> The Senate is poised to pass the GENIUS Act in the coming weeks. The bill will bestow upon the crypto industry a long-sought blessing: a key form of the digital currency, stablecoins, will now be subject to a bespoke (and notably light-touch) regulatory system created by Congress. With it will come the U.S. government’s stamp of approval. After years spent being dismissed as a haven for money launderers and speculators, the bill is in part a marker that the crypto industry has arrived in Washington.
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> And yet, there are a few problems.
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> The bill could open multiple pathways toward contagion that could spread throughout the financial system, Hill staffers and experts familiar with the legislation warn TPM. Some argue that it would create a financial system that operates with many of the same risks the U.S. left behind in the 20th century, including banks and private companies issuing their own, alternate currencies; others regard the bill as priming the country for a series of runs on digital currencies.
Mexatt on
The 19th century financial system sucked because of:
1. The gold standard
2. Unit banking laws, the pyramid reserve system that backed them up, and the tender laws that made all national bank notes legally equal to each other in value
Not all financial deregulation is these things. Not all attempts to allow more flexibility in the financial system is these things. As long as the Federal Reserve follows a wise monetary policy and *we don’t force financial institutions to be fragile by regulatory or statutory design*, this won’t be a problem, especially with decent capital requirements that aren’t shot through with mortgage backed security sized holes.
Warnings about the Depression or 19th century financial instability are almost always based on popular myths, rather than facts about the era.
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> The Senate is poised to pass the GENIUS Act in the coming weeks. The bill will bestow upon the crypto industry a long-sought blessing: a key form of the digital currency, stablecoins, will now be subject to a bespoke (and notably light-touch) regulatory system created by Congress. With it will come the U.S. government’s stamp of approval. After years spent being dismissed as a haven for money launderers and speculators, the bill is in part a marker that the crypto industry has arrived in Washington.
>
> And yet, there are a few problems.
>
> The bill could open multiple pathways toward contagion that could spread throughout the financial system, Hill staffers and experts familiar with the legislation warn TPM. Some argue that it would create a financial system that operates with many of the same risks the U.S. left behind in the 20th century, including banks and private companies issuing their own, alternate currencies; others regard the bill as priming the country for a series of runs on digital currencies.
The 19th century financial system sucked because of:
1. The gold standard
2. Unit banking laws, the pyramid reserve system that backed them up, and the tender laws that made all national bank notes legally equal to each other in value
Not all financial deregulation is these things. Not all attempts to allow more flexibility in the financial system is these things. As long as the Federal Reserve follows a wise monetary policy and *we don’t force financial institutions to be fragile by regulatory or statutory design*, this won’t be a problem, especially with decent capital requirements that aren’t shot through with mortgage backed security sized holes.
Warnings about the Depression or 19th century financial instability are almost always based on popular myths, rather than facts about the era.