Some Democrats Support Legislation Allowing Elon Musk to Launch His Own Cryptocurrency
Elon Musk, a well-known advocate and trader of cryptocurrency, may have the opportunity to develop his private currency on the X Money platform, thanks to some Senate Democrats endorsing the GENIUS Act. This pro-crypto legislation has garnered support from several Democrats, despite criticisms highlighting significant flaws in the bill.
The cryptocurrency industry utilized a considerable portion of their funds during the 2024 elections to secure a cooperative Congress, with donations contributing almost half of all corporate contributions to PACs last year. The week ahead aims to leverage this investment return with the help of Senate Democrats.
The GENIUS Act, which is co-sponsored by Sen. Kirsten Gillibrand, the chair of the Democratic Senatorial Campaign Committee, is set to be discussed by the Senate Banking Committee. Gillibrand has long been advocating for industry-friendly cryptocurrency laws, and she may have found the support she needs, with many Democrats receiving substantial contributions from crypto PACs and being willing to work alongside Republicans and the White House.
Despite the bill’s supporters touting it as vital to enhance safety in cryptocurrency markets, consumer advocacy groups, other senators, and even regulators with a pro-crypto leaning have expressed concerns regarding the potential consequences of the GENIUS Act. Critics argue that the bill could create a system akin to the Wild West for stablecoins, with inadequate standards and security for users while granting companies like Elon Musk’s X the authority to establish a lightly monitored private currency.
Senator Bill Hagerty’s GENIUS Act, co-sponsored by committee chair Sen. Tim Scott and Sen. Cynthia Lummis, aims to establish a regulatory framework for stablecoin issuers based on their asset sizes. Those under $10 billion would fall under state regulations, while those over $10 billion would be regulated by federal agencies like the Federal Reserve or the Office of the Comptroller of the Currency. The rules proposed include licensing procedures, compliance with anti-money laundering laws, sanctions regulations, and 100 percent reserve requirements for backing assets. However, the bill’s stipulations clearly outline that regulation will be “light-touch”, with supervision, examination, and enforcement having defined limitations.
Juxtaposed against the Democrats’ broader struggle to counteract the Trump administration on issues like tax cuts for the wealthy or Medicaid cuts, many Democrats seem inclined to heed the demands of the cryptocurrency industry and Silicon Valley. The GENIUS Act sits prominently atop their list of priorities.
Cryptocurrency assets like stablecoins, intended to emulate traditional banking assets, such as bank deposits or money market funds, are designed to maintain value pegged to the US dollar or a standard currency. Advocates argue that stablecoins serve as efficient mediums for trading, settling transactions, and making payments for goods and services, especially in the realm of trading other cryptocurrencies.
The potential ramifications of the GENIUS Act are being heavily debated, with concerns about regulatory oversight and implications on financial security at the core of the discourse. With negotiations ongoing, a revised version of the bill is anticipated, which could reshape the regulation and supervision of stablecoins and their issuers. It remains to be seen how this legislation will impact the cryptocurrency industry and the broader economy’s financial stability.