Congress has passed the Genius Act, marking the first major federal step toward regulating digital currencies. Starting with stablecoins—digital assets tied to the U.S. dollar—the legislation aims to provide clarity and legitimacy to the crypto space. With bipartisan support and backing from President Donald Trump, the bill mandates that stablecoins be backed one-to-one with secure assets like cash or Treasury bonds. This move is seen as a win for the crypto industry, offering a clear framework for issuers and paving the way for tech companies to enter the space with fewer regulatory hurdles than traditional financial institutions. Supporters argue this modernization could enhance America’s competitiveness in global payments by enabling faster, cheaper transactions.

However, privacy advocates are sounding the alarm. The bill classifies stablecoin issuers as financial institutions under the Bank Secrecy Act, subjecting them to Know Your Customer (KYC) and anti-money-laundering (AML) laws. This means issuers must identify users, monitor transactions, and report to federal authorities—effectively linking real identities to blockchain wallets. Given the transparent nature of public blockchains, once a user’s identity is tied to a wallet, their entire transaction history can be traced. Critics warn this opens the door to sweeping financial surveillance by both the government and private companies, potentially exposing even peer-to-peer transactions. Though the legislation includes a separate bill to ban a central bank digital currency (CBDC) over similar concerns, the Genius Act’s own surveillance risks remain largely unaddressed.

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SOURCE: Reclaim the Net