WSJ Tech News Briefing: What the Future Holds for Stablecoins After Senate Passes Genius Act
Release Date: June 18, 2025 | Host: The Wall Street Journal
1. Escalating Cyber Threats Amid the Iran-Israel Conflict
In this episode, Victoria Craig opens the discussion by highlighting the potential spillover of the Iran-Israel conflict into cyberspace. As physical battlegrounds dim, the digital realm presents a new frontier for conflict.
James Rundle, WSJ's Cybersecurity and National Cyber Policy reporter, delves into the likelihood and implications of Iran leveraging cyber capabilities against not only Israel but also its allies, including the United States. He emphasizes the persistence and capability of Iranian cyber operations:
"It's not just likely. It's happened before. Iran has been known to target critical infrastructure in the US and past cyber attacks. We saw that in 2023 when Iranian hacktivists attacked a water plant in Pennsylvania, defacing screens with anti-Israel propaganda." [01:15]
Rundle explains that while there has been an uptick in disinformation campaigns—such as text messages warning Israeli residents of missile strikes—destructive cyberattacks like malware and ransomware have yet to see a significant rise:
"A lot of cyber activity has increased in terms of disinformation... they haven't noticed a lot in terms of destructive attacks such as malware, ransomware wipers, that sort of thing. Not yet anyway." [01:49]
The discussion shifts to the preparedness of U.S. infrastructure. Rundle points out that despite improvements, many critical infrastructures remain vulnerable due to their private sector management:
"The problem is really on two fronts... companies are being urged to make sure they're following the basics, so make sure that their software is up to date and patched against the latest threats." [02:27]
He further emphasizes the potential catastrophic impact if Iran were to successfully breach major U.S. infrastructure:
"If they do manage to get into the systems of something crucial, such as a power plant, it could quite rapidly disrupt everyday life in America." [03:06]
Rundle concludes this segment by acknowledging improvements in governmental focus on cybersecurity but remains cautious about the overall readiness:
"In a lot of places in America, it's a huge issue." [04:22]
2. The Genius Act: Shaping the Future of Stablecoins
Transitioning from cybersecurity, the briefing moves to the realm of digital finance with the passage of the Genius Act in the Senate, which is poised to head to the House for a vote. Teles Demos, WSJ's Heard on the Street columnist, provides an in-depth analysis of the legislation and its implications for the stablecoin industry.
Demos explains that the Genius Act establishes a comprehensive regulatory framework for stablecoins, aiming to clarify their definition, regulatory oversight, and issuance requirements:
"The Genius act is designed to give a kind of regulatory framework for stablecoins... what officially is a stablecoin which sort of federal regulators will address it, and what are the requirements that you have to follow to be able to issue it under these guidelines." [06:08]
Key provisions include mandatory audited reserves backing the stablecoins and specific guidelines on the types of instruments that can hold these reserves. This regulatory clarity is intended to foster trust and legitimacy, encouraging broader adoption among businesses and consumers.
Demos highlights the interest from major retailers like Amazon and Walmart, who are contemplating launching their own stablecoins. He discusses the potential disruption to the traditional banking system, drawing parallels to money market funds:
"Stablecoins essentially are a place to park money that isn't a bank account... they make banks compete with them as a place to put your cash." [07:17]
3. Implications for the Banking System and Payment Ecosystems
The conversation then explores how stablecoins could transform the banking landscape and payment systems. Demos posits that stablecoins could offer an alternative to traditional bank accounts, similar to how money market funds operate, potentially altering how deposits are managed and viewed:
"Stablecoins represent a very different kind of deposit. My small sub $250,000 checking account is fully insured by the FDIC... but larger accounts held by stablecoin issuers are not insured." [09:51]
Referencing the collapse of Silicon Valley Bank (SVB) in 2023, Demos illustrates the risks associated with uninsured corporate deposits, drawing concerns about the stability and security of funds managed through stablecoins:
"The SVB example illustrates how messy these kinds of things can get. If stablecoins reach a massive scale, it would represent a pretty meaningful change in how deposits live in banks." [10:11]
Regarding payments, stablecoins could bypass traditional credit card networks, offering merchants lower transaction costs and a new method for consumers to transfer money directly:
"Stablecoins present to the people who back them the opportunity to move money in a way that doesn't need a credit card. Because I can transfer a stablecoin to you just by moving it on the ledger." [07:40]
However, Demos remains cautiously optimistic, noting that while stablecoins offer innovative advantages, widespread disruption to the current payment ecosystem remains uncertain:
"Whether stablecoins are truly going to disrupt payments in that sense remains to be seen." [08:30]
Conclusion
The episode of WSJ Tech News Briefing effectively navigates two pressing technology issues: the rising threat of cyber warfare in the context of geopolitical conflicts and the regulatory evolution of the stablecoin industry. Through expert insights from James Rundle and Teles Demos, listeners gain a comprehensive understanding of the challenges and opportunities that lie ahead. As cyber threats continue to evolve and financial technologies like stablecoins gain regulatory clarity, the interplay between technology, policy, and the global economy remains a critical area to watch.
Produced by Julie Chang with supervising producer Melanie Roy. For more insights and updates, tune in to the Wall Street Journal's Tech News Briefing.