Concerns Rise Over Centralized Control in Stablecoin Regulation
The recently signed GENIUS Act, hailed as the first major U.S. crypto legislation, is now facing growing backlash from lawmakers and crypto experts. Critics argue that the bill opens the door to a central bank digital currency (CBDC) by another name, hidden behind the veil of regulated stablecoins.
Congresswoman Marjorie Taylor Greene called the bill a “backdoor CBDC”, warning that it enables government control over digital financial transactions through regulatory frameworks imposed on stablecoin issuers.
Are Regulated Stablecoins Functionally Equivalent to CBDCs?
Many in the crypto industry argue that regulated stablecoins already carry core traits of CBDCs, especially with the GENIUS Act’s amendments. The bill includes strict anti-money-laundering, KYC, and sanctions compliance requirements, necessitating transaction monitoring and the power to freeze or reverse funds.
“This isn’t innovation; it’s surveillance,” critics warn. They believe this regulatory model places stablecoins under effective federal control, stripping them of decentralization and turning them into programmable money governed by state actors.
Crypto Experts Echo the Warnings
Bitcoin advocates and DeFi leaders have amplified these concerns. “The Genius Act forces stablecoins into CBDC compliance and control—functionally identical to a CBDC, just without the scary name,” one analyst noted.
Economist and crypto author Saifedean Ammous added that the U.S. dollar is “already a digital, centrally-controlled currency,” and this law formalizes that control within the blockchain ecosystem.
The ability to surveil and censor transactions within stablecoins, combined with custodial fiat reserves that are vulnerable to state seizure, mirrors the very structure that decentralized finance was built to resist.
Implications for the Future of Digital Finance
While the GENIUS Act provides legal clarity for stablecoin issuers, opponents argue that it trades innovation for state power. The law has sparked a renewed debate over financial freedom vs. security in the digital age.
The fine line between a regulated stablecoin and a government-issued CBDC is becoming thinner, raising questions about how far regulation can go before it erodes the principles of crypto autonomy.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.