Levitin noted that the Genius Stabelcoin Law in the US Congress changes the procedure for distributing and reimbursing assets in bankruptcy of commercial banks. In the proposed edition, the law allows investors whose digital assets are stored on the balance sheet of banking structures, to receive their funds earlier than traditional deposit depositors.
The professor of law added that the essence of the problem is the legislative recognition of cryptocurrencies with a special class of assets that do not fall under the standard rules for regulating the Federal Corporation for Loster Insurance (FDIC).
FDIC considers cryptocurrencies as assets stored by the bank in trust management. This means that in the case of bankruptcy of a credit institution, cryptocurrency is not included in the general competitive mass, but immediately returned to their owners.
“In the case of bankruptcy of the bank, for example, when the institution is collapsed, tokens holders will be able to first return their digital assets, while ordinary depositors risk completely losing access to funds. At the same time, deposit accounts are usually protected by FDIC to a certain amount, while crypto acts receive a privileged status without similar restrictions. This can undermine the trust in banks if traditional investors feel less protected than crypto -investors, ”Levitin said.
He added that with bankruptcy of the bank, his assets are distributed between creditors in accordance with the requirements established by the hierarchy. Typically, wealthy lenders are the first to turn out, then depositors protected by FDIC, and then unsecured lenders.
However, the Genius bill shall granted legal defense to crypto -investors inaccessible to ordinary depositors, which, according to the expert, creates a dangerous precedent that potentially threaten the stability of the American banking system.
Earlier on the Bits.media portal, a detailed review of the bill on the regulation of Genius stabilcoins, which is now considering the American Congress, and the consequences of its adoption for the US crypto industry.
Source: Bits
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