These days, everyone's getting into crypto. With the self-declared "crypto president" in office, the market is surging, and the public is hoping to cash in. Now, even the CEO of the second largest bank in the US wants to get into blockchain, though there's just one tiny wrinkle: it's not quite legal yet.
"It's pretty clear there's going to be a stablecoin," Bank of America CEO Brian Moynihan said in an interview on Tuesday, referring to a type of digital currency designed to mirror the value of the US dollar. "If they make that legal, we will go into that business."
The Bank Holding Company Act currently restricts companies from mixing banking with commerce because of the dangers posed to the public. That probably won't stop Trump from letting banks go wild on stablecoins for long.
In his few months back in office, the president has been busy opening the floodgates on crypto with a slew of executive actions and cozy deals with crypto moguls — not to mention launching his own meme coin days before his second inauguration.
One of Trump's first moves in January was an executive order meant to protect and promote cryptocurrency for businesses. This stirred state lawmakers to draw up plans for "strategic crypto reserves," while crypto platforms beg them to loosen regulations.
The returning president went so far as to designate "PayPal Mafia" boss David Sacks as the country's first Crypto Czar. Like Moynihan, Sacks has speculated that stablecoins could "ensure American dollar dominance internationally, to increase the usage of the US dollars digitally as a world reserve currency."
Nevermind that the dollar is already the world's reserve currency, in an arrangement that has more to do with military intervention than the blockchain. It's also completely unclear why stablecoins are any better than cold hard cash. Not even Moynihan has any clue: "the question of what it’s useful for is going to be interesting," he said this week.
The moguls are just the latest in a long line of crypto-hopefuls trying to make a buck before they explain why crypto is a good idea. This desperate search for a use-case has dogged crypto since its inception, leading tech critics like Ed Zitron to argue that the crypto industry "has fundamentally no purpose other than to continue existing."
Zitron notes that stablecoins are backed by a slurry of money, loans, and certificates, functioning more like banks than the always-reliable dollar.
While this stuff seems stable in theory, says Zitron, in reality these stablecoins hold value due to an "unspoken, industry-wide zealotry that says, 'we all agree this is worth this, based on a few facts and a lot of faith.'"
That faith is often tied to the whim of crypto markets. We saw this in the collapse of Terra, a stablecoin that imploded in 2022, wiping out nearly half a trillion dollars' worth of crypto in the process.
Far from stable, it turned out that Terra was heavily subsidized by Anchor, a crypto protocol that offered a whopping 19.5 percent interest rate on deposits. Once the run started, all the blockchain transparency in the world couldn't stop people from pulling money out of Terra — a major part of crypto's sales pitch.
"In any other industry, this would be exceedingly illegal," Zitron writes. "Still, in crypto, this is simply the agreement — this is worth a dollar." Until it isn't.
So far, the crypto industry has gotten away with its antics thanks to a lack of regulation and its separation from the broader economy. But as Wall Street speculators, bank CEOs, and Crypto Czars start to merge the two into one, the ups and downs of the crypto market might soon become our own.
More on cryptocurrency: As Crypto Prices Collapse, Trump's Meme Coin Falls to Lowest Value Since Its Launch
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