Stablecoins from Circle, Tether, and PayPal aren't covered by FDIC insurance, despite what their marketing implies. The Genius Act explicitly excludes them from deposit protection, and issuers can freeze your money anytime, as Tether did with $4.2 billion. They're quietly showing up in payroll and Zelle without disclosure.
Stablecoins are not insured. And we have Circle, Tether, PayPal, and now all banks making stablecoins, putting billions of dollars into systems like Zelle and payroll systems. Yes, payroll systems, money that people depend on every single month. And every single one of them has buried in fine print that stablecoins are not FDIC insured. And the law just passed making it illegal to even say that they are. The Genius Act that was signed into law in July makes it legal for banks to create stablecoins And they've been having a field day. For example, Title 12, Chapter 56, it says a payment stablecoin is not a deposit. It does not get deposit insurance, period. Then you'll go to a stablecoin company and they say that the reserves are held at an FDIC-insured bank and your brain's like, oh well, it's safe. But that is not true. The bank is insured, not the deposit, AKA your tokens. The OCC just published Genius Act rules in the Federal Register And buried inside, they said full insurance coverage may be possible for larger issuers. The government's own regulator is telling you it literally cannot. It cannot work at scale for them to insure all stablecoins. Then you hear all this news about federal banking charters and people think it's safe, but people don't know that a trust bank often does not take deposits. No deposits means no FDIC insurance. The OCC's own interpretive letter says, quote, the bank does not accept deposits and therefore is not FDIC insured. The charters are real, but the insurance is not. Then we have people talk about something called pass-through insurance, which is like the only hope to actually insure stablecoins. And we had the FDIC chairman, Travis Hill, come out and say that stablecoins are not eligible for pass-through insurance. The one backup that people are pointing to, the head of the FDIC shut that door. And what people don't understand is even if all of that insurance worked, the Genius Act requires that every stablecoin issuer has the ability to block, freeze, and reject transactions. Tether has already froze $4.2 billion. Circle can freeze USDC. That freeze button is built in by law. So number 1, your tokens are not insured. Number 2, trust bank charters doesn't mean that FDIC has anything covered. Number 3, pass-through insurance is being blocked. And number 4, your tokens can be frozen regardless. Now we know the risk with crypto, but what's crazy about it is they're moving into payroll systems like Zelle and banking apps. And they don't tell you that they're using stablecoins. This is about paychecks now. This is about the future of American finance, and nobody knows because they don't read the fine print. So I'll update you guys as I get through it.
