The Looming Threat of Uninsured Nonbank Stablecoins

On May 21, 2025, the U.S. Senate voted to begin final consideration of the “GENIUS Act.” Despite its lofty title, the bill would create grave threats to our financial system and economy by allowing nonbanks to issue stablecoins without the protections provided by federal deposit insurance and other regulatory safeguards governing FDIC-insured banks. The GENIUS Act would set the stage for future runs on stablecoins triggering systemic financial crises and requiring government bailouts.The great majority of global stablecoins promise to maintain parity with the U.S. dollar and are functionally equivalent to bank deposits. Stablecoins are mainly used as payment instruments for speculating in crypto-assets with fluctuating values, like Bitcoin and Ethereum, and facilitating unlawful activities.Despite their promises, stablecoins have been anything but stable. More than 20 stablecoins collapsed between 2016 and 2022, and every leading stablecoin lost its “peg” to the U.S. dollar between 2019 and 2023. Stablecoins (like other uninsured, short-term financial claims) are vulnerable to investor runs whenever investors doubt the ability of issuers to redeem their stablecoins promptly. The GENIUS Act would establish a very weak and inadequate regulatory system for stablecoins, and it would not provide a federally-supervised fund to ensure their repayment.Advocates claim that nonbank stablecoins will improve our payments system and increase financial inclusion. In fact, nonbank stablecoins operating on public blockchains have not shown any ability to deliver fast, reliable, and inexpensive payment services. Public blockchains suffer from lack of scalability and immutability, which prevent them from providing a feasible technology for ordinary payments and other high-volume financial services. Nonbank stablecoins have not demonstrated any capacity to increase financial inclusion, and the crypto industry’s past dealings with underserved communities have been predatory and exploitative.To remove the dangers posed by uninsured nonbank stablecoins, Congress should reject the GENIUS Act and pass legislation mandating that all issuers and distributors of stablecoins must be FDIC-insured banks. That mandate would ensure that stablecoins are offered to the public in a safe, well-regulated manner that protects consumers and investors and maintains the stability of our financial system. Congress should encourage a more efficient and inclusive payments system by supporting tokenization of deposits on permissioned distributed ledgers administered by FDIC-insured banks, and by requiring FDIC-insured banks to provide basic, low-cost deposit accounts with online payment services to lower-income individuals and families who live in the banks’ designated service areas and meet minimum qualifications for lawful status and financial responsibility.The GENIUS Act would allow Big Tech firms and other commercial enterprises to acquire nonbank stablecoin issuers and use stablecoins to enter the banking business and build financial empires. That outcome would undermine our nation’s longstanding policy of separating banking and commerce and create enormous risks. To keep Big Tech giants and other commercial firms out of banking, Congress should reject the GENIUS Act and require all stablecoin providers to be FDIC-insured banks.The GENIUS Act would permit nonbank stablecoins to become a dangerous new category of “shadow deposits,” thereby creating “Shadow Banking 2.0” (a term coined by Hilary Allen). “Shadow Banking 2.0” would disintermediate FDIC-insured banks by pulling away large amounts of bank deposits, severely impairing the ability of banks to make loans to consumers and Main Street businesses.The GENIUS Act would also allow nonbank stablecoin issuers to inflate a “Subprime 2.0” crypto bubble by offering crypto derivatives. Crypto derivatives would generate multiple, highly-leveraged bets on volatile crypto-assets with fluctuating values. The resulting pile of speculative bets on crypto-assets would resemble the toxic pyramid of bets on subprime mortgages arranged by large financial institutions during the “Subprime 1.0” credit boom of the early 2000s.The collapse of “Subprime 1.0” caused the global financial crisis of 2007-09. The crypto bubble produced by “Shadow Banking 2.0” and “Subprime 2.0” would inevitably cause another crypto crash, with damaging spillover effects on traditional financial markets. It is very doubtful whether federal agencies could arrange costly bailouts without risking a crisis in the Treasury bond market and significant depreciation of the U.S. dollar. In addition to the foregoing dangers, the GENIUS Act has many other deeply-flawed provisions, which provide further reasons for Congress to reject the GENIUS Act and require all stablecoin providers to be FDIC-insured banks

Compensation Under the Microscope: Connecticut

With the exception of the District of Columbia, Connecticut has paid exonerees the highest annual amount of compensation for wrongful convictions in the country, almost four times the national average. Perhaps in part because of this, Connecticut is one of a few states that has attempted to limit the scope and generosity of its statute. It, however, later backpedaled on some of those limits. Then, in a burst of activity in early January 2025, the Connecticut Claims Commissioner cleared a backlog of pending cases, awarding more than $36 million in compensation. The Connecticut statute has thus had three lives, having been passed in 2008 and amended twice eight years apart, in 2016 and 2024. Connecticut presents a particularly interesting example of the evolution of a progressive state compensation statute. In Connecticut, claims are decided by a single person – the Claims Commissioner – who has the authority to decide all claims against the state. As we shall see, the Commissioner resolved a substantial majority of claims during life number 1, the most generous one and the one in which the statute was most effective. This article summarizes the Commissioner’s decisions made during that period when the statute had no compensatory floors or caps. Instead, it listed factors the Commissioner should consider in exercising his or her uncabined discretion to arrive at an award adequately compensating the wrongly convicted. Those decisions, almost all of which were written by one Claims Commissioner, reviewed the relevant factors for decision, applied the facts presented, used language that was very empathetic and, ultimately, arrived at compensation amounts associated with each factor with virtually no published reasoning or analysis

To Predict the Post-Chevron World, You Must Understand the Pre-Chevron World and Then Add Extreme Political Polarity

In this contribution to a symposium on the Supreme Court’s opinion in Loper Bright Enterprises v. Raimondo, Professor Pierce explains how the Court has created a legal environment that will lead to many serious problems. He provides a roadmap to avoid that result

Analyzing the Benefits of Artificial Intelligence to Racially Inclusive Democracy

Over the past two decades—as the United States has grown more ethnically diverse—the U.S. Supreme Court has dismantled key voting rights protections, and state legislatures have erected a record number of voting restrictions. Largely oblivious to this growing gap in legal protections, several artificial intelligence (“AI”) optimists have claimed that AI can help usher in a more inclusive, participatory, and unbiased democracy. Such an outcome, however, is far from guaranteed. This Article is the first to comprehensively examine the extent to which AI—and the legal frameworks that regulate it—can advance racially inclusive democracy. It responds to the AI optimism literature by offering a clear-eyed assessment of relevant political, racial, and economic barriers to AI making democracy more racially inclusive. This analysis reveals that some of the AI optimists’ technological and legal proposals could, in fact, exacerbate racial disparities in political power and harm voters of color. The Article acknowledges, however, that certain AI tools, if applied appropriately, could help reduce turnout gaps and increase government responsiveness to communities of color. Although good AI law is no substitute for an updated Voting Rights Act and a Supreme Court committed to protecting voting rights, embedding values of racial inclusion into AI law at this formative stage could shape the trajectory of our democracy. For example, laws ensuring broad access to public AI infrastructure (particularly in historically marginalized communities) and robust AI accountability laws can foster conditions in which AI is more likely to be used to benefit racially inclusive democracy

Circuit Capture and the National Court of Appeals

We are facing a crisis of confidence in our federal courts. Polarization in the judicial selection process and partisanship in judicial decision-making have yielded a steep decline in the public’s trust of the judicial branch. Much of the blame lies with the Supreme Court, whose repeated ethical scandals and aggressive rightward tilt have renewed calls for major court reform—from court packing to jurisdiction stripping, from term limits to lottery dockets, and much more in between. But the Supreme Court is not the only court in need of reform. The vast majority of cases go no further than the thirteen U.S. Courts of Appeals, which increasingly suffer from the same polarization and politicization problems without the same level of scrutiny. Regional organization is an arbitrary product of history. Perhaps it made sense when the Nation’s first circuit courts were staffed by Supreme Court justices, who had to contend with the realities of early 19th-century travel. But as the country expanded and the circuit courts evolved from trial courts into the powerful, law-making U.S. Courts of Appeals, that structure has long since outgrown its initial justification and is now being exploited for political gain. There’s no better example than the current Fifth Circuit—an ultra-conservative court stacked with appointees by Donald Trump hand-picked for their conservative bona fides and constantly in the headlines for its sweeping, politically-charged decisions. This problem—one of circuit capture by partisan judges—is structural, and a structural problem requires a structural solution: the dissolution of the regional circuits. The idea of a single, unified National Court of Appeals is not new. Several commissions and judicial administration scholars have unsuccessfully proposed it in one form or another to combat increasing caseloads. But the problems the courts face today is not one of caseloads, it is one of legitimacy. And taking aim at the margins and working within the bounds of the current structure will not solve it. This Article argues that a single, centralized intermediate federal appellate court would alleviate the partisan problems generated by captured circuits, promote uniformity of federal law, and streamline the appellate process

FEATURE COMMENT: President Trump And Tariffs—The Procurement Exception

President Trump’s first administration was marked by very strong “Buy American” protectionism, focused closely on procurement. Since President Trump took office again on Jan. 20, 2025, the second Trump administration instead has focused, at least preliminarily, on tariffs as a policy and revenue-generating tool. This article reviews the Trump administration’s initial moves to impose new tariffs and their potential effect on procurement. The article explains that goods purchased by federal agencies are generally exempt from tariffs, as a matter of regulation, though how exactly that exemption will be applied is often unclear. The article reviews those and other policy issues which remain open for the procurement community, as President Trump looks increasingly likely to impose significant additional duties on goods coming into the U.S

Overcoming Racial Harms to Democracy from Artificial Intelligence

While the United States is becoming more racially diverse, generative artificial intelligence and related technologies threaten to undermine truly representative democracy. Left unchecked, AI will exacerbate already substantial existing challenges, such as racial polarization, cultural anxiety, antidemocratic attitudes, racial vote dilution, and voter suppression. Synthetic video and audio (“deepfakes”) receive the bulk of popular attention—but are just the tip of the iceberg. Microtargeting of racially tailored disinformation, racial bias in automated election administration, discriminatory voting restrictions, racially targeted cyberattacks, and AI-powered surveillance that chills racial justice claims are just a few examples of how AI is threatening democracy. Unfortunately, existing laws—including the Voting Rights Act—are unlikely to address the challenges. These problems, however, are not insurmountable if policymakers, activists, and technology companies act now. This Article asserts that AI should be regulated to facilitate a racially inclusive democracy, proposes novel principles that provide a framework to regulate AI, and offers specific policy interventions to illustrate the implementation of the principles. Even though race is the most significant demographic factor that shapes voting patterns in the United States, this is the first article to comprehensively identify the racial harms to democracy posed by AI and offer a way forward

Justice Delayed By Design: The Harms of Our Protracted Divorce System

Divorce is the termination of a legal relationship. It is necessary for the enforceable division of property and debts between spouses as well as for remarriage. However, it’s not simply a lawsuit. Instead, it most often involves a seismic shift in the very foundations of life and, as such, frequently provokes, exacerbates, and exposes insecurities, instabilities, and vulnerabilities. This legal process also involves a unique relationship between litigants who are former intimate partners—often co-parents—and who are largely unrepresented and therefore engaged in a new form of relationship as opposing parties to a lawsuit. Given these complex dynamics, one might hope that the legal process would be expedited to minimize trauma and to bolster financial stability. Instead, the legal process of divorce is complicated, time-consuming, and rife with pro-cedural and substantive hurdles that result in the majority of divorces languishing in the court system. But unlike most legal system delays, the ponderous pace of the divorce system is not the result of inefficiencies or bugs in the system. To the contrary, many of the divorce system’s delays are deliberate features. Most are expressly intended to slow the pro-cess, compel couples to reconsider their decisions, and ultimately, deter divorces. Others are intended to support pro se litigants, but instead, as implemented, often greatly disadvantage them. Our society’s traditional support for the institution of heterosexual marriage—which one can enter after little more than the mere submis-sion of a form—has informed the structure of the divorce system and has resulted in a series of procedural hurdles to discourage divorce. This Article enters a conversation about the relationship between religion, morality, tradition, and the procedural impediments to divorce and begins a conversation about how those impediments most harm those located at the intersection of poverty and gender bias. These conversa-tions are critically important now, as national political efforts to restrict access to divorce have reemerged. Specifically, this Article analyzes the procedural impediments to efficient divorce actions and the harm those impediments cause to all, but particularly to our system’s most vulnerable litigants—disproportionately low-income women. After illustrating that these procedural delays have not resulted in preserving marriages and instead have enhanced the risk of harm, this Article analyzes a range of system changes that take into account the often-emergent nature of divorces, the unique relationship between the parties, and the support processes that would better meet the particular needs of divorce litigants and their families, as well as the court system generally. These statutory and procedural innovations seek to create an expeditious path to perma-nent resolution of divorce cases for all litigants. They include eliminating or greatly reducing waiting periods, shifting the presumption in divorce cases to limited discovery, providing expedited mediation opportunities, and creating the statutory right to expedited divorces for those for whom delay would cause particular harm. These statutes would operate much like domestic violence protection order statutes, acknowledging the par-ticular vulnerabilities of those seeking protection and the unique nature of judicial intervention in the context of intimate family relationships

An Empirical Assessment of New Jersey\u27s Mistaken Imprisonment Act

In their article “Compensation for the Convicted Innocent in New Jersey: Problems and Recommended Solutions,” Professors D. Michael Risinger and Lesley Risinger masterfully recount the history and flaws of New Jersey’s Mistaken Imprisonment Act.1 The professors recommend concrete and common-sense amendments to the Act that, if enacted, would resolve statutory ambiguities, remedy bad public policy, and make more generous an Act intended to benefit the wrongfully convicted, but which often falls short of that goal. This article will provide empirical and comparative context for the Risingers’ proposals. By examining why the claims of exonerees had been denied or never made, this article probes the extent to which these, or other, recommendations might benefit exonerees. Over twenty-five years after the passage of the Mistaken Imprisonment Act (the “MIA” or “Act”), we have sufficient history to evaluate the effectiveness of the Act and to it with that of other states. This article concludes that, on many metrics, the New Jersey statute performs better than most other state wrongful conviction compensation statutes. However, the Act is far from perfect. This data-driven and comparative assessment supports many of the Risinger proposals and may, in addition to their article, serve as a basis for needed reform

Policy Brief: The Hagerty-Scott-Lummis-Gillibrand Stablecoin Bill Would Cause Great Harm to Consumers, Investors, Our Financial System, and Our Economy

On February 4, 2025, Senators Bill Hagerty, Tim Scott, Cynthia Lummis, and Kirsten Gillibrand introduced a bill that would create a dangerously weak and deeply flawed regulatory regime for stablecoins. Their bill (the “Hagerty bill”) would allow stablecoins to be offered to the public without the protections provided by federal deposit insurance and other safeguards governing banks insured by the Federal Deposit Insurance Corporation (FDIC). The Hagerty bill would greatly increase the likelihood that future runs on stablecoins would trigger systemic crises requiring costly federal bailouts to avoid great harm to our financial system and economy. A stablecoin is a crypto-asset whose issuer represents that the stablecoin will maintain parity with a designated fiat currency or another referenced asset. The vast majority of global stablecoins are linked to the U.S. dollar and are functionally equivalent to bank deposits. The issuers of those stablecoins promise to redeem them or transfer them to third parties upon the holder’s demand or within a specified time. Stablecoins have proven to be anything but stable. More than twenty stablecoins collapsed between 2016 and 2022. Each of the world’s leading stablecoins lost its “peg” to the U.S. dollar (or other designated reference value) between 2019 and 2023. Recent stablecoin runs resemble the runs that occurred on uninsured deposits and other uninsured short-term financial instruments during U.S. financial crises stretching from the nineteenth century through 2023. The Hagerty bill ignores the lessons of those crises by failing to establish a strong and effective regulatory regime for stablecoins, and by failing to provide a credible federally-supervised fund to ensure their timely repayment. The Hagerty bill would allow issuers of nonbank stablecoins to pay interest and compete with FDIC-insured banks. The bill’s lax regulatory regime would allow stablecoins to pay higher interest rates and divert deposits away from FDIC-insured banks. Thus, the Hagerty bill would undermine our banking system and disrupt the flow of credit from FDIC-insured banks to consumers and Main Street businesses. The Hagerty bill would also enable Big Tech firms and other commercial enterprises to acquire nonbank stablecoin issuers and use stablecoins as “shadow deposits” to enter the banking business. Big Tech firms would gain access to information about their customers’ financial dealings, thereby leveraging their ability to exploit private customer data. Congress should reject the Hagerty bill. Congress should instead approve legislation requiring all issuers and distributors of stablecoins to be FDIC-insured banks. That requirement would keep Big Tech firms out of banking and maintain our nation’s longstanding policy of separating banking and commerce. It would also ensure that stablecoins are provided in a safe, well-regulated manner that protects consumers, investors, our financial system, and our economy. The Hagerty bill has many other defects, which are described in this Policy Brief. Those shortcomings provide additional reasons for Congress to reject the Hagerty bill and require all stablecoin providers to be FDIC-insured banks