Roubini blasts GENIUS Act as ’reckless’, warns stablecoins could trigger bank-like runs
Economist Nouriel Roubini criticized the GENIUS Act as reckless and warned stablecoins lack deposit insurance or a lender-of-last-resort, which could trigger runs and threaten financial stability. Roubini called Bitcoin a "pseudo-asset" and said it is not an inflation hedge, repeating his view that crypto is tied to bubbles and illicit use. His comments come as Bitcoin has fallen about 45% from its late-October high to roughly $67,400, while investors have shifted flows into gold and other hedges. US spot Bitcoin ETFs recorded roughly $3.3 billion in outflows over the past quarter, while US gold ETFs attracted over $16 billion. Roubini also cautioned that proposals to pay interest on stablecoins could undermine banking fundamentals. The article contrasts Roubini’s stance with bullish voices like Robert Kiyosaki, and notes that several companies’ bitcoin-backed treasury strategies have weakened as market caps and digital-asset treasuries decline.
Bearish
Roubini’s critique highlights regulatory and systemic risks specific to stablecoins—namely no deposit insurance and absent lender-of-last-resort—which increase the probability of runs if confidence falls. That concern, combined with a 40%+ drop in Bitcoin from its recent peak and quarter-to-date outflows from spot BTC ETFs (~$3.3B) versus large inflows into gold ETFs (~$16B), suggests risk-off sentiment among investors. Historical parallels: fears around uninsured dollar-pegged instruments and liquidity mismatches (e.g., 2022 Terra/LUNA collapse, 2023 bank runs at SVB-related contagion moments) show how confidence shocks can produce rapid redemptions and price collapses. Short-term, expect increased volatility, stablecoin redemption pressure, and further BTC weakness as funds reallocate to perceived safe havens. Longer-term, the debate may push for clearer regulation (reserve requirements, insurance, access to central bank facilities) which could eventually stabilize markets but may also impose costs and reduce some yield-seeking demand. For traders, the immediate implication is elevated downside risk and a preference for capital preservation strategies until regulatory clarity or renewed inflows materialize.