Amidst the global buzz surrounding Jeffrey Epstein, the Gaza conflict, and ongoing trade disputes, one of the more notable shifts recently involves former President Donald Trump and U.S financial policy. Trump, during his second term, proposed the GENIUS Act (“Guiding and Establishing National Innovation for U.S. Stablecoins”) which sought to overhaul America’s payment systems. This law allows almost anyone, including the President, to issue stablecoins that are one-to-one backed with U.S. dollar assets like cash or Treasury securities.
It now seems that Trump is fully committed to advocating for cryptocurrencies. Aside from fully supporting the digital assets, he is reported to be persuading other foreign leaders to do the same. As of now, he is also considering the creation of a central bank of blockchain and digital assets, the first of its kind, with a stablecoin dedicated to supervising a physical institution for digital assets.
GENIUS Act: A Modern Interpretation of “Wildcat Banking”
Under the GENIUS Act, entities are given the right to create regulated stablecoins with payment functionality, akin to a pre-Civil War era with privately issued banknotes. This proposal is met with criticism due to its resemblance to the 19th century America’s failed banknote system and the lightly regulated derivatives markets during the 2007-2008 financial crisis.
Stablecoin issuers would need to maintain full USD reserves and disclose the makeup of their reserves on a monthly basis. Additionally, issuers with a market capitalization over $50 billion would face new obligations to provide audited financial statements on a yearly basis. Nevertheless, critics note the recurrence of stablecoin parity disruptions. USDC, for instance, has temporarily lost its dollar peg, trading as low as 95 cents during May 2022, and even the most regulated stablecoins still demonstrate volatility.
Why This Matters
We know that Trump has an interest in positioning the United States as the regulatory and infrastructural epicenter of cryptocurrencies. This for his supporters may provide a clearer path for innovation and enable United States sovereignty over the regulated stablecoins. On the opposite side, critics raise concerns of consolidated regulatory power creating conflict of interest and systemic risk. It has even been speculated that “Trump Bucks”, a hypothetical stablecoin, could under the GENIUS ACT provisions represent a conflict of interest as the legislation does not currently bar sitting officials from issuing stablecoins.
Outlook
There is little doubt that his proposal could create a regulatory center for stablecoins in the US, attracting global innovation in Fintech and Blockchain. However, there is an abundance of evidence stemming from the wildcat banking episode in the US and large-scale innovation without any innovation has resulted in systemic vulnerabilities lacks from the 2008 financial crisis.
As Congress works on more comprehensive legislation for cryptocurrency, understanding both the opportunities and challenges will be crucial. In any case, Trump’s reaffirmed interest in blockchain infrastructure indicates that stablecoins and cryptocurrency innovations are no longer fringe topics—they have become focal points in the financial policy discussion.
As Congress progresses with broader crypto legislation, understanding both the promise and risks will be vital. If nothing else, Trump’s renewed focus on blockchain infrastructure signals that stablecoins and crypto innovation are no longer niche subjects—they are centerpieces in the financial policy debate.
These are possibilities, not certainties. The proposals, discussions, and intentions mentioned are still unfolding. Let’s see what happens in the future.