Business
What Are Stablecoins?
There’s a new type of money spreading rapidly across the internet, propelled by the crypto boom. It’s supposed to be worth a dollar, but it’s not issued by any government. Called a stablecoin, it is a digital currency that is subject to very little legal oversight — and its growing popularity has recently transformed it into a $300 billion market.
You can use stablecoins to buy things online, make investments or send money abroad with minimal fees.
Hundreds of different brands of stablecoins exist now, with more to come. The Trump family introduced its own version this year. Walmart has been exploring one, as have major banks, tech companies and others.
And as big businesses flock to the cryptocurrency, so have bad actors. When pushing for stablecoin legislation in March, Senator Bill Hagerty, Republican of Tennessee, said the United States could not ignore the use of these digital dollars for “illicit activities by drug cartels, foreign terrorist organizations and state actors.”
Financial experts worry that the increasing adoption of these cryptocurrencies could pose large risks to the financial system. You can use them to easily move official money into digital currencies and back again. But they do not come with deposit insurance, like money in a savings account from a bank will have. There are no fraud protections. And there is scant regulation in place to make sure people are not using them for illegal transactions.
Stablecoin companies “enjoy the privileges of being a bank without the responsibilities,” said Corey Frayer, a former official at the Securities and Exchange Commission focused on crypto policy and a director at the Consumer Federation of America, a consumer advocacy group.
The mechanics of how stablecoins work are straightforward. You can buy them, usually from a large online crypto exchange, in a matter of minutes with a wire transfer or credit card. The coins sit in your digital wallet, available for cheap and fast transactions anywhere in the world.
Imagine you want to buy this pair of Nike Air Force 1 shoes. They cost $222 from Crepslocker, a British online reseller of luxury goods. Here’s what happens at checkout:
Mani Fazeli, the vice president of product at Shopify, said that since cryptocurrency regulations were still evolving, consumer protections can differ from traditional card payments. He added that the company worked with regulated partners to handle compliance for different parts of the process for payments.
Until recently, stablecoins served two main purposes: buying other cryptocurrencies and making risky crypto bets. But new regulations, including the GENIUS Act that President Trump signed into law this year, legitimized them for traditional payments and banking.
As it becomes more mainstream, many people may not even know they’re using stablecoins for transactions, said John Collison, a founder of Stripe, a payments company.
He cited Félix Pago, a popular app that allows people to send money transfers through WhatsApp and other platforms. Using Stripe technology, Félix Pago converts money into stablecoins to cut out foreign exchange fees, but doesn’t advertise cryptocurrency anywhere on its website.
“For me, this is a sign of the maturity of the industry and the utility of the technology,” Mr. Collison said in an interview.
The lack of transparency worries Mr. Frayer. He predicts that payment companies will slip stablecoins into updated terms of service, so consumers unknowingly agree to crypto transactions every time they swipe their card. But those transactions “will come with none of the protections” that Americans expect, like chargebacks and fraud protection, he said.
Mr. Frayer warns that the proliferation of the coins echoes a dangerous era in American finance. In the 19th century, before federal regulations, private banks issued their own currencies that frequently collapsed, wiping out people’s savings.
Here’s how stablecoins in your crypto wallet differ from a traditional bank deposit:
A niche invention that grew bigger than nations’ G.D.P.s
Five years ago, stablecoins were mostly niche assets for crypto traders. Today, they’re worth more than the yearly economic output of Greece.
Tether, one of the most well-known issuers of stablecoins, made $13 billion in profit last year, according to company disclosures, just from the interest on customer funds. It now has roughly $180 billion in circulation. Circle, which issues the stablecoin USDC, has about $78 billion.
The Rise of Tether and Circle
To understand why that matters, you need to understand Treasury bills, or T-bills.
T-bills are essentially short term loans taken by the U.S. government to fund its operations, accounting for 20 percent of all U.S. debt. They’re considered some of the safest investments in the world because the United States is very unlikely to default on its debt, especially over shorter time periods. So banks, pension funds, foreign governments and money market funds all heavily invest in this market as a way to safely park enormous amounts of cash while earning a return.
Now, stablecoin issuers are some of the biggest purchasers of Treasury bills. Circle and Tether together hold roughly $136 billion in T-bills, according to an analysis of their financial statements, putting them on par with large nations and institutional investors.
Top Purchases of Treasury Bills in 2024
With the passage of the GENIUS Act, the Trump administration’s signature crypto policy, the adoption of stablecoins is projected to skyrocket.
The Federal Reserve estimates that the total market could be worth $3 trillion in five years. That’s nearly the entire 2024 gross domestic product of France, according to the World Bank.
Industry giants are celebrating. “We love, we love the GENIUS Act,” said Rubail Birwadker, the global head of growth at Visa, which has expanded into stablecoin payments. He added that the new regulation “makes it so much easier for more legitimate banks, technology companies, others to actually enter the ecosystem because they know exactly what they’re getting into.”
Mr. Frayer, the Consumer Federation of America director, said the law fell far short of existing regulations for financial firms. It hands financial power to companies, he argued, that “fundamentally don’t believe that the federal government has any role in regulating financial transactions.”
A coin that provides all of the power, with none of the oversight.
Because stablecoins exist in a regulatory gray zone, Tether has become a favorite currency of criminals and money launderers.
ISIS has used it to fund operations, according to the U.S. Financial Crimes Enforcement Network.
Russian oligarchs moved millions of dollars in Tether across borders to evade sanctions in Europe, the Treasury Department said.
On Telegram, underground channels openly advertise weapons and narcotics, accepting Tether payments while promoting “zero fees” and untraceable transactions.
In a statement, a Tether spokesperson said the company worked closely with law enforcement agencies and that it regularly froze assets of bad actors. “Blockchain transactions are traceable in ways that cash and traditional banking channels are not,” the company said. “Criminals predominantly use cash along with every form of money, but digital assets create immutable records that law enforcement can trace.”
The risks of stablecoins extend beyond criminal use. Because they have connected crypto markets directly to traditional finance, failures in either system can spread to the other.
When the price of Bitcoin slid recently, people used stablecoins to cash out, according to data from CoinMarketCap, an industry firm. The overall value of the number of Circle stablecoins decreased nearly 3 percent over a 13-day period.
The sell off was relatively slow, happening over the course of nearly two weeks. But had withdrawals happened more rapidly, it could have meant something much more damaging. Here’s how that could have played out.
The value of cryptocurrency crashes, pushing investors into stablecoins, in part to help them cash out of their investments.
As crypto continues to tumble, stablecoin companies begin to sell Treasury bills in order to pay back customers.
T-bills, as a result, lose their value, affecting bank and money market fund reserves.
A crash could also work in the other direction, a danger that became clear two years ago.
Banks or money market funds go under.
In March 2023, Silicon Valley Bank collapsed.
The money that is backing stablecoins disappears.
Circle had $3.3 billion trapped in the failed bank, causing its USDC currency to plunge to 87 cents per coin.
Panic cascades, sending cryptocurrency into free-fall.
Crypto exchanges froze withdrawals, margin calls resulted in forced selling and the contagion spread to Bitcoin and Ethereum.
The crisis ended only when federal regulators guaranteed all Silicon Valley Bank deposits. The episode, however, exposed a critical vulnerability: Unlike bank deposits, stablecoin holdings have no federal safety net, so customers are at risk if the issuer falters. Had Circle lost its $3.3 billion, many everyday users would simply have been out of luck.
The risk isn’t just hypothetical. Stablecoin issuers have a checkered record when it comes to managing customer funds, according to Hilary Allen, a professor at American University.
In 2021, for example, Tether reached a settlement with the New York attorney general after investigators found it had falsely claimed to hold sufficient assets to match the amount of Tether in circulation, according to court documents. Had there been a surge in withdrawals, Tether might not have been able to cover all its stablecoin holders.
On Nov. 26, S&P Global, a ratings firm, downgraded its assessment of Tether’s holdings to “weak,” the firm’s lowest rating, citing “persistent gaps in disclosure” and overreliance on high risk assets like bitcoin, gold and corporate bonds.
In a statement, a Tether spokesperson said its currency “has remained stable through banking crises, exchange failures, and extreme market volatility.” Since the New York attorney general settlement years ago, Tether has increased its holdings of safe assets, the company said.
Tether’s checkered history nonetheless does not inspire confidence, according to Ms. Allen. Any doubt about solvency, she said, could generate a run.
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Business
Legal brawl that helped tank Jeff Shell’s Paramount career ends
The strange legal saga that torpedoed Jeff Shell’s career at Paramount Skydance has ended with a whimper.
An attorney for Las Vegas gambler and self-styled “fixer” Robert James “R.J.” Cipriani has asked a Los Angeles County Superior Court judge to dismiss the scorched-earth lawsuit he brought against Shell in March. Cipriani had been demanding $150 million for allegedly providing “sophisticated, high-value crisis communications services, entirely without compensation” to Shell over 18 months.
Shell’s attorneys separately filed court documents to withdraw a counter-lawsuit against Cipriani.
The bitter feud captivated Hollywood earlier this year after Cipriani went public with his grievances against Shell, whom he met nearly two years ago through powerlawyer Patricia Glaser.
Glaser had arranged a meeting in August 2024 between Cipriani and Shell, the former chief executive of NBCUniversal. At the time, she and Shell suspected Cipriani was behind an online whisper campaign to spread rumors about Shell just as he was trying to mount a comeback at Paramount.
A year earlier, Shell had lost his job as NBCUniversal’s chief executive over an inappropriate relationship with an underling.
Cipriani claimed Shell turned to him for protection against potential bad publicity. In his lawsuit, Cipriani alleged that during months of on-again, off-again conversations, Shell dished sensitive information to him, including that Paramount was poised to strike a $7.7-billion deal to bring UFC fights to Paramount+.
Cipriani also alleged Shell had reneged on a promise to help him develop a show at Paramount as compensation for his occasional work.
Shell has long maintained that he never made such a promise. He contends Cipriani, a self-professed whistleblower who goes by the handle RobinHood702 (the Las Vegas area code), was trying to shake him down.
“I didn’t pay this guy a cent,” Shell said Thursday. “From the very beginning, I wasn’t going to pay him a cent.”
Earlier this spring, Paramount conducted an external review into Shell’s conduct and found no violation of securities laws.
Robert James “R.J.” Cipriani in Amazon Prime Video’s 2025 series, “Cocaine Quarterback.”
(Courtesy of Prime)
The nasty spat culminated in April when Shell agreed to resign as president of Paramount Skydance to concentrate on his legal headache.
At the time, Cipriani had widened his lawsuit to include Shell’s wife, Laura, and tech billionaire Larry Ellison, whose son David Ellison runs Paramount. Cipriani named others, including the Ellisons’ investment partner, RedBird Capital Partners. Cipriani’s lawyer subpoenaed entertainment and sports executive Ari Emanuel to get testimony to advance the beef.
Shell and Paramount’s lawyers fought back, demanding sanctions be leveled against Cipriani for an alleged overreach.
On Tuesday, Cipriani’s attorney Steven J. Aaronoff filed a request for “a dismissal of the entire action, with prejudice, as to all parties and all causes of action … against all named Defendants, including Jeff Shell, Laura Shell, Paramount Skydance Corp., RedBird Capital Partners LLC, David Ellison and Lawrence J. Ellison.”
Cipriani and Aaronoff were not immediately available for comment.
On Thursday, Glaser declined to comment. The veteran litigator found herself in hot water after her efforts to broker a detente between Cipriani and Shell spectacularly backfired.
Staff writer Stacy Perman contributed to this report.
Business
Commentary: The right-wing attack on science reaches a nadir, but it could get worse
The tally from Trumpian attacks on science now includes billions of dollars in damage to farmers and ranchers and assaults on scientists’ freedom of speech
One of the rules I came to live by during my years of covering global trouble spots is: “Never assume that things can’t get worse.”
But it will be hard to find a worse display of shameful servility to the Trump administration by a scientific organization than the American Diabetes Association provided on Friday.
During the organization’s annual conference in New Orleans, five of its leading members — four former presidents and the current editor of Diabetes Care, its official journal — were distributing paper copies of an editorial from the journal decrying the administration’s aggressive attack on scientific research and funding.
The seeming endorsement by the ADA of the current administration’s approach to science and of its attacks on freedom of speech is unconscionable.
— Open letter to American Diabetes Association
Suddenly they were confronted by security guards and New Orleans police and manhandled out of the hall. (A video is here, courtesy of MedPageToday.)
Their papers were confiscated. They were ordered to surrender their passes and were informed that if they tried to reenter the hall they would be arrested for trespassing.
“We printed 1,000 copies of the editorial, at my personal expense, and we hoped that 200 people who hadn’t seen it would read it,” Steven Kahn, director of the Diabetes Research Center at the University of Washington, editor of the journal and the lead author of the editorial, told me.
Instead, the editorial has become a must-read, with tens of thousands of page views and widespread condemnation of the conference organizers’ actions.
An open letter to the ADA started by David Nathan of Massachusetts General Hospital, titled “Shame on You” and stating that “the seeming endorsement by the ADA of the current administration’s approach to science and of its attacks on freedom of speech is unconscionable” has more than 6,400 signatories on change.org as of this writing.
The Diabetes Association implied in an official statement that the scientists had breached IRS regulations that include “maintaining a strictly nonpartisan environment at all organizational events.” On Wednesday, the organization said it would commission “a thorough independent review of the events that occurred.”
The organization’s action underscores one reason why the Trump administration’s wholesale attack on scientific research has reached a level that, as I’ve written, will have generational ramifications: It’s because some of our most august scientific organizations have failed to stand up for principle.
“It’s part of a larger systems failure among the academic medical centers, research universities, scientific and professional societies and the National Academies,” says Peter Hotez of Baylor College of Medicine, a vaccine expert and veteran adversary of pseudoscience.
The attention given to individual incidents such as the ADA conflict obscure what Hotez calls “the greater reality … a much darker MAHA strategy to tear down American biomedicine.” The goal, he says, is to supplant independent academic research with “an entire system of pseudoscience and grift.” MAHA is the administration’s acronym for “Make America Healthy Again.”
The latest iteration of this effort came late last month with a rule proposal from the Office of Management and Budget, which is headed by the arch-conservative Russell Vought, that would in effect make all scientific grant applications subject to the oversight of politically-appointed commissars.
Among other provisions, grants would be rejected if they’re judged to “fund, promote, encourage, subsidize, or facilitate … diversity, equity, and inclusion” or “gender ideology” such as “theories or ideologies that deny the biological reality of sex or the sex binary in humans.”
The OMB proposal finally stirred major scientific bodies to speak up. “This latest move is a brazen power grab,” the American Association for the Advancement of Science said through its chief executive, Sudip Parikh. “If this rule becomes final, Americans’ hopes for future cures, national security and economic strength will rely on the scientific sensibilities of the nation’s chief bureaucrat.”
As it happens, the OMB proposal dropped just as the economic consequences of the extremist war on science were becoming clearer than ever.
Among the thousands of grants and programs that perished when the administration dismantled the U.S. Agency for International Development, for example, was a program monitoring the advance of the New World screwworm north from Central America.
The screwworm, which has the capacity to devastate cattle and sheep herds, has now appeared in Texas, where its costs could be enormous. Just last year, the Dept. of Agriculture calculated that the eradication of the pest in the U.S. in the 1990s yielded annual economic benefits to producers of an inflation-adjusted $1.7 billion a year to the cattle industry and $6 billion a year to the broader economy. A new outbreak, the USDA estimated, could cost the Texas economy $1.8 billion.
Then there’s measles. The Centers for Disease Control and Prevention reports 2,030 U.S. cases this year as of June 4, almost as many as were seen in all of 2025 (when there were 2,288, including three deaths), the worst outbreak since 1991. This is the harvest of the anti-vaccine ideology being spread by Health and Human Services Secretary Robert F. Kennedy Jr.
The outbreak’s consequences can be measured in dollars and cents: Responding to an outbreak of as few as 600 cases could cost local agencies $10 million, according to healthcare researchers at Johns Hopkins University.
The Trump administration has proposed slashing the budget of the grant making National Science Foundation by 61% and of the National Institutes of Health by 40%. The budget of the CDC, which once reigned as a global gold-standard for public health oversight but has suffered from the disdain of RFK Jr. and his minions, would be cut by 44%.
Taken together, these cuts “would shrink the economy by $1 trillion compared with maintaining the 2025 level of R&D,” reckons the Information Technology and Innovation Foundation, a science and tech think tank.
What frightens scientists more than the sheer numbers are that the cuts are arbitrary and manifestly pernicious. A study published last year in JAMA Internal Medicine identified 383 NIH-funded clinical trials that the administration terminated, leaving more than 74,000 participants high and dry.
“Scientific investment is not a cost to be minimized,” Henry Miller, a former biotech official at the Food and Drug Administration, observed recently; “it is an engine of national wealth. … The internet, mRNA vaccines, human gene therapy, GPS, the transistor — all emerged from the sustained public investment being dismantled today.”
The Diabetes Care editorial that Kahn and his colleagues attempted to distribute at the New Orleans conference is a cri de coeur targeted at the right-wing anti-science campaign. It’s titled, “Misguided Brushes of a Pen Continue to Dismantle and Destroy Biomedical Research in the United States.”
The result of the funding reductions, the authors wrote, will be “researchers being forced out of science and fewer people considering biomedical investigation as a career. Are we ready to watch the crippling of scientific advances in diabetes and all other diseases? It is no longer enough to stand idly by or work behind the scenes with lawmakers. Moreover, it is no longer appropriate to fret about political backlash.”
The scientists intended their distribution of the article implicitly as a counterweight to a keynote talk by NIH Director Jay Bhattacharya, who was going to speak without taking questions but who bailed out at the last minute. I sought a comment from Bhattacharya, who portrays himself as a champion of open scientific debate, about the eviction of the five scientists from the conference, but got no reply.
The uproar has roiled the ADA. Its president-elect, endocrinologist Jennifer Green of Duke University, and its scientific sessions planning committee chair, diabetes expert Mark Atkinson of the University of Florida, have both resigned their positions, though their role in the evictions, if any, is unknown.
The so-called New Orleans Five demanded an apology from the association, Kahn told me. They got one Wednesday from ADA Chief Executive Charles Henderson, via a video in which he extended his apology to “the broader diabetes community,” many members of which of whom he acknowledged were “disturbed, disappointed and concerned about what occurred.”
The truth is that the ADA’s action only validated the editorial’s exhortation to scientists to speak out forcefully: “We can no longer afford complacency and fear. We must all act now!” Will other scientific bodies draw a lesson from what happened in New Orleans? Let’s hope so.
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