Due to a shocking partnership between Senate Republicans and 18 Democrats, the controversial GENIUS Act has been passed, marking the first significant cryptographic legislation in American history. This legislation is being portrayed as a promising development for the crypto industry, leading to an established regulatory framework for stablecoin issuers. However, this might not be the truth as the implications of this bill are severe, heralding an age of scarcely regulated financial systems, rampant corruption, and potential economic downfall.
Instead of standing as a measure to ensure accountability and oversight in cryptocurrency transactions, the legislation resembles a tailor-made tool for the interests of crypto lobbyists. The invoked regulatory framework is nothing more than a facade, leaving the issuance of stablecoins unbounded with insufficient requirements for proving assets to back them. This situation showcases the sheer mismanagement of such a crucial aspect of our evolving economy.
Commenting on this ill-planned legislative move, Senator Elizabeth Warren characterized it as a significant concession to influential companies in the technology industry. This sentiment resonates because the bill appears to bolster the potential profitability of questionable cryptographically-powered ventures by former President Donald Trump. It is puzzling, then, why Democrats, who traditionally champion economic equity and transparency, have supported this legislation.
The inexplicable support of the Democrats for this ill-conceived bill might be traced back to the familiar political strategy – following the money trail. During the 2024 election cycle, crypto stakeholders pumped a staggering $200 million into various political campaigns. The primary recipients of this influx were those behind the Fairshake PAC. Prominent crypto entities such as Coinbase and Ripple contributed more than half of the total funding, with a conspicuous aim to influence regulatory norms surrounding cryptocurrency.
Senator Ruben Gallego of Arizona and first-term Senator Elissa Slotkin from Michigan were notably among the benefactors of this political funding, with thousands in direct contributions from crypto executives. They also received substantial support from Fairshake, reflecting the extensive influence of cryptocurrency interests within the government. Unsuspecting political figures like former Senator Sherrod Brown of Ohio found their positions threatened by crypto-funded ad campaigns that effectively swayed voters’ preferences.
With the combined power of strategic messaging and financial backing, the crypto industry managed to significantly impact the political landscape. This triumph serves as a stark warning to those opposing the growth of an unchecked crypto industry: Opposition might lead to their political downfall. The victory of Republican Bernie Moreno over incumbent Senator Sherrod Brown, who faced a $40 million crypto-funded campaign against him, highlights the persuasive power of such machinations.
Cryptocurrency is not inherently dangerous, however, under unregulated conditions, it becomes a playground for all kinds of illicit activities. An alarmingly large number of nefarious groups globally have started utilizing digital currencies to conduct operations outside traditional banking systems, favoring the anonymity it provides. This has evolved crypto from a promising financial tool into a source of major national security concerns.
Ranging from terrorist organizations to human traffickers and drug cartels, many prize the obscurity of cryptocurrency for conducting illegal financial activities. Ransomware groups originating from as far as North Korea to Eastern Europe have extracted billions in crypto ransom, with the transactions often becoming untraceable and irrecoverable. The FBI reported a shocking $5.6 billion loss due to crypto-related fraud in the year 2024 alone.
The Biden administration initially approached cryptocurrency with much-needed caution, aiming to protect consumers, national security, and the financial ecosystem from misuse. As such, they advocated for stringent ‘Know Your Customer’ regulations and emphasized the risks of unregulated digital currencies fueling illicit activities. However, under second-time President Trump, this prudent stance was abandoned.
In contrast to his past reservations about crypto, dismissing it as ‘based on thin air’ and ‘not money’ back in 2019, Trump has adopted a far more favorable stance. There are suggestions that Trump is discreetly establishing a profitable crypto network, further entangling his personal interests with the progression of crypto regulations.
Trump’s increasing engagement with the crypto industry, including a private dinner with top meme coin investors and profiting from his family’s stake in World Liberty Financial, showcases an ethical paradox. While his administration governs the regulation of the industry, the Trump family’s foray into launching their stablecoin USD1 opens the door for potentially concerning conflicts of interest.
The alarming part is that congressional members, in contrast with the President and his family, face restrictions regarding personal profits from stablecoin investments. This stark difference points to some evident problems with the regulation of cryptocurrencies and their interactions with politics. Crypto industry influences are visible everywhere, even observed in crypto groups grading congressional members reminiscently of how the National Rifle Association does with gun legislation.
The industry’s steady infiltration into policymaking is not to be overlooked or underestimated. They may not have officially supported candidates yet but make no mistake, the groundwork is being laid. As the House labors on its version of the crypto legislation, the STABLE Act, Trump’s eager expectation for a final bill before the August recess indicates crypto’s growing institutional support.
In the grand scheme of things, this is not solely about digital currency. In actuality, this story is about the balance of power — who wields it, who is financially backing it, and who gets to dictate the rules. As evidenced by past mistakes such as the housing market collapse and the rise in tech monopolies, regulation mandated by the regulated often leads to public detriment.
The crypto industry’s involvement in policy-making leads to an environment where those positioned to lose are the ordinary citizens. When the majority of legislative decisions are influenced by the very industry they are meant to control and we see politicians prioritizing their political survival or gains over public interest, the outcome is invariably predictable.
They say those who cannot remember the past are condemned to repeat it. It is crucial to reconsider where we stand regarding crypto regulation — are we setting ourselves up for a future of economic instability and regulatory loopholes, or can we reverse this course? Regardless of the path chosen, the one thing that remains certain is that the stakes are high and the outcomes not just about crypto but the very fabric of our democratic institutions.