Don't Fall for the "Stablecoin" Scam

Stablecoins are a form of crypto currency that promises to be redeemable, dollar for dollar, on demand

A new bill introduced in the Senate this week would create a legal framework for so-called stablecoins, a form of cryptocurrency that promises to be redeemable, dollar for dollar, on demand, just like a bank account. Sounds wonderful, doesn’t it? Unfortunately, they don’t have to follow any of the laws and regulations that govern real bank accounts regarding such minutiae, such as financial stability standards or consumer protections, not to mention, the lack of FDIC insurance in the event of a collapse. Some examples of ‘stablecoins’ include Facebook’s failed Libra Project, Tether, USDC and USD1– President Trump’s recently launched ‘stable coin’.

The bill, called the "Stablecoin TEכר סיארהcnology Act of 2025" (GENIUS Act), was introduced on February 4th by Bill Haggerty (R-TN) and co-sponsored by Republicans Tim Scott (SC), Cynthia Lumens (WY) with Democratic support provided by Kirsten Gillibrand (NY) and referred to the Committee on Banking, Housing, and Urban Affairs.

The scheme is supposed to work as follows: investors put a dollar into the stablecoin company, get a crypto “dollar” back that they can use for crypto trading (or money laundering or tax evasion) and get the (dubious) promise that they can trade back to their U.S. dollar at any time. In the meantime, the company that issues the stablecoin then invests the U.S. dollars into various assets and earns a return on those investments that they can keep as profit.

The provisions in this bill would blow a hole through the United States’ traditional separation of banking and commerce. The Bank Holding Company Act, passed in 1956, prohibits bank holding companies from engaging in commercial activities and from controlling (or being controlled by) commercial enterprises.

American Economic Liberties Project

So, in other words, you buy a stablecoin, you receive no interest (that would be a red line for the real banks) and have no recourse if the stablecoin becomes worthless, either by the issuer going under or deciding to get out of the business of issuing stablecoins, or they simply get hacked. Or, some other reason I can’t think of, off the top of my head.

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