Politics is a dirty business.
Before we get into that, the stablecoin industry is heating up. I draw this conclusion simply by the number of articles I see appearing each day. In the last 24 hours, without much searching, this is what I came accros:
The last couple will be the basis for this article.
The GENIUS Act is the stablecoin bill that was in the United States Senate. Last week, it failed to pass a procedural vote, causing many to worry it was derailed. Earlier this week we saw the deadline to refile pass.
As we see with the second article, a bill was reintroduced due to a compromise between the two parties. This is where we see a major change that could affect the landscape of stabliecoin issuance in the future.
It is easy to conclude how the banks hate this disruption and are doing all they can to retain control.
Kevin O'Leary, noted crypto advocate, has stated these institutions fear stablecoins.
Global foreign exchange and payments platforms are lobbying hard against stablecoins, which stand to significantly disrupt their business models, investor Kevin O’Leary said during a keynote address at Consensus 2025.
Legacy forex and payments platforms often extract large fees for servicing cross-border cash transfers and stand to lose out on revenue if regulated stablecoins become accepted as a cheaper, faster alternative, O’Leary said at the Toronto conference.
This should come as a surprise to nobody. So what do they do? Turn to politics.
US Senators are aiming to pass the so-called Genius Act — a framework for regulating stablecoins — before the end of May. “As soon as the SEC approves the stablecoin act, every regulator in the US’s circle — Abu Dhabi, Switzerland, England — will follow,” O’Leary said.
“Who’s worried about this? The financial services industry. They hate this idea, and they’re working very hard to stop that bill from happening right now,” he added.
This looks like it is having an impact. The updated version of the GENIUS Act has a provision that could exclude Big Tech from issuing stablecoins. My guess is the financial industry (lobby) greased a lot of powerful Senate palms on this one.
Does this make sense?
The answer is no but then politicians aren't sensible. They are legally bribed and few, outside Big Pharma, have more power than the banks.
A number of provisions were added which not only could prohibit Big Tech from issuing stablecoins but also holding them. It removes them as a platform for stablecoin transactions.
- The GENIUS Act amendments address concerns over stablecoin fraud and limit Big Tech's role in issuing or holding stablecoins.
- Key provisions prohibit non-financial companies like Meta, Amazon, and Google from issuing or even holding stablecoins.
- Amendments aim to maintain banking-commerce separation, ensure transparency, and enhance enforcement by the Treasury.
Here is a provision from one of the drafts that is circulating>
“Prohibits non-financial publicly traded companies from issuing a stablecoin unless they can meet strict criteria regarding financial risk, consumer data privacy, and fair business practices. This helps prevent companies like Meta, Amazon, Google, and Microsoft from issuing a stablecoin and maintains the separation between banking and commerce,” one version reads.
Ultimately, this could be a bad move by the United States. While there is a lot to hate about Big Tech, there is equal levels for the banks. Neither are pure as driven snow.
The problem is these legislators are living in an archaic age. Platforms are the future. Payment services are outdated and basically a tax on individual. Plus, there are competing entities from around the world. The Chinese companies could easily adopt USD stablecoins on their applications, siphoning American users similar to TikTok. While that is under attack, it took years before Washington responded.
Finally, it is stated the goal is to maintain a separation between banking and commerce. This is pure foolishness. It is akin to writing legislation that demands movie delivery come in the form of a physical disc instead of streaming.
In the digital world, there is no difference. Technology is forging a new path, making older institutions obsolete. This is the nature of technology along with progress. The old "build a better mousetrap" always comes into play.
Few realize that money is technology. Very little is done in physical cash. Banks initially had value as a security mechanism for physical cash. They had the expensive vaults to protect the funds.
Here we see politicians believing that feeding the banking system provides more security. Banks are some of the biggest crooks throughout history. Leaving that aside, the utility of a bank in a time of digital wallets is rapidly diminishing.
As O'Leary stated, the banks (and other financial services providers) hate this because they are extracting large fees for the services. When companies like the UAE get involved, do you think they will care about what the US Congress says?
All the while, decentralization advocates need to keep building. This is the ultimate solution. Big Tech is a problem for the same reason as the banks: centralized control.
The banks versus Big Tech is the lesser of two evils. Washington DC is taking the side of the bankers.
