Fabio Vighi
In January 2025, President Donald Trump signed Executive Order 14178, “Strengthening American Leadership in Digital Financial Technology.” The order banned federal agencies from taking any action to develop, issue, or promote a Central Bank Digital Currency (CBDC), either at home or abroad. It also dismantled previous federal initiatives exploring a digital dollar, including a 2022 executive order and a Treasury framework issued under the Biden administration.
Framed as a defense of personal liberty against government overreach, the executive order argued that CBDCs pose risks to financial privacy, institutional independence, and democratic sovereignty. By blocking the rise of a government-issued digital dollar, the administration claimed it was safeguarding Americans from the potential of centralized transaction controls and politically motivated restrictions on personal spending. But buried in the same order was a directive that pointed in a very different direction: the launch of a working group to develop a federal framework for the privately issued digital currencies known as stablecoins.
Stablecoins are a class of cryptocurrency designed to hold a fixed value, usually pegged to a fiat currency such as the US dollar. Essentially, they function as digital dollar tokens, backed by reserves of cash or short-term Treasuries. Unlike volatile cryptocurrencies like Bitcoin, stablecoins are intended to be practical for everyday use, remittances, and integration into decentralized finance systems.
Trump’s move to ban central bank digital currencies, while simultaneously accelerating the federal recognition and regulation of stablecoins, reveals a calculated pivot rather than a principled stand against digital currencies. The executive order did not end the digitization of money—it merely redirected it into the hands of private entities operating under government oversight. In doing so, it replaced one form of centralized control with another, repackaged in the language of “market freedom.”
This strategy is now being accelerated by various legislative initiatives backed by the crypto industry and its congressional allies. This week, Trump-aligned lawmakers rallied behind the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, a bill designed to establish regulatory clarity for stablecoin issuers and formalize a public-private partnership model for digital money. Passed yesterday the House, it will allow private entities such as banks, fintechs, crypto firms to issue stablecoins, though only with Federal Reserve approval and supervision. Crucially, most stablecoins are denominated in US dollars, typically at a 1:1 ratio, such that their value mirrors the dollar’s exactly. This peg ties them to the monetary policies of the US government, including interest rates, inflation, and debt levels. These digital reserves are thus deeply integrated into the Federal Reserve’s monetary system, just as their issuers are financially dependent on Fed-managed instruments. Even though they aren’t issued by the Fed, stablecoins depend entirely on confidence in the dollar.
If stablecoins are indeed fully integrated into banking systems, payment apps, and centralized exchanges, then they will also interact with the broader financial system through Fed-linked rails, such as ACH, Fedwire, or SWIFT for settlement. And here it becomes clear that, contrary to what its proponents claim, the current push toward stablecoins is a step towards the construction of a digital panopticon that is technically private but shaped by state authority. The architecture of oversight is the same as that of CBDCs—only the branding changes. Once stablecoin transactions are intermediated by platforms operating under federal regulation, the potential for monitoring, freezing, or limiting access to funds can only increase.
Trump’s personal financial stake in stablecoins has drawn ample criticism, the alignment of policy promotion with private investment raises obvious questions about conflicts of interest. But the shift to stablecoins must be viewed in a broader context: the terminal crisis of the money medium itself as a store of value. The US dollar is increasingly seen as unsound, insofar as it is backed by escalating and unsustainable debt issuance, which in turn is reliant on low interest rates, and therefore vulnerable to inflationary pressure. Dollar-pegged stablecoins are no solution: A token pegged to a depreciating asset does not offer monetary security; it simply digitizes instability while adding a further layer of abstraction.
Far from offering a path to financial freedom or transparency, stablecoins serve as a transitional mechanism in the digitization of monetary control. Their adoption allows central banks and governments to “modernize” currency infrastructure and “experiment” with programmable features, while retaining full regulatory control. Avoiding the political backlash associated with a central bank digital currency, leaders can present themselves as champions of freedom and innovation. Meanwhile, the digital transformation of money moves forward under the illusion of decentralization.
The choice between central bank digital currencies and stablecoins, then, is a staged contest between competing models of centralized power. Whether digital dollars are issued by the Fed or by private corporations under the Fed’s supervision, we’re still facing the same shift toward a cashless, programmable, and controllable monetary system.
For now, the public continues to be presented with a false binary: state-issued surveillance money or private-sector “freedom money.” But both options lead to the same destination: an economy where privacy is eroded, autonomy is conditional, and participation is governed by terms set far from the public eye. In this landscape, the ban on CBDCs looks like an attempt to divert public skepticism, while reinforcing government control under a different name.
*Fabio Vighi is a professor of critical theory and Italian at Cardiff University.
Source: https://www.compactmag.com/article/why-crypto-wont-free-you/
