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I have never understood the appeal of cryptocurrency. It's not usable for everyday purchases. Even the vaunted secrecy of crypto transactions is a sham since they are actually traceable. (cf. "Tracers in the Dark: The Global Hunt for the Crime Lords of Cryptocurrency," November 15, 2022, by Andy Greenberg."

There is a fundamental difference between cryptocurrencies and meme crypto coins (which are purely speculative) and crypto stablecoins (which are supposed to hold a $1 value and are backed by real assets like USDs and Treasury bills). There is so much money invested in crypto that Congress is getting involved in regulating it. The industry has invested over $100 million in lobbying Congresscritters.

https://www.nytimes.com/2025/07/16/technology/cryp...

It Was Supposed to Be ‘Crypto Week’ in Congress. Then It Unraveled.

The crypto industry was headed for a landmark moment in the House with three bills that it helped push going to a vote. But a coalition of ultraconservative House Republicans staged a mutiny.

By David Yaffe-BellanyRobert Jimison and Michael Gold, The New York Times, July 16, 2025

It was supposed to be “crypto week” on Capitol Hill.

Republicans in the House of Representatives had scheduled back-to-back votes this week on three bills supported by the cryptocurrency industry, a suite of legislation with the potential to cement crypto’s status as a cornerstone of mainstream commerce. There were crypto ads in major newspapers, crypto billboards at local bus stops across Washington and even crypto-themed chocolate bars in Capitol vending machines.

Then the industry’s plans started to unravel....

At the heart of the debate was a push by some House Republicans to combine aspects of the separate crypto bills into a single piece of legislation.

In addition to the Genius Act and the Clarity Act, Republicans were scheduled to vote on the bill stopping the Federal Reserve from issuing its own cryptocurrency. Crypto investors have long objected to the creation of a “central bank digital currency,” arguing that it would raise privacy issues. But the threat is purely hypothetical. Nothing along those lines has ever been seriously proposed by a U.S. official....

The Genius Act was closest to fruition. The bill would create a regulatory framework for stablecoins, a type of crypto designed to maintain a constant price of $1, and appeared poised to encourage more companies in traditional finance to start experimenting with digital currencies. Last month, the Senate voted 68 to 30 to pass the bill, drawing support from some Democrats. Mr. Trump has vowed to sign it.

The Clarity Act is more expansive, laying out rules for a vast universe of crypto investments. In effect, the legislation would rewrite the rules to prevent the S.E.C. from reviving its crackdown under a future president, according to industry analysts....

The crypto industry is poised to continue fighting. On Tuesday, the industry’s network of super PACs announced that it held over $141 million in cash as the crypto world prepared an “aggressive, targeted strategy” for the 2026 midterms. [end quote]

Here's the Genius Act. It creates the first comprehensive regulatory framework for payment stablecoins.[1] The bill mandates stringent standards for reserves, audits, and transparency for issuers and establish a dual federal and state supervisory system to mitigate financial stability risks and protect consumers. The stablecoin industry would resemble the pre-Civil War money which was issued by banks before the United States issued its own paper currency beginning in 1861.

https://en.wikipedia.org/wiki/GENIUS_Act

Here's the Clarity Act. This bill takes power away from the SEC, which wanted to strictly regulate cryptocurrency as securities, and gives regulatory power to the Commodity Futures Trading Commission. It's a fair bet that the crypto industry is pushing this to get lax regulation.
https://www.congress.gov/bill/119th-congress/house...

https://www.barrons.com/articles/genius-act-clarit...

Genius Act, Clarity Act, Crypto Week, and Why It All Matters
By Elsa Ohlen, Barron's, Updated July 16, 2025

...
The Digital Asset Market Clarity Act is widely seen as likely to have the biggest effects. It lays out a framework to categorize digital assets as either commodities, to be overseen by the Commodity Futures Trading Commission, or securities, under the jurisdiction of the Securities and Exchange Commission...

The third piece of legislation, the Anti Central Bank Digital Currency (CBDC) Surveillance State Act, is meant to address concern that if cryptos become an integral part of the financial system, it could create a scenario where authorities are able to control or monitor the activities of citizens and institutions. Access to how people use digital currencies could potentially provide a lot of data about them.

Bitcoin hit a record high of more than $120,000 earlier this week. A big reason was expectations that these bills will bring about a positive outcome. [end quote]

As of mid-July 2025, the total money invested in cryptocurrencies (global market cap): The total cryptocurrency market capitalization is approximately $3.6 - $3.8 trillion. This number fluctuates daily. The total money invested in crypto stablecoins: The total market capitalization of stablecoins is around $241 - $255 billion.

I would count the stablecoin as a form of M1 (immediately liquid money such as cash and checking accounts) because it is supposed to be a crypto stand-in for the USD. Currently M1 is $18.7 trillion so the stablecoins would be an insignificant part of M1 if they were included -- which they are not.
https://fred.stlouisfed.org/series/M1SL

The objective of the crypto industry is to maximize its own profit, regardless of the potential danger to the monetary system or potential for fraud and investor losses.

The objective of Congress is supposed to be protection of the public on a Macro and investor level but they are influenced by the crypto lobbyists.

Commercial non-bank companies, like Amazon and Wal-Mart are contemplating issuing their own crypto currencies to reduce the cost of processing credit card payments. I don't see the incentive for a customer to use these because they would be less fungible than USDs. I use Amazon and Costco credit cards because I get cash back.

I don't see the point of the Federal Reserve creating a crypto currency since they already run a fiat currency racket which creates trillions of USDs out of thin air.

https://fred.stlouisfed.org/series/WALCL

Some people say that the reason to have crypto stable coins is to be able to buy and speculate on cryptocurrencies. This seems like dangerous reasoning to me since I can't even buy a tulip bulb with a bitcoin.

If I wanted to speculate on cryptocurrency I could buy shares in IBIT, the iShares Bitcoin ETF.

The world of cryptocurrency is changing. I think it's yet to be seen whether it will become useful or will cause a financial crisis...or both. But I do think the GENIUS Act should be passed. The others...I'm not so sure.

Wendy

Help me here. What good is crypto stablecoin if there has to be $1 for each dollar created? Why not just use the dollar?

(And where are the hundreds of millions of lobbying costs and data center costs and power costs coming from, if not from crypto investors?)

There is much to understand here and I get almost none of it.

Help me here. What good is crypto stablecoin if there has to be $1 for each dollar created? Why not just use the dollar?"

My thought exactly. Crypto is supposed to be good for money laundering. I had previously thought
that transactions were untraceable, but in OP Wendy states that they are traceable, so not sure if that is on the plus side for the crypto crowd anymore.

And doesn't the crypto coin "mining" use an enormous amount of electrical power ?
The US not willing to update electrical infrastructure for the benefit of its citizens,
but maybe TPTB would be willing to upgrade the grid if it helps the crypto crowd have
a stable electrical power source, especially if the crypto lobbyists can up their $100 Million
lobbyist payout to the Congress critters.

Seems like Americans, and America, is accelerating toward the looney-bin cliff.

first, this should be re-named the 'stablecoin genius' act in honor of grifter-in-chief.

more critically, this legislature is only serving to normalize a destabilizing force where pols and institutions can gain based on transactions and custody fees, not on any investment\utilitarian value of holding crypto.
and if 95% of the transactions continue as exchanges between global criminal enterprises (and sanctions avoidance), far be it from trump and cronies not to want their cut.

lastly, bitcoin flow is certainly (and so far permanently) trackable.
what is much harder than using major currencies is finding out who the intermediates actually represent.
ultimately, even criminals want to buy real world goods, and that final conversion to fiat may be a weakness.
but it is becoming a microscopic % of volumes.

Whenever anyone tries to engage me on the subject of cryptocurrency, I usually
just send them this link:

https://www.web3isgoinggreat.com/

"...and is definitely not an enormous grift that's pouring lighter fluid on our already smoldering planet."

I usually check it every week or so because there's almost always a new
grift or two revealed.

-Rubic

<Help me here. What good is crypto stablecoin if there has to be $1 for each dollar created? Why not just use the dollar?>

I asked the same question on an earlier thread. Someone answered that it's easier to buy cryptocurrencies with stablecoins (which are also crypto in nature) than with USDs.

<(And where are the hundreds of millions of lobbying costs and data center costs and power costs coming from, if not from crypto investors?)>

Great question! Those are real USDs so they must come from crypto investors one way or the other.
Wendy

Help me here. What good is crypto stablecoin if there has to be $1 for each dollar created? Why not just use the dollar?

Because the dollar is not native to a blockchain. Therefore, the dollar can't directly be used inside of the blockchain system.

Crypto can be a bit opaque, and for a good explainer I highly recommend Matt Levine's lengthy piece on it (you might already have read it, link below), but in a nutshell crypto is basically a system for moving around entries on a computer ledger. That happens in the "normie" financial system as well - most financial transactions don't involve moving actual dollars or other assets around, but instead also involve moving entries in a computer ledger. These entries represent the assets. In crypto, these entries are the asset, which can be used to buy other entries/assets that are native to that blockchain.

A flawed but useful model would be to think of the in-game currency for any role-playing video game that you've ever played, such as gold that you might find in a game like World of Warcraft. Each of those "gold" units that exists within the game world can be used to buy other things that exist within the game world. There's typically no direct way to use real-world dollars in the game world economy, or vice-versa - the online currency has to be exchanged for real-world dollars (or the reverse).

Stablecoins are useful because they are native to a blockchain, and therefore can be the direct subject of blockchain operations in a way that dollars cannot. Blockchain fans believe that this will be enormously useful, because blockchain operations can be decentralized and trustless in a way that conventional transactions cannot be. I'm skeptical of that supposition, but that's the reason.

https://www.bloomberg.com/features/2022-the-crypto...

I have been investing in electrical infrastructure companies for some time now. I was in Iceland a few days ago and I suspect someone will soon figure out that it makes sense to place large data centers there as there is a copious quantity of geothermal power and the climate is cooler than most - aiding in cooling data centers. Of course the area may also be prone to earthquakes and volcanos, so it might not be wise to invest in expensive data centers there after all.

Jeff

someone will soon figure out that it makes sense to place large data centers there as there is a copious quantity of geothermal power and the climate is cooler than most - aiding in cooling data centers.

Earthquakes are one major issue--if a data center uses spinning drives. If it uses all SSD (solid state drives), earthquakes may (not) be an issue.

Maybe build it in the ocean a short distance offshore. A two-fer. Natural cooling via outside sea water, yet still close enough to a geothermal power source to be practical. Can't say how long the situation would be stable (geothermal power supply, wiring carrying power, and no lava flows causing problems).

One of the problems with data center location is latency. They need to be reasonably close to the users. That’s not necessarily true for all types of data centers, but for the most part they need to be in reasonable proximity to population centers.

Help me here. What good is crypto stablecoin if there has to be $1 for each dollar created? Why not just use the dollar?

Clearly you have never needed to buy drugs without connections or engaged in human trafficking.

Because the dollar is not native to a blockchain. Therefore, the dollar can't directly be used inside of the blockchain system.

Sure I get that. My point is that if there has to be a dollar in reserve to have a dollar of stablecoin, then that dollar in reserve isn’t doing anything productive, so the stablecoin has to work twice as hard - to make up for the dollar’s “lost” productivity, and to make it worthwhile, the productivity of the stablecoin too.

Otherwise you just have a bunch of dollars sitting in a vault doing nothing, while the stablecoin floats around the world doing whatever it is that Stablecoins do.

Otherwise you just have a bunch of dollars sitting in a vault doing nothing, while the stablecoin floats around the world doing whatever it is that Stablecoins do.

Bold of you to assume the stablecoins are actually backed by dollars.

My point is that if there has to be a dollar in reserve to have a dollar of stablecoin, then that dollar in reserve isn’t doing anything productive, so the stablecoin has to work twice as hard - to make up for the dollar’s “lost” productivity, and to make it worthwhile, the productivity of the stablecoin too.

Otherwise you just have a bunch of dollars sitting in a vault doing nothing, while the stablecoin floats around the world doing whatever it is that Stablecoins do.

The dollars don't literally sit in a vault doing nothing, anymore than dollars you put in a checking account sit in the bank vault doing nothing. The simplest version of this was that the stablecoin issuer collects (for example) a billion dollars and issues a billion stablecoins, and then takes that billion dollars and invests it. Say, T-bills. Then they sit back and collect $40 million a year for doing basically nothing, since the stablecoins don't yield any interest - users of the stablecoin are willing to forego that in exchange for the service of having something that's more useful for payments than physical dollars would be.

Or one new model is they deposit the money with a big regulated financial institution like BlackRock (who go out an invest in T-bills or whatever) rather than investing it themselves. I know I already linked to an article by Matt Levine, but he writes about crypto a lot in a very accessible way:

https://archive.ph/RipQc#selection-1555.0-1567.163

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