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What Section 453 really means 

Section 453 doesn’t block lawsuits or give blanket immunity to pesticide companies. 

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But first…

And now, on to the main event…

Over the summer, Congress did something quite startling: It passed bipartisan legislation with the potential to disrupt the traditional system of global payments, long dominated by Wall Street banks. And yet, for some strange reason, very few people on Wall Street seem to be talking about the Genius Act—the backronym is for Guiding and Establishing National Innovation for U.S. Stablecoins—which President Trump signed into law on July 18.

Stablecoins are a type of cryptocurrency pegged to a real and stable asset, like the U.S. dollar or short-dated Treasury bills. They can move around the world instantly, like other crypto tokens, but theoretically without the same risks. They’re also cheaper to transact than other forms of settlement. Until recently, stablecoins existed in a sort of legal grey area, which prevented more risk-averse financial institutions from building new products on the blockchain. But now that there’s a regulatory framework in place, it’s game on.

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For my own edification, as well as yours, I decided to call up Chris Land, the general counsel to Wyoming Senator Cynthia Lummis, one of the two Republican co-sponsors of the Genius Act along with Sen. Bill Hagerty of Tennessee. Land worked on writing the legislation, alongside Luke Pettit, a former senior policy advisor to Hagerty who is now the assistant secretary for financial institutions at the U.S. Treasury. (Pettit, in effect, is charged with implementing the new law.)

In layman’s terms, the Genius Act provides the regulatory architecture for the speedy and safe movement of stablecoins around the world, outside of the traditional banking system, where “wiring” money can take several days to settle and often costs a fee. Obviously, the old way of doing things has been plenty lucrative for the banks, which is why, Land told me, many of them opposed the legislation. But since our dealmaking president supported the bill—a favorite of the crypto industry, which donated tens of millions of dollars to Trump’s campaign—the big banks had to reluctantly go along, perhaps hopeful that the president would get around to deregulating them, too.

In Land’s telling, the Genius Act represents a “paradigm shift” in the payments system. As I’ve explained many times, we have what is known as a fractional banking system, meaning that we deposit our hard-earned cash in the bank, which is then free to take that money and lend it to borrowers, earning money along the way. The system works as long as everyone doesn’t withdraw his or her money at the same time, as happened in 2023 at Silicon Valley Bank. Under our fractional banking system, we’ve decided we can tolerate this kind of risk, as long as it doesn’t happen too often—we generally see such crises every 20 years or so.

The Genius Act, however, explicitly prohibits stablecoin issuers from making loans against their reserve assets—every digital dollar is meant to be fully backed by a nearly riskless security, such as Treasuries. The other benefit, in theory, is to separate the payment and lending functions of banking. “The U.S. payment system is one of the worst in the world, among first-world countries,” Land told me; it’s slow and hasn’t seen major innovation for “a generation or two.” Cutting down transmission times, he added, “is actually good for the economy,” with the potential to unlock hundreds of billions of dollars of “trapped capital.”

So what’s in it for the stablecoin issuers? Say you’re Ford Motor Company, and want to send $1 billion in cash to a subsidiary in Australia. Absent the new law, the money would likely have to be wired through multiple financial institutions, taking several days and racking up a bunch of fees in the process. Under the Genius Act, though, a nontraditional bank, like Circle or Tether, would deposit $1 billion worth of stablecoins, backed 100 percent by Treasuries as well as the issuer’s capital, into Ford’s digital wallet. The stablecoin could then be transferred “instantly” to the Australian subsidiary on the blockchain. “They don’t have to go through all these banks and pay fees and take time to settle,” he said.

Okay, so how does Circle make money? First, Land explained, the stablecoin issuer takes a small fee on the transaction, something like 25 basis points. And since it’s required to hold Treasuries as security for the full amount of the stablecoins, Circle gets the interest income from those securities when, say, the Australian subsidiary of Ford redeems the stablecoins for dollars, causing Circle to liquidate some of its Treasury inventory. “It’s a combination of both transaction fees and the yield on the bonds,” Land said. The stablecoin issuers also make money from the float, too, since there are redemption limits on how much of the money can be redeemed at any one time.

Circle, which went public in June, now has a market cap of $38 billion. The company’s $1.7 billion in 2024 revenue was derived mostly from the interest income on the reserves backing its stablecoins. Meanwhile, the privately held Tether owns around $100 billion worth of Treasury securities, making it among the largest holders of such securities in the world. (In 2024, Cantor Fitzgerald, the company owned by the family of Howard Lutnick, the Commerce Secretary, bought a $600 million convertible debt instrument in Tether, convertible into a 5 percent stake in the company.) Not bad for a pair of companies that were launched in 2013 and 2014, respectively.

This success demonstrates why the big Wall Street banks, which had been slow to experiment with crypto products during the Biden era, are now adjusting their outlook under Trump. JPMorgan Chase, for instance, is looking at issuing a stablecoin. In July, C.E.O. Jamie Dimon said that he thinks stablecoins are “real,” and allowed that the bank needed to learn about the product to understand it “and be good at it.” David Solomon, the C.E.O. of Goldman, has said that his firm is studying stablecoins and is anxious to see how they fit into the financial services industry.

Land noted that we’re still in the “pre-adoption” phase of stablecoins, where many financial institutions are trying to decide whether or not to issue them, and looking to see whether the interest from customers is sufficient to make it a new source of revenue. He predicted that banks such as Goldman and Bank of New York Mellon are more likely to be early adopters, while Bank of America, which is more consumer-oriented, doesn’t appear to have much interest in stablecoins. Another possibility is that Wall Street will come together to offer an alternative stablecoin currency that would compete with the dollar. There has been recent reporting that nine big banks are considering a plan to jointly issue a stablecoin backed by a basket of G7 currencies.

Regardless, it strikes me that there’s been surprisingly little discussion thus far, amid the legacy players, about a fintech innovation that could completely change the payments market within a few years. And there are larger, geopolitical impacts to consider, too. As Andy Mukherjee wrote for Bloomberg last week, the rise of U.S. stablecoins could draw capital from across the global financial system, especially in countries with high inflation or unstable governments that are looking for access to dollars without having to worry about fees or capital controls. According to one estimate, U.S. stablecoins could draw $1 trillion from banks in emerging markets over the next few years, strengthening the dollar—bad news for China, and also for America’s trade balance, although I doubt Trump was thinking about the consequences of digital dollarization when he signed the Genius Act into law.

It’s likely good news for Wyoming, though, which is among the reasons why Senator Lummis co-sponsored the bill. “It’s an economic development project for Wyoming,” Land explained. “Essentially, she wants Wyoming to turn into a financial services hub for crypto, kind of like South Dakota did in 1981 with credit cards,” creating something like 10,000 new jobs in the state.

And it’s probably good, in the long run, for the whole country, too. The move toward digital currencies is inevitable, and there may be real first-mover advantages to countries that can perfect the regulatory infrastructure first. The Genius Act is not a perfect law by any stretch of the imagination, I’m sure, but the fact that it got passed at all, in this crazy, do-nothing Congress, makes it a major accomplishment, even if most people are clueless about what it actually does.

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