The Trump administration’s trade war with the world has roiled the stock market and threatens to plunge the country into a recession while jacking up the price of basic supplies.
But instead of taking on the financial issues dominating the headlines, the House and Senate are racing to bring stablecoins — a cryptocurrency sector few Americans have even heard of — out from the shadows.
The $230 billion stablecoin industry could be the first to benefit from Donald Trump’s promise to make the U.S. the world’s “crypto capital of the planet.”
“Passing legislation gives them a first-mover advantage to profits that are to be gained.”
Industry advocates say the legislation will clear up uncertainty around the regulation of their cryptocurrencies, unleashing a new era of financial innovation.
Critics of the bipartisan push warn that the legislation risks another financial crash while enriching Trump, whose family is launching a stablecoin of their own.
“Passing legislation gives them a first-mover advantage to profits that are to be gained. We saw that with the Trump meme coin, where a lot of people lost out but it didn’t matter because Trump’s platform was making fees,” said Mark Hays, of the group Americans for Financial Reform. “It just seems like a witches’ brew of problematic things that could lead to another crash.”
What Is a Stablecoin?
To their proponents, stablecoins offer all the benefits of crypto without the downsides.
They are pegged to real-world currencies, such as the U.S. dollar. The idea is that one dollar-denominated stablecoin can always be redeemed for one dollar. Stablecoin issuers use real-world assets, such as U.S. Treasury bonds, to back their offerings.
Stablecoins live on blockchains — cryptographically protected digital ledgers — just like more famous tokens like bitcoin or Ether.
Unlike bitcoins, they are supposed to be insulated from wild price swings by their currency pegs. That hasn’t stopped some stablecoins from collapsing.