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BIS: Stablecoins Fail as Money, Call for Strict Limits on Their Role
By Cointelegraph | June 2025
The Bank for International Settlements (BIS) has issued a sharp critique of stablecoins, asserting they fail to meet key monetary standards and pose risks to financial integrity and sovereignty.
According to the newly released BIS Annual Economic Report 2025, stablecoins fall short of three essential criteria that define money in a modern financial system: “singleness,” “elasticity,” and “integrity.”
“Stablecoins perform poorly when assessed against the three tests for serving as the mainstay of the monetary system,” the BIS wrote.
Rather than functioning as true money, stablecoins are described as “digital bearer instruments” that more closely resemble financial assets.
Three Failures: Singleness, Elasticity, and Integrity
• Singleness: Central bank-issued money is accepted at par and universally trusted. In contrast, stablecoins are issued by private entities and often trade at fluctuating rates, undermining monetary uniformity.
• Elasticity: Traditional banking systems allow for liquidity expansion as needed. By contrast, the BIS noted, stablecoins require full upfront payment, making them a “strict cash-in-advance setup” ill-suited for absorbing market shocks or handling high-volume payments.
• Integrity: The report raised the most serious concerns about financial crime.
Stablecoins, especially those used with unhosted wallets on public blockchains, were flagged as vulnerable to money laundering, sanctions evasion, and terrorist financing.
“Stablecoins have significant shortcomings when it comes to promoting the integrity of the monetary system,” the BIS warned.
Stablecoins Should Play a Limited Role
Despite recognizing the appeal of stablecoins—particularly for cross-border transactions and lower fees—the BIS advised that their role in the financial system be strictly limited and tightly regulated.
“Society can re-learn the historical lessons about the limitations of unsound money,” the report cautioned.
“Bold action by central banks and other public authorities can push the financial system along the right path.”
Market Impact and Crypto Reactions
Following the BIS report, Circle (CRCL)—issuer of USDC—saw its stock drop over 15%, closing at $222 on Tuesday after hitting a record high of $299 the day before.
The crypto community responded critically.
Jim Walker, chief economist at Aletheia Capital, remarked:
“The BIS is hysterical in its opposition to crypto. The first criterion—being backed by a central bank—should make it a laughing stock given the historical failures of those institutions.”
Tokenization Praised
Not all digital finance was dismissed. The BIS praised tokenization as a “transformative innovation”, calling it a promising path for next-generation monetary infrastructure.
Rather than replacing the financial system, tokenization was described as building upon it—a nuanced but important distinction from the harsh critique of stablecoins.
@ Newshounds News™
Source: Cointelegraph
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GENIUS Act May Be Tied to CLARITY Bill in the U.S. House: A Turning Point for Crypto Regulation
By Coinpedia | June 2025
The U.S. House of Representatives is considering merging two landmark crypto bills—the recently passed GENIUS Act and the CLARITY Act—into a single legislative package that could reshape digital asset regulation across the United States.
“Together, these two bills could finally bring the structure and national guidelines the crypto industry has long demanded.”
What’s Happening?
▪️ The GENIUS Act (Government-Enacted National Infrastructure for Uniformity in Stablecoins) passed the Senate on June 17 with a 51–23 vote—marking the first major crypto bill to clear the chamber.
▪️ In the House, Republican Majority Whip Tom Emmer is now leading efforts to tie the GENIUS Act to the CLARITY Act (Digital Asset Market Clarity Act of 2025), which has already cleared the House Financial Services Committee and awaits a full vote.
Emmer believes passing both bills together is the only way to bring “a full and unified framework” to the U.S. crypto ecosystem.Why the CLARITY Act Matters
The CLARITY Act would clearly define how digital assets are categorized—such as securities vs. commodities—and outline federal rules for usage, trading, and issuance of crypto tokens across all 50 states.
Currently, crypto firms face a patchwork of conflicting state regulations, slowing innovation and increasing compliance costs. By creating one national rulebook, the combined legislation would unlock a simpler, safer environment for businesses and consumers alike.
Trump’s Push for Quick Passage
Former President Donald Trump has publicly urged the House to pass the GENIUS Act as-is, without adding the CLARITY Act. His supporters argue that swift action is needed to give stablecoin issuers regulatory clarity.
But critics, including Democratic lawmakers, see political risks. Trump has ties to World Liberty Financial, a stablecoin project, and some allege he stands to benefit personally if the law passes in its current form.
Political Pushback: The COIN Act
In response, Senator Adam Schiff introduced the COIN Act (Curbing Officials’ Income and Nondisclosure) on June 23, aiming to prevent presidents, vice presidents, and senior officials from profiting through crypto while in office or shortly after.
Schiff’s proposal adds another layer of complexity—and raises questions about whether crypto regulation can proceed without addressing potential political conflicts of interest.
What Most People Don’t Know
If passed, the merged bills could eliminate the need for crypto startups to navigate 50 different legal systems, significantly lowering the barrier to entry for innovation in the U.S.
For users, this could mean wider access to digital assets, fewer transaction barriers, and greater consumer protections—all under one consistent national framework.
Bottom Line:
The merging of the GENIUS and CLARITY Acts represents a critical moment for crypto legislation in the U.S. While support is growing for comprehensive regulation, political tensions and personal interests could complicate the path forward.
@ Newshounds News™
Source: Coinpedia
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