Are we headed for the crypto apocalypse?

With the passage of the Genius Act, the United States will allow all manner of companies to issue their own money in the form of crypto assets known as "stablecoins".

- Hilary J. Allen

With a single piece of legislation, Congress has made the US financial system more vulnerable to crises, increased the chances of government bailouts for tech platforms and further entrenched Silicon Valley's already substantial political power.

Nor do the risks end there. By blessing a less regulated alternative to bank deposits, Congress may have created conditions that will choke off the flow of credit to productive enterprises, as well as circumscribing the US Federal Reserve's ability to conduct monetary policy through open market operations.

Moreover, the House of Representatives recently passed the Clarity Act, which would upend securities laws by creating gaping loopholes for assets whose ownership is recorded on a blockchain. The bill is not guaranteed to pass, now that other financial market players seem to be waking up to the dangers that could be unleashed by destroying the integrity of US capital markets. Yet the risk of it becoming law cannot be ignored. If it does, we will effectively be reverting to the "buyer beware" markets of the 1920s.