue.

Make no mistake: this is in fact a digital dollar. Trump’s AI and Crypto Czar David Sacks confirmed this during the signing event.

“This genius act will unlock American dominance in the crypto industry by creating clear rules of the road. It will update arcade payment rails with a revolutionary new payment system, and it will extend US dollar anonymous, like you said, globally by creating a digital dollar that people all over the world can use. 

“And for every digital dollar in a crypto wallet, there'll be a traditional dollar in a US bank account, which will create trillions of dollars demand for US Treasuries. So that is the power of this bill, as you asked all the comments, this is a huge promise made and promise kept by President Trump.”

Sacks is a bigwig in Silicon Valley. According to his own bio: “David Sacks is co-founder and partner at Craft. He has been a successful founder and investor for over two decades, building and investing in some of the most iconic companies in tech. David has invested in over 20 unicorns, including Affirm, AirBnB, ClickUp, Eventbrite, Facebook, Houzz, Lyft, OpenDoor, Palantir, Postmates, Reddit, Slack, SpaceX, Twitter, Uber, and Wish.” He was also the COO at PayPal back in its early years.

But now that CBDCs by another name are here, the push for acceptance begins. 

You see, the crypto space has become synonymous with fraud, money laundering, scams, Ponzi schemes, gambling & dumps, volatile investing and more, and not something to be taken all that seriously. However, now that the Genius Act provides new guardrails (and more to come with more bills and executive orders on the way), companies are going to start pushing very hard to get Americans and those abroad “on-chain,” as it is called.

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