The GENIUS Trojan Horse

In a 2024 Wall Street Journal op-ed piece former Speaker of the House, Paul Ryan, laid out a very compelling case in favour of stablecoin adoption. According to Ryan, taking stablecoins “a little seriously” would go a long way in averting a dollar debt crisis while ensuring that the United States remains competitive with China. Think of Circle, PayPal, or Tether, not just as tech firms, but as synthetic central banks, hoarding Treasuries to mint tokenized dollars for the global public. To bolster his argument even further, he goes on to say:

“Their emergence (i.e. stablecoins) as a mechanism for promoting the dollar couldn’t be timelier. The U.S. benefits from the dollar’s status as the primary international reserve currency. Among the perks: cheap, reliable financing for fiscal spending and substantial influence over the global financial system. Most financial activities eventually flow through U.S. banks thanks to the dollar’s dominance. As the global economy becomes more digital and multipolar, the dollar’s primacy is constantly under threat…The Chinese government is using physical and digital infrastructure investment in emerging markets, coupled with financial engineering, to embed the yuan in a network it can control to project influence. The U.S. can’t afford to sit idly as its largest international competitor taps latent demand for safe and convenient digital money.”

Ryan lamented the regulatory vacuum and urged lawmakers to establish a framework immediately. Fast forward one year: the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS) has passed, creating exactly the regulatory framework Ryan envisioned. His dream is now reality. At first glance, it seems like a practical response to the growing popularity of stablecoins, ensuring consumer protection and financial stability. However, its provisions create a framework that could be hijacked to seamlessly transition stablecoins into a government-controlled CBDC, especially during a financial crisis. 

The Framework That Binds

The GENIUS Act establishes a dual regulatory framework (federal and state) for payment 

stablecoins, defined as digital assets designed for payment or settlement, backed by a fixed amount of monetary value, and not classified as securities or national currencies. The Act outlines requirements for issuers, supervisory mechanisms, consumer protections, and interoperability standards, while clarifying that payment stablecoins are not securities or commodities. The five main pillars of the Act are:

1. Licensing Monopoly – Only government-approved entities can issue stablecoins.
2. Fiat-Only Reserves – Stablecoins must be backed 1:1 with U.S. dollars or short-term Treasuries.
3. Mandatory Surveillance – All issuers must comply with full KYC/AML under the Bank Secrecy Act.
4. Harsh Penalties – $100,000/day fine for unlicensed stablecoin issuance.
5. Federal Control – Regulators get sweeping powers to freeze, shut down, or control issuers

While some in the Bitcoin community are celebrating this Act as a victory for the industry and as a good thing for Bitcoin, it seems many have forgotten why Bitcoin exists in the first place. This level of myopia and selective amnesia is shocking but not at all surprising. Fiat isn’t just a payment system but it’s also a cancerous mindset that afflicts many. What they aren’t grasping is that this Act’s main purpose is regulatory capture not “modernization of payment systems.” Secondly it forces every digital dollar to flow through state-controlled gatekeepers who would enforce OFAC sanctions and blacklist wallet addresses at the behest of the state.

The Dollar’s Digital Lifeline

As pointed out by Ryan in his op-ed, as well as throughout the Act itself, the main purpose of GENIUS is to establish regulatory infrastructure that further entrenches dollar supremacy by guaranteeing Treasury demand; with stablecoin issuers as the new captive buyers. This directly contradicts Bitcoin’s raison d’être: replacing the dollar. 

Stablecoins are neither trustless nor permissionless. GENIUS has effectively brought stablecoin issuers into the Federal Reserve’s private-public cartel, making them extensions of the very system Bitcoin was designed to destroy.

Let’s not forget that stablecoins are the embodiment of the misguided “blockchain not Bitcoin” mantra. They are digital dollars that recreate central banking on a blockchain which simply means that they do not fix any of the problems with the fiat monetary system; but they are an extension of it. Furthermore, stablecoins aren’t stable at all. They’re pegged to a sinking ship, maintaining 1:1 backing with inflating dollars. As the dollar bleeds value, so do they. You don’t need to be a genius to figure this out. 

The Trojan Horse Revealed

Here’s the uncomfortable truth: stablecoins and CBDCs are functionally identical. The key distinction is merely who issues them; the state or a corporation. 

CBDCs are fully programmable, with zero censorship resistance, finality that can be revoked, and no backing beyond government decree. Stablecoins, while slightly more flexible, still rely on fiat reserves, operate on permissioned ledgers, and can be frozen at will by private issuers. Both sacrifice privacy, both are centralized chokepoints, and both are doomed to lose value over time.

The infrastructure for this convergence already exists. The FedNow system, launched in 2023, was introduced as a 24/7 instant payments rail between banks. But in reality, it functions as wholesale CBDC infrastructure:

• Banks and stablecoin issuers can settle in central bank money, in real time

• Programmable features can be embedded at the protocol level

• The system enables real-time tracking, blacklisting, and transaction conditioning

With the GENIUS Act tethering all stablecoins to FedNow-cleared instruments, money becomes programmable-by-default. The system is fully compatible with a command-and-control monetary regime.

Once this regulatory framework is fully operational, the stablecoin infrastructure becomes a de facto CBDC by definition. By forcing stablecoins into compliance frameworks that mirror CBDC architecture, authorities get all the surveillance and monetary control they want without having to sell the public on a “government digital dollar.” 

The Public-Private Shell Game

This follows the government’s favorite legal workaround; the public-private partnership shell game. When direct state action would trigger constitutional challenges, simply outsource the dirty work to private entities who can claim they’re making “independent business decisions.” 

We witnessed this playbook perfected during COVID with social media censorship. The First Amendment explicitly prohibits government restriction of speech, so instead of direct censorship, agencies like the CDC and FBI pressured platforms to remove “misinformation.” The Twitter Files revelations exposed the coordination: government officials flagging accounts, requesting takedowns, and providing blacklists, all while maintaining the fiction that private companies were making editorial choices.

The stablecoin gambit follows identical logic. Rather than the Fed issuing CBDCs directly, they have simply outsourced the implementation of identical surveillance infrastructure to private stablecoin issuers.  When your transactions get flagged or frozen, it won’t be “government tyranny”, it’ll be a private company’s “risk management decision.

Why The Anti-CBDC Act Doesn’t Save You

The Anti-CBDC Act (H.R.1919) was introduced as a bulwark against the introduction of a CBDC by the Federal Reserve. While well-intentioned, this Act in its current form is an empty suit. It blocks a narrow window while leaving every door, roof, and basement wide open. 

It bans the Federal Reserve from:

• Issuing a CBDC directly to individuals (i.e. retail CBDC)

• Using a CBDC for monetary policy

• Testing or developing CBDCs

That sounds good on paper. But here’s what it doesn’t ban:

• Treasury-issued digital dollars

• Stablecoins backed by Fed reserves

• Banks distributing programmable dollars on behalf of the government

• Wholesale CBDCs

• Emergency powers that override the bill during a crisis

In short, the Anti-CBDC Act only bans the most obvious version of a CBDC. It does nothing to prevent a backdoor implementation, which is exactly what the GENIUS Act enables. 

The Path Forward

The writing is on the wall. GENIUS isn’t about innovation or outcompeting China, It’s about cementing surveillance finance and reinforcing dollar hegemony under the illusion of innovation. This has nothing to do with Bitcoin. GENIUS turns stablecoins into digital panopticons, surveillance tools in the service of the state, hidden behind the mask of private enterprise. It’s financial tyranny with a user-friendly interface.

Bitcoin exists to opt out of this system entirely. As the surveillance state disguises itself in “innovation,” remember, opting in to their system is optional. Opting out with Bitcoin is imperative. 

While others celebrate regulatory capture masquerading as legitimacy, remember: the goal was never to make digital dollars more efficient. It was to make money free.