Washington, DC: A month after the much hyped GENIUS Act was passed, along with two others as part of the so-called ‘crypto week’ bills, experts are now worried about the implications of the move. Many finance and banking industry insiders say these bills have now opened the door for a whole new set of opportunities to launder wealth. Endorsed by President Trump, these bills pave the way to boost cryptocurrency use, even for his own family’s promoted World Liberty Financial crypto business.
Though cryptocurrency enthusiasts have cheered the move- it ends years of regulatory uncertainty from a fringe to a core asset class- critics are worried that these bills could pave the way for introducing new vulnerabilities in the financial system. They are mostly worried about stablecoins, cryptocurrencies pegged to an existing currency (most likely, USD) with the exact same value. These alternatives to fiat currencies can now be used to transfer money anywhere around the world instantly, without worrying about a host of intermediary charges.
Critics and lawmakers are worried about these stablecoins’ use for bank-like activities without regulatory oversight, leaving customers high and dry should any such stablecoin firm fail. The biggest challenge here is the relative ease in launching a new stablecoin by any entity, effectively allowing anyone to issue value-backed currencies as an investment medium.
Anti-corruption activists are especially concerned about the GENIUS Act, which they allege is riddled with loopholes that could facilitate ill-gotten money to be funnelled into the US through cryptocurrency platforms registered abroad.
If these loopholes aren’t addressed, “American digital assets infrastructure risks becoming a haven for kleptocrats”, Anti-corruption group Transparency International’s Scott Greytak alleges.
US President Donald Trump has been actively encouraging the use of cryptocurrencies, especially as crypto donors paid $18 million to Donald Trump’s re-election campaign, sparking allegations and concerns about a conflict of interest. This is the stark opposite of Trump’s dismissal of cryptocurrencies in his first term, where he had alleged it was a scam of ‘money based on thin air’. Though things have settled for now, the implications of these acts and their regulatory changes will be clearer in the near term- forcing governments the world over to enact their own laws to prevent money laundering through such alternative means.
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