Sun. AM-PM Seeds of Wisdom Crypto Update(s) 5-18-25

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Seeds of Wisdom

THE LATEST STABLECOIN GENIUS ACT DRAFT: ADDRESSING KEY D------T OBJECTIONS?

Yesterday, Punchbowl News reported that Senate leader John Thune had filed for a procedural vote (cloture) on the Stablecoin GENIUS Act — the same vote that failed last week. Hence, another vote is likely to be held next week. D------t Senator Kirsten Gillibrand claimed major progress on the bill, indicating that several D-------s were gearing up to support it.

However, last night, Punchbowl published a memo from Senator Elizabeth Warren highlighting ongoing problem areas.

Ongoing Concerns About Trump Family Interests

Firstly, she objected that there’s nothing in the Bill stopping elected officials and their families from issuing stablecoins. The involvement of President Trump’s sons with crypto firm World Liberty Financial is viewed as controversial by some. That concern was exacerbated when its new stablecoin, USD1, was used in a $2 billion transaction by a firm chaired by the UAE’s national security adviser.

Regarding families, earlier this week, Senator Gillibrand implied that family members are legally permitted to issue stablecoins. However, officials themselves cannot. Since early May, there has been a GENIUS Act clause that states:

“For the avoidance of doubt, existing Office of Government Ethics laws and the ethics rules of the Senate and the House of Representatives prohibit any member of Congress or senior executive branch official from issuing a payment stablecoin during their time in public service.”

BigTech Stablecoin Issuance

Senator Warren’s second objection is that BigTech firms, such as Meta or X, are still allowed to issue stablecoins.

While the latest draft does not have a blanket ban, it includes a significant clause addressing issuance by public non-financial corporations. These firms must be approved by the Stablecoin Certification Review Committee, which will assess:

• Financial stability concerns
• Protection of consumer data
• Avoiding tying stablecoin services to other business activities

However, this only applies to public companies. For example, it would not apply to X, Stripe, or other unlisted unicorns. The Committee will consist of the:

• Secretary of the Treasury
• Federal Reserve Chair or Vice Chair
• Chair of the FDIC

T-------m and Criminal Activities

Senator Warren is also concerned about the use of stablecoins for t-------t and criminal activities. She wrote:

“New language in the draft bill imposing restrictions on when foreign companies can issue stablecoins in the United States makes no material difference, given that the coins could still be issued offshore and moved through domestic decentralized exchanges accessed by t--------s and criminals.”

Her concern might relate to a change in wording — replacing “any person” with “digital asset service provider” (DASP) in several places. This was likely done to align with the upcoming crypto market infrastructure legislation. However, individuals involved in decentralized exchanges may not be covered under the DASP definition — potentially creating a loophole.

Stablecoins and Financial Stability

Stablecoins offer many potential benefits, but they also carry significant financial stability risks. Senator Warren believes these risks are not sufficiently addressed in the current draft:

“[The bill] would still allow issuers to actually invest their reserves in riskier assets, hold them in offshore accounts, engage in dangerous financial and commercial activities, and prevent regulators from applying strong safeguards — inviting a future crash and costly bailouts.”

Other jurisdictions generally require onshore reserve holdings for stablecoins, whereas the GENIUS Act is different in this respect. Some argue that reserves should only be invested in direct government securities, not in money market funds that add a layer of risk.

There is also growing interest in using tokenized assets for stablecoin reserves. These are often tokenized money market funds, which raises the need for clear tokenization standards, including:

• Secure custody providers
• Transparent audits
• Prohibitions on rehypothecation (lending of underlying assets)

There’s no point in banning stablecoin issuers from lending reserves if the tokenization firm can do so instead.

Political Landscape and Path Forward

Despite these concerns, it’s important to consider the broader political context. Senator Warren has long held strong opposition to cryptocurrencies and stablecoins. Her support for any such legislation remains unlikely.

The key to successful regulation lies in garnering D--------c support from lawmakers like Gillibrand, who understand that regulating existing stablecoins is critical. Without a clear framework, the regulatory vacuum may only increase the risks posed by this growing financial sector.

@ Newshounds News™

Source: Ledger Insights

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JUDGE DENIES JOINT BID FROM RIPPLE AND THE SEC TO END XRP LEGAL BATTLE

A U.S. judge has rejected a joint request from Ripple and the SEC that sought to end their long-running legal dispute over XRP, saying their bid failed to meet legal requirements.

What happened?
Ripple and the SEC filed a joint motion for an “indicative ruling” to reduce Ripple’s $125 million civil penalty to $50 million, and potentially vacate the penalty altogether.

But District Judge Analisa Torres shut it down, saying the parties failed to address the legal burden required to change or vacate the prior judgment.

Judge Torres wrote:

“Relief from judgment under Rule 60 is granted ‘only upon a showing of exceptional circumstances’… The parties have made no effort to satisfy that burden here; their request does not even mention the rule.“

She concluded:

“If jurisdiction were restored, the court would deny the parties’ motion as procedurally improper.”

Background on the case:

• The SEC sued Ripple in late 2020, alleging it sold XRP as an unregistered security.
• In 2023, Judge Torres ruled that Ripple’s open-market XRP sales were NOT securities, but said institutional sales WERE.

In August 2023, Ripple was hit with a $125 million penalty. Both Ripple and the SEC have appealed the amount.

Post-Gensler Fallout:
Since Donald Trump took office and Gary Gensler exited the SEC, the agency has walked back several crypto enforcement actions. But this case continues to hang in the balance.

Judge Torres’ ruling keeps the legal penalties in place — and the battle continues.

@ Newshounds News™

Source: DailyHodl

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Source: Dinar Recaps

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US COMPLETELY LOSES PERFECT CREDIT RATING FOR FIRST TIME IN OVER A CENTURY

Moody’s Ratings downgraded the U.S. government’s credit rating on Friday, citing repeated failures by successive administrations to control the country’s growing debt. The agency lowered the rating from its highest grade, Aaa, to Aa1, noting that while the U.S. still benefits from key strengths—such as a dynamic economy and the global dominance of the U.S. dollar—its fiscal outlook has significantly deteriorated.

Why It Matters

The shift means the United States no longer enjoys a fully stable top-tier rating from any major agency for the first time in more than 100 years. Moody’s becomes the third and final major credit agency to reduce its assessment of the federal government’s creditworthiness. Standard & Poor’s made its first-ever downgrade in 2011, and Fitch Ratings followed in 2023.

What to Know

In its announcement, Moody’s—led by chief economist Mark Zandi—projected the federal deficit will rise to nearly 9% of GDP by 2035, up from 6.4% in 2024, driven by:

• mounting interest payments,
• rising entitlement costs, and
• sluggish revenue growth.

Moody’s also warned that extending President Donald Trump’s 2017 tax cuts—now a key priority for the Republican-led Congress—would add $4 trillion to the federal primary deficit over the next decade. Political gridlock remains a major obstacle to fiscal reform, with:

• Republicans opposing tax increases, and
• D-------s resisted spending cuts,
  leaving little room for bipartisan solutions.

What to Know About the Three Major Credit Agencies

The three major credit rating agencies—Moody’s Investors Service, S&P Global Ratings, and Fitch Ratings—play a critical role in assessing the creditworthiness of sovereign nations, including the United States. These agencies assign ratings that influence:

• borrowing costs,
• investor confidence, and
• global economic perceptions.

A top-tier credit rating signals low risk, while a downgrade can lead to increased borrowing costs and financial instability.

Historically, the U.S. maintained a perfect credit rating from all three agencies for decades, reflecting the country’s economic strength and political stability. That changed in 2011 when S&P downgraded the U.S. from AAA to AA+ following a contentious debt ceiling standoff. Fitch followed in 2023, citing fiscal deterioration and repeated political brinkmanship. Moody’s had been the last to maintain a stable AAA rating—until now.

• Moody’s, founded in 1909, is the oldest of the three.
• S&P, established in 1860, is known for its market indices and ratings.
• Fitch, founded in 1914, is the smallest but still influential.

Together, these agencies hold immense sway over global finance, and their recent assessments of the U.S. reflect growing alarm over debt levels and political instability.

What People Are Saying

D--------c strategist Chris Jackson posted on X (formerly Twitter):
“BREAKING: In a stunning move, Moody’s has downgraded the U.S. credit rating from Aaa to Aa1—for the first time in history. That’s right: the only major credit agency that hadn’t downgraded us under Trump just did. Who else enjoying all this ‘economic winning’ under Trump?”

Steven Cheung, assistant to President Trump and White House Director of Communications, replied:
“Mark Zandi, the economist for Moody’s, is an O---a advisor and C-----n donor who has been a Never Trumper since 2016. Nobody takes his ‘analysis’ seriously. He has been proven wrong time and time again.”

@ Newshounds News™

Source: Newsweek – Moody’s Downgrades U.S. Credit Rating   

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CHINA SELLS $19B IN U.S. TREASURIES AS TRADE WAR ESCALATES

Beijing Cuts Holdings Amid Tariff Tensions and U.S. Credit Concerns

China has significantly reduced its holdings of U.S. government debt, shedding $18.9 billion in Treasuries in March, according to newly released data from the U.S. Department of the Treasury. This move aligns with rising tensions in the ongoing U.S.–China trade conflict.

Sharp Drop in Holdings

• China’s Treasury holdings fell to $765.4B in March, down from $784.3B in February.
• This is one of the steepest monthly reductions in recent years.
• China is now the third-largest U.S. debt holder, behind the U.K. and Japan.

This reduction comes amid growing speculation that China may use its U.S. debt holdings as a geopolitical tool—or to reduce risk as bilateral relations deteriorate.

Trade War Fueling Financial Maneuvers

China’s actions follow the U.S.’s aggressive tariff measures, which have escalated into what many now consider a de facto trade embargo, with tariffs exceeding 100% on some imports.

Chinese economist and former central bank adviser Yu Yongding commented:

“China must have a set of countermeasures through repeated scenario planning to safeguard the security of its overseas assets.”

Global Credit Concerns Deepen

China’s debt selloff coincides with mounting concerns over the U.S.’s fiscal health:

• Moody’s downgraded U.S. debt from ‘AAA’ to ‘Aa1’, citing unsustainable debt levels.
• Interest payments and debt ratios are now “significantly higher than similarly rated sovereigns,” Moody’s warned.

Interestingly, China increased its U.S. Treasury holdings by $20B in February, despite the early tariff rounds. March’s reversal signals a shift in strategy as tensions spike.

@ Newshounds News™

Source: Full article on Bitcoin.com

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Source: Dinar Recaps

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