🚨 Crypto Capital or Crisis Catalyst? U.S. Legislation May Unleash Next Financial Meltdown
WASHINGTON – With the Genius Act now law and the Clarity Act having passed the House, the United States is positioning itself as the future “crypto capital of the world,” echoing the ambitions of President Donald Trump. But behind the celebratory headlines lies a dangerous risk, say critics: these laws may be designed less to regulate the crypto industry than to appease it.
US Congress: Genius Act & Clarity Act
Crypto’s Legislative Win Could Spell Economic Disaster
Driven by strong lobbying and political donations, the crypto industry has carved out significant influence in Washington. The Genius Act and Clarity Act now offer legal frameworks that critics argue fail to enforce adequate safeguards — particularly around stablecoins, digital assets pegged to fiat currencies like the US dollar.
Stablecoin Oversight
New Laws May Encourage Riskier Investments by Stablecoin Issuers
Under the Genius Act, stablecoin issuers are incentivised to invest reserves in riskier assets to boost returns — a business model reminiscent of fractional reserve banking, but without strong capital or liquidity requirements. These weaknesses raise the spectre of destabilising stablecoin runs, especially if permissive state-level licenses become the norm.
Historical Parallels
Echoes of the 1930s: Could Crypto Spark a Modern-Day Panic?
America’s current financial market strength stems from regulatory reforms created during the Great Depression, which prioritised investor protection and systemic stability. Critics say that new crypto-friendly legislation ignores this hard-won legacy, opening doors to another boom-bust cycle akin to the 1929 crash.
Foreign Risk Exposure
Genius Act Allows Stablecoins Backed by Foreign, Non-Dollar Assets
Section 15 of the Genius Act permits foreign stablecoin issuers to hold reserves in non-dollar government debt, introducing new vulnerabilities. A surge in the dollar’s value could trigger immediate liquidity issues and widespread market panic — particularly if such “stablecoins” can’t meet their dollar obligations.
Clarity Act’s Risky Provisions
Senate Passage Could Reintroduce Pre-Depression Era Conflicts of Interest
If passed by the Senate, the Clarity Act would legitimize forms of self-dealing and conflict of interest unseen since the 1920s. National security concerns are also rising, with provisions that critics say could enable illicit finance through cryptocurrencies and stablecoins.
Conclusion
A Crypto Hub with Cracks Beneath the Surface
While some may cheer America’s embrace of digital currencies, critics argue this could pave the way for severe economic consequences. Without tougher oversight, the U.S. risks turning its crypto ambition into a financial flashpoint — where a few get richer, while the broader economy pays the price.
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