>Assume the buyer/seller holds capital from sources that the majority of the market considers “illicit” and/or is legally sanctioned and/or physically frozen or restricted
This is not feasible legally, and is where your claim falls apart.
From the now-passed GENIUS act [0] which regulates the stablecoin issuer:
- "Permitted payment stablecoin issuers must maintain reserves backing outstanding payment stablecoins on at least a one-to-one basis, consisting only of certain specified assets, including US dollars and short-term Treasuries."
Their point is that if the money held in reserve are proceeds from criminal activity, it is possible for the assets to be seized or frozen by the feds (which would render them no longer backed 1-to-1 even if they were before then). The text of the law you quoted doesn't really change anything.
I see, I misread: that’s interesting. I would assume the issuer would still be liable to resolve the backing, but yeah I could see how that poses systemic risk.
I also don’t think such a risk could realistically remain hidden - this is still going to be heavily regulated and audited, and industry will wise up to the sorts of risk that emerge.
This is not feasible legally, and is where your claim falls apart.
From the now-passed GENIUS act [0] which regulates the stablecoin issuer:
- "Permitted payment stablecoin issuers must maintain reserves backing outstanding payment stablecoins on at least a one-to-one basis, consisting only of certain specified assets, including US dollars and short-term Treasuries."
[0]: https://www.lw.com/en/insights/the-genius-act-of-2025-stable...