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UC Law Science and Technology Journal

Abstract

Cryptocurrency has been legalized in the United States. The 2025 GENIUS Act provides a sensible regulatory framework for cryptocurrency as a medium of exchange while avoiding predicted monetary chaos. The Act correctly distinguishes between volatile fiat cryptocurrencies like Bitcoin, which are unsuitable as payment mechanisms, and stablecoins backed by traditional currencies and reserves.

Historical analysis spanning American monetary systems from the “free banking era” before 1860 through modern digital payments demonstrates that private money has long coexisted with government currency but requires appropriate regulation to prevent bank runs, fraud, and monetary instability. The GENIUS Act addresses key cryptocurrency risks—technological failures, volatility, issuer fraud, and loss of monetary control—through one-to-one reserve requirements, business activity restrictions, supervisory oversight, and priority for stablecoin holders in bankruptcy proceedings.

Critics argue the Act enables monetary chaos, lacks consumer protections, and permits “Big Tech” to control money supply. These criticisms are largely unfounded. The Act’s reserve requirements prevent fractional banking and money supply disruption, while existing corporate governance and consumer protection mechanisms provide adequate safeguards.

The GENIUS Act represents neither a return to nineteenth-century monetary chaos nor abandonment of oversight, but rather a measured approach distinguishing payment uses from investment uses of cryptocurrency. Success ultimately depends on whether stablecoins can satisfy the “no-questions-asked” principle and offer competitive transaction costs compared to existing payment systems like credit cards and digital wallets.

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