A congressional hearing on digital currencies rarely makes headlines. Yet, this week’s debate over stablecoins and central bank digital currencies (CBDCs) revealed more than technical disagreements; it exposed deeper anxiety about financial power, privacy, and control in an increasingly digital world.
The conversation unfolded along predictable lines. Those skeptical of CBDCs warned of creeping surveillance and government overreach. Advocates, meanwhile, framed it as a necessity, a matter of American competitiveness in a world where China and Europe are already moving ahead. Yet what emerged, almost inadvertently, was a realization that the supposedly safer alternative, privately issued stablecoins, carries many of the same risks.
While CBDC opponents championed stablecoins as the free-market alternative, testimony from industry leaders revealed that stablecoins — despite their branding as decentralized, private-sector solutions — already carry many of the same risks. The ability to freeze assets, enforce government mandates, and track transactions is a present reality, especially when combined with Know Your Customer (KYC) laws which eradicate privacy.
The core argument against CBDCs is simple: they give the federal government unprecedented control over personal finances. Randall Guynn, Chairman of the Financial Institutions Group at Davis Polk & Wardwell, issued a stark warning.
“A CBDC would give the Federal Reserve staff a direct window into virtually every transaction every person in America makes,” he said. “And at least one of them won’t be able to resist the temptation to use that information to promote what they consider to be worthy political goals.”
His comments echoed a broader concern: a US CBDC could function as a financial surveillance tool, much like China’s digital yuan. In China, authorities can track purchases in real-time and even restrict how certain funds are spent. Many fear the US government could use a CBDC to implement similar controls — whether to enforce political objectives, regulate behavior, or even deplatform individuals from the financial system.
Hellbound and Down 