Crypto is a threat to the US Financial System

With Dan Davies – for the New York Times

This has been a good week for America’s crypto interests. The Genius Act, which legitimates a kind of cryptocurrency called stablecoins, advanced in the Senate, and on Thursday, President Trump held a gala dinner for the top 220 holders of his $Trump memecoin.

That doesn’t mean it’s been a good week for America. Stablecoins, as their name suggests, are crypto assets guaranteed by other assets like the U.S. dollar. Mr. Trump and his sons created one called USD1 through their cryptocurrency company, World Liberty Financial. Digital currencies like stablecoins are bad enough when they could potentially be used for political self-dealing. The potential problems they pose to the mainstream financial system go deeper and are much more concerning.

Their advocates claim that they will enhance U.S. financial power — Mr. Trump said that stablecoins would “expand the dominance of the U.S. dollar.”

They are likely instead to undermine it, fostering scams and sanctions evasion, generating financial risk and perhaps even allowing another currency to supplant the dollar in global trade.

More at the New York Times.

Other Writing:

Essay

Behold the AI shoggoth – with Cosma Shalizi

Artificial intelligence is a familiar-looking monster The academics argue that large language models have much older cousins in markets and bureaucracies An internet meme keeps on turning up in debates about the large language models (llms) that power services such Openai’s Chatgptand the newest version of Microsoft’s Bing search engine. It’s the “shoggoth”: an amorphous monster ...
Read Article
Essay

How to Save the Euro – and the EU: Reading Keynes in Brussels with John Quiggin

John Quiggin and I have a “piece”:http://www.foreignaffairs.com/articles/67761/henry-farrell-and-john-quiggin/how-to-save-the-euro-and-the-eu on the eurozone mess in the new issue of _Foreign Affairs._ The piece is subscriber-only, but we’re allowed to post it (in Web format) for six months or so on a personal or institutional website. Accordingly, the piece can be found below the fold. The piece was finished ...
Read Article