A U.S. lawmaker is raising concerns about the recently passed GENIUS Act, suggesting it could be a "Trojan Horse" for a Central Bank Digital Currency (CBDC). The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, was passed by the House of Representatives on July 17, 2025 and sent to President Donald Trump, who signed it into law. The act establishes a regulatory framework for stablecoins, a type of cryptocurrency designed to maintain a stable value by being pegged to assets like the U.S. dollar.
The concerns center around the belief that the GENIUS Act, while appearing to regulate stablecoins, could pave the way for government control over digital currencies, effectively creating a CBDC without explicitly calling it one.
Growing Concerns United States congresswoman Marjorie Taylor Greene stated that the GENIUS stablecoin bill creates a "backdoor" for the government to effectively create a central bank digital currency, veiled as privately issued crypto tokens. She added that regulated stablecoins feature “functional surveillance capabilities,” which make them indistinguishable from CBDCs.
This sentiment is echoed by others in the Bitcoin and crypto communities. Bitcoin advocate Justin Bechler, in a July 19 post, argued that the "Genius Act forces stablecoins into CBDC compliance and control; functionally identical to a CBDC, without the scary name". Saifedean Ammous, author of “The Bitcoin Standard,” posited that the U.S. dollar, in any form, is essentially a central bank digital currency that is already monitored by the state and increasingly digital. Jean Rausis, co-founder of the Smardex decentralized trading platform, stated that governments realize that if they control stablecoins, they control financial transactions.
How the GENIUS Act Works The GENIUS Act establishes a comprehensive federal-state supervisory and enforcement system for payment stablecoin issuers. It defines "payment stablecoins" and excludes CBDCs, tokenized bank deposits, and assets that qualify as securities from this definition. The act allows banks, non-banks, and credit unions to issue their own stablecoins, fostering faster and lower-cost financial transactions. It also prioritizes stablecoin holders' claims on reserve assets in case of an issuer's insolvency.
Potential Implications Critics worry that the GENIUS Act could lead to increased government surveillance and control over financial transactions. The Act includes stricter Anti-Money Laundering (AML) provisions, reserve requirements, and liquidity checks. These regulations could push out offshore stablecoin issuers that do not comply with U.S. regulations and strengthen U.S. dollar dominance by ensuring stablecoins are backed by U.S. debt and treasury bills.
Some experts believe that by controlling stablecoins, the U.S. government could achieve a similar level of control as with a CBDC, but through centralized issuers rather than a direct digital dollar. The ability to freeze funds and track transactions through stablecoins raises concerns about potential government overreach.
Despite these concerns, proponents of the GENIUS Act argue that it provides necessary guardrails and consumer protections for the growing stablecoin market. They believe it will foster innovation in digital payments while ensuring financial stability. Senator Tim Scott, Chairman of the Senate Banking Committee, stated that the GENIUS Act marks a major milestone in securing America's leadership in payments innovation while protecting consumers and strengthening national security. President Trump has hailed the act as an "exciting new frontier" for cryptocurrency, potentially revolutionizing financial technology.
