This week we talk about stablecoins, crypto assets, and conflicts of interest.

We also discuss the crypto industry, political contributions, and regulatory guardrails.

Recommended Book: Throne of Glass by Sarah J. Maas

Transcript

A cryptocoin is a unit of cryptocurrency. A cryptocurrency is a type of digital currency that uses some kind of non-central means of managing its ledger—keeping track of who has how much of it, basically.

There have been other types of digital currency over the years, but cryptocurrencies often rely on the blockchain or a similarly distributed means of keeping tabs on who has what. A blockchain is a database, often public, of users and a list of those users’ assets that’s distributed between users, and it makes use of some kind of consensus mechanism to determine who actually owns what.

Some cryptocurrencies ebb and flow in value, and are thus traded more like a stock or other type of non-fixed, finite asset. Bitcoin, for instance, is often treated like gold or high-growth stocks. NFTs, similarly, create a sort of artificial scarcity, producing unique digital goods by putting their ownership on a blockchain or other proof-of-ownership system.

Stablecoins are also cryptocurrencies, but instead of floating, their value growing and dropping based on the interest of would-be buyers, they are meant to maintain a steady value—to be stable, like a national currency.

In order to achieve this, the folks who maintain stablecoins often use reserve assets to prop up their value. So if you produce a new stablecoin and want to issue a million of them, each worth one US dollar, you might accumulate a million actual US dollars, put those in a bank account, show everybody the number of dollars in that bank account, and then it’s pretty easy to argue that those stablecoins are each worth a dollar—each coin is a stand-in for one of the dollars in the bank.

In a lot of cases, the people issuing these coins aim for this approach, but instead of doing a direct one-for-one, dollar for coin system, they’ll issue a million coins that are meant to be worth a dollar apiece, and they’ll put one-hundred-thousand dollars in a bank account, and the other 900,000 will be made up of bitcoin and stocks and other sorts of things that they can argue are worth at least that much.

As of mid-2025, about $255 billion worth of stablecoins have been issued, and about 99% of them have been pegged to the US dollar; Tether’s USDT, Binance’s BUSD, and Circle’s USDC are all tethered to the USD, for instance, though other currencies are also used as peg values, including offerings by Tether and Circle that are pegged to the Euro.

Stablecoins that are completely or mostly fiat-backed, which means they have a dollar for each coin issued in the bank somewhere, or close to that, tend to be on average more stable than commodity or crypto-backed stablecoins, which rely mostly or entirely on things like bitcoin or gold tucked away somewhere to justify their value. Which makes sense, as while you can argue, hey look, I have a million dollars worth of gold, and I’m issuing a million coins, each worth a dollar, that asset’s value can change day-to-day, and that can make the value of those coins precarious, at least compared to fiat-backed alternatives.

Because stablecoins are not meant to change in value, they’re not useful as sub-ins for stocks or other sorts of interest-generating bets, like bitcoin. Instead, they’re primarily used by folks who want to trade cryptoassets for other sorts of cryptoassets, for those who want to avoid paying taxes, or want to otherwise hide their wealth, and for those who want to transfer money in such a way that they can avoid government sanctions and/or tariffs on those sorts of transfers.

What I’d like to talk about today is a new US federal law, the GENIUS Act, which was heavily pushed by the crypto industry, and which looks likely to make stablecoins a lot more popular, for better and for worse.

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The Guiding and Establishing National Innovation for US Stablecoins Act, or GENIUS Act, was introduced in the Senate by a Republican senator from Tennessee in May of 2025, was passed in June with a bipartisan vote of 68-30—the majority of Republicans and about half of Democratic senators voting in favor of it—and after the House passed it a month later, President Trump signed it into law on July 18.

Again, this legislation was heavily pushed by the crypto industry, which generously funded a lot of politicians, mostly Republican, but on both sides of the aisle, in recent years, as it serves folks who want a broader reach for existing stablecoins, and who want to see more stablecoins emerge and flourish, as part of a larger and richer overall crypto industries.

Folks who are against this Act, and other laws like it that have been proposed in recent years, contend that while it’s a good idea to have some kind of regulation in place for the crypto industry, this approach isn’t the right one, as it basically gives the tech world free rein to run their own pseudo-banks, without being subject to the same regulations as actual banks.

Which isn’t great, according to this argument, as actual banks have to live up to all sorts of standards, most of them oriented around protecting people from the folks running the banks who might otherwise take advantage of them. Those regulations are especially cumbersome in the wake of the 2008 Great Recession, because that severe global economic downturn was in large part caused by exactly these sorts of abuses: bankers going wild with lending mis-labeled assets, those in charge of these banks pocketing a whole lot of money, lots of people losing everything, and lots of institutions going under, leaving those people and the government with the bill, while the folks who did bad things mostly got off scott free.

The goal of these bank regulations is to keep that kind of thing from happening again, while also keeping banks from overtly taking advantage of their customers, who often don’t know much about the banking options and assets they’re being sold on.

Allowing tech companies to do very similar things, but without those regulations, seems imprudent, then, because, first, tech companies have shown themselves to be not just willing, but often thrilled to grab whatever they can and get slapped on the wrist for it, later, moving fast and breaking things, basically, and then paying the fines after they’ve made a fortune, and if they’re allowed to step into this space without the same regulations as banks, that gives them a huge competitive advantage over actual financial institutions.

It’s a bit like if there were a food company that was allowed to dodge food industry regulations, as was thus able to cut their flour with sawdust and sell it to people at the same price as the real thing. People would suffer, their competition, which sells actual flour would suffer, because they wouldn’t be able to compete with a company that doesn’t play by the same rules, and the companies that sell the inferior products without anyone being able to stop them would probably get away with it for a while, before then closing up shop, pocketing all that money, and starting over again with a different name.

This is how things work in a lot of countries with weak regulatory systems, and it creates so much distrust in the economic sphere that things cost more, the quality of everything is very low, and it’s nearly impossible to ever punish those who cause and perpetuate harm.

That’s at the root of many arguments against the GENIUS Act: concerns that a lack of consumer protections will lead to a situation in which we have growing systemic risk, caused by tech entities taking bigger and bigger risks with other people’s money, like in the buildup to the 2008 recession, while simultaneously more legit institutions are elbowed out, unable to compete because they have to spend more and work harder to adhere to the regulations that the new players can ignore.

It’s worth mentioning here, too, that the Trump family has issued their own cryptocoins, and reportedly already profited to the tune of several billion dollars as a result of that issuance, that the Trumps have their own stablecoin, which they’re promoting as an upgrade to the US dollar, that the early backers of these coins include foreign governments and their interconnected companies, like the Emirati-backed MGX, that the Trump children have their own crypto-asset companies, including one that’s listed on the Nasdaq, and which is profiting from the increasing popularity and legalization of the industry in the US, and that Trump’s media company, which owns Truth Social, also has a multi-billion-dollar bitcoin portfolio, alongside a whole lot of other crypto-coins, which the president has been pushing, and his family has been promoting overseas, using his name and office.

All of which points at another conflict of interest issue here, that the president and his family seem to be self-enriching at an incredibly rapid pace and at a very high level, in part by pushing this and similar legislation.

People in the crypto industry lavishly spent on his campaign, and they are entwined with his family’s business interests, which makes it difficult to separate what might be good for the country, in an objective way, from what’s good for Trump and his family, in the sense of using the office to grow wealthier and wealthier—and that’s true both in the sense that crypto-assets allegedly allow his family to take bribes in a fairly anonymous and deniable way, but also in the sense that people who buy his memecoins and buy into his stablecoin ventures and buy more bitcoin and similar assets that he already holds, also increase t