GENIUS Act Shocker: How Coinbase and PayPal Exploited a Stablecoin Loophole You Won’t Believe

Big Finance meets Big Crypto—and guess who's bending the rules?

When regulators blinked, the giants pounced. Coinbase and PayPal just outmaneuvered Washington's half-baked stablecoin framework, turning legislative gray areas into a billion-dollar playground. Here's how they did it.

The loophole that’s shaking DC

Buried in Section 12(b) of the GENIUS Act, a vague clause about "asset-backed digital tokens" gave just enough wiggle room. Compliance teams at both companies reportedly high-fived when they realized—no hard reserve requirements for tokens under $10B market cap. Queue the money printer.

Why this changes everything

Stablecoins were supposed to be finance's boring middle-aged cousins. Now? They're Trojan horses. PayPal's PYUSD and Coinbase's proposed USDG token can effectively function as unregulated shadow banks—all while technically checking every box in the 83-page compliance doc collecting dust on some intern's desk.

The cynical kicker

Of course this happened. When has any regulatory 'framework' actually stopped profit-seeking behavior? The real surprise is that Congress thought scribbling "do no evil" in the margins would suffice. Meanwhile, TradFi brokers are still charging 2% fees for moving money at dial-up speeds.