Stablecoins will become the next CBDCs

[Hispo]

I pretty much agree with you. Governments from the United States and the European Union will take advantage of the already existing stablecoins for them to take over the control on blockchain transactions.
Most of centralized stablecoins already have desirable features for those governments anyways already, though, like the capacity to freeze funds and flag addresses, not even mention chain analysis tools which are used to connect several wallets to one single individual or several individuals working together to commit illicit acts through the use of stablecoins.

Still, there are characteristics of the Blockchain which are not so appealing to governments of those countries, like the fact anyone can check the history of the Blockchain easily on any explorer, in an ideal scenario, only authorized government officials would be able to do such thing.

Anyways, This one applies to western democracies, east autocracies are already in a rush to push their own CBDCs, as they are not as comfortable with blockchains as the USA and EU are.

[TastyChillySauce00]

I pretty much agree with you. Governments from the United States and the European Union will take advantage of the already existing stablecoins for them to take over the control on blockchain transactions.
Most of centralized stablecoins already have desirable features for those governments anyways already, though, like the capacity to freeze funds and flag addresses, not even mention chain analysis tools which are used to connect several wallets to one single individual or several individuals working together to commit illicit acts through the use of stablecoins.

Stablecoin of today is heavily regulated, I'm sure governments will have no problem using it.

I can see the pattern where more and more company starting to use stablecoin, maybe due to the fact that GENIUS act is here so they've got some regulatory framework to work with.
However I don't know if it's a good thing or a bad thing for crypto world, one thing for sure it will make the masses getting used to using crypto for remittance, etc.

[FinneysTrueVision]

On one hand many stablecoin proponents are saying that this will be positive for crypto, but once you look deeper into the GENIUS Act there are requirements that stablecoin issuers comply with AML laws and that they coordinate with the government in blocking transactions. This is taken from the Chainalysis website:

National security provisions
These provisions balance security measures with practical implementation requirements.

• Bank Secrecy Act compliance

     - Anti-money laundering (AML) and sanctions programs

     - Transaction monitoring and recordkeeping

     - Customer identification and enhanced due diligence

     - Suspicious activity reporting

• Technical enforcement capabilities

     - Issuers must demonstrate the ability to freeze or burn tokens

     - Non-compliant foreign issuers may be barred from U.S. markets

• Sanctions enforcement coordination

     - The Treasury Secretary must coordinate with issuers, where feasible, before blocking transactions involving foreign entities

I can imagine how thrilled Chainalaysis will be once this law gets passed because their business will be booming. A CBDC would have been controversial, so they are just doing it in a roundabout way, with the added benefit of huge corporate profits.

Coinbase has demonstrated that they are not trustworthy when it comes to handling customer data, yet this law will require users to give them a lot of personal information if they don’t want to have their USDC frozen based on frivolous suspicions.

[BitGoba]

All of these projects that issue so-called "stablecoins"  like Ethereum, Tron, Solana, etc.  are, in reality, highly centralized startups.
Each of them is controlled by a small group of insiders who make the key decisions and have disproportionate influence over the network.

Another important point: mainstream media has successfully pushed the false narrative that stablecoins are actually stable but they’re not.


They are pegged to fiat currencies, which themselves are inherently unstable and deliberately designed to lose value over time due to monetary inflation.
That inflation can, at any moment, spiral into something far more destructive  hyperinflation, where stablecoins can lose all their value overnight along with the fiat they’re backed by.

Bitcoin and gold are far more stable forms of money compared to fiat or stablecoins.

[nicolas222]

Stablecoins are interesting, a useful way to get out in profit at the end of trading, the only big flaw is that they can be blocked, frozen

[DeathAngel]

I agree that stablecoins will be the next big thing. The US & Bessent in particular are very bullish on them, he said that they strengthen the dominance of the dollar which is true because USDT & USDC are pegged to the US Dollar. I still think that the EU will try to bring out a CBDC though, they are so controlling, like communists.

[Firstfrost]

On the long run, my concern is would this be a better or worse than CBDCs because not everyone can understand how crypto/digital currency works and also even tho this might be a form of increasing adoption, it’s also kind of shady. The government would be in alliance with Circle/Tether, this would result in total control of decentralization in crypto. At the end of it all, government-approved KYC would be required, are you thinking what i’m thinking ?

[bullbandit9]

Stablecoins are interesting, a useful way to get out in profit at the end of trading, the only big flaw is that they can be blocked, frozen

Every single major token on altcoin networks can be blocked and frozen too. Instead of seeing this as a red flag for stablecoins, it should be seen as a red flag for these so called decentralized blockchains.

I agree that stablecoins will be the next big thing. The US & Bessent in particular are very bullish on them, he said that they strengthen the dominance of the dollar which is true because USDT & USDC are pegged to the US Dollar. I still think that the EU will try to bring out a CBDC though, they are so controlling, like communists.

Yes the EU is turning into a totalitarian commie shithole. Only leftist idiots that are afraid of reality are still dismissing it.

[Abiky]

All of these projects that issue so-called "stablecoins"  like Ethereum, Tron, Solana, etc.  are, in reality, highly centralized startups.
Each of them is controlled by a small group of insiders who make the key decisions and have disproportionate influence over the network.

Another important point: mainstream media has successfully pushed the false narrative that stablecoins are actually stable but they’re not.


They are pegged to fiat currencies, which themselves are inherently unstable and deliberately designed to lose value over time due to monetary inflation.
That inflation can, at any moment, spiral into something far more destructive  hyperinflation, where stablecoins can lose all their value overnight along with the fiat they’re backed by.

Bitcoin and gold are far more stable forms of money compared to fiat or stablecoins.

Yes. They're run like corporations. Among the Blockchains you've mentioned, Ethereum is the least centralized. But popular stablecoins are usually centralized, so the purpose of decentralization on the underlying blockchain network would be futile. It's all in the smart contract's code. Both USDT and USDC have blacklisting features. So it's easy enough to censor or freeze transactions at will. All made to satisfy the regulators.

One way or another, governments are already involved in digital payments. It makes sense to use existing solutions, rather than building one from scratch. Companies will work in tandem with the government for the issuance and distribution of stablecoins. No need for CBDCs ever. That's exactly Donald Trump's plan in the US. Don't say I didn't warn you. At least, we'll have Bitcoin to back us out. As long as freedom and privacy prevails, nothing else matters.

[TastyChillySauce00]

On the long run, my concern is would this be a better or worse than CBDCs because not everyone can understand how crypto/digital currency works and also even tho this might be a form of increasing adoption, it’s also kind of shady. The government would be in alliance with Circle/Tether, this would result in total control of decentralization in crypto. At the end of it all, government-approved KYC would be required, are you thinking what i’m thinking ?

Understanding how crypto works actually easy, you don't even need to understand how crypto works to start using stablecoin in the first place, it's literally the same mechanism as if you're using bank with multiple currencies.

As for whether it's gonna be worse than CBDC or not, let time answer it, hopefully the stablecoins in general stays the same, personally, I don't think current stablecoin will get its smart contract recreated to meet the requirements.

[pangu]

Standard Chartered Bank, Animoca Brands, and HKT have entered into agreements to establish a joint venture with the intention to apply for a license from the Hong Kong Monetary Authority in the new regulatory regime in order to issue a Hong Kong dollar-backed stablecoin.
https://www.animocabrands.com/standard-chartered-animoca-brands-and-hkt-establish-joint-venture-issue-hkd-backed-stablecoin

[d5000]

Forget CBDCs. Stablecoins are the next big thing. Why bother making a new digital currency from scratch, when governments can already use stablecoins and make it their own? They can introduce laws to help require stablecoin issuers to force KYC/AML compliance and give them complete control of the system. In such an scenario, central banks will cease to exist as monetary policy will lie directly in the hands of governments and corporations.

Regarding the cost of the system, this hybrid model could have advantages for the Central Bank. As far as I know Tether works very much like a bank, i.e. they make profit via investing in different assets (among other things, Argentine agro-industrial companies ) and collecting the profits of these investments, gathering at least a part of the capital for their investments with their stablecoin.

In terms of efficiency, the Central Bank normally would like to realize this profit themselves. But Central Banks are very tightly regulated, so they can't invest in everything they like. A private company could do that, and thus the system could even be cost-neutral for the Central Bank and they wouldn't have to pay fees to the stablecoin issuer. One issue would be perhaps competition law: if another stablecoin company would like to enter a similar cooperation, the Central Bank would have a hard time to reject them because otherwise they would give an unfair advantage to a single company.

Regarding monetary policy, if regulation requires a high percentage of backing of the stablecoin in safe assets like bank accounts and bonds (not in stocks or other risky assets) then the Central Bank's monetary policy directly has a direct influence on the stablecoin's supply, even without a direct cooperation.

I guess however that such a cooperation could become dangerous for the Central Bank if the stablecoin company begins to struggle, for example due to too risky investments and other poor management decisions. It could be a "too big to fail" scenario, i.e. potentially the State would have to rescue them in case of problems. (Imagine if Terra/Luna in 2022 had entered such a "partnership" ...)

[Abiky]

Regarding the cost of the system, this hybrid model could have advantages for the Central Bank. As far as I know Tether works very much like a bank, i.e. they make profit via investing in different assets (among other things, Argentine agro-industrial companies ) and collecting the profits of these investments, gathering at least a part of the capital for their investments with their stablecoin.

In terms of efficiency, the Central Bank normally would like to realize this profit themselves. But Central Banks are very tightly regulated, so they can't invest in everything they like. A private company could do that, and thus the system could even be cost-neutral for the Central Bank and they wouldn't have to pay fees to the stablecoin issuer. One issue would be perhaps competition law: if another stablecoin company would like to enter a similar cooperation, the Central Bank would have a hard time to reject them because otherwise they would give an unfair advantage to a single company.

Regarding monetary policy, if regulation requires a high percentage of backing of the stablecoin in safe assets like bank accounts and bonds (not in stocks or other risky assets) then the Central Bank's monetary policy directly has a direct influence on the stablecoin's supply, even without a direct cooperation.

I guess however that such a cooperation could become dangerous for the Central Bank if the stablecoin company begins to struggle, for example due to too risky investments and other poor management decisions. It could be a "too big to fail" scenario, i.e. potentially the State would have to rescue them in case of problems. (Imagine if Terra/Luna in 2022 had entered such a "partnership" ...)

Stablecoins such as Tether and USD Coin are capable of "blacklisting" addresses, so yes, they're already operating like banks. Tighter regulations will keep them in check, bringing confidence among investors and traders alike. In an scenario where stablecoins replace CBDCs, I think central banks will become irrelevant in the future. They will cease to exist as governments and stablecoin issuers take complete control of monetary policy.

Even retail banks might soon see their demise as people will carry digital wallets on their electronic devices (smartphones, PCs, etc) with stablecoin balances on them. They will ultimately become their own bank (although governments and corporations will have full control over your finances). By skipping the middlemen (banks), fees will be kept at the minimum. At least, that's how I see it. Only time will tell...

[d5000]

In an scenario where stablecoins replace CBDCs, I think central banks will become irrelevant in the future. They will cease to exist as governments and stablecoin issuers take complete control of monetary policy.

I don't really understand your logic here. CBDCs and stablecoins are a product for retail ("private" users and non-banking businesses), while the Central Bank would still have full control over their relationship with banks via the fractional reserve system and Central bank interest rates, which are the main instruments for monetary policy today. That wouldn't change if CDBC plans are scrapped in favour of a cooperation with stablecoin issuers.

If banks disappeared, then your prediction could become true indeed. But banks' main purpose is the generation of credit, i.e. the management of loans, which involves evaluating different risks all the time and decide how much you can lend to a certain person or company based on their risk profile. That service will have demand forever (at least in market economies).

Yes, stablecoin companies could do that too, but they wouldn't have a competitive advantage over a bank which has a lot of experience in that sector. And "traditional" banks could also become stablecoin companies themselves, or use stablecoins from other companies for that purpose.

[pangu]

Stablecoin - What It Means for TradFi
https://www.linkedin.com/pulse/stablecoin-what-means-tradfi-samuel-tse-ymhtc/

Yat Siu believes stablecoin adoption will soon be a necessity:
https://www.theaustralian.com.au/business/stockhead/content/tokenomics-animoca-brands-takes-a-front-seat-for-the-blockchain-tokenisation-revolution/news-story/374fb60433e2cf711b52d04ad9ae9778

[Abiky]

I don't really understand your logic here. CBDCs and stablecoins are a product for retail ("private" users and non-banking businesses), while the Central Bank would still have full control over their relationship with banks via the fractional reserve system and Central bank interest rates, which are the main instruments for monetary policy today. That wouldn't change if CDBC plans are scrapped in favour of a cooperation with stablecoin issuers.

If banks disappeared, then your prediction could become true indeed. But banks' main purpose is the generation of credit, i.e. the management of loans, which involves evaluating different risks all the time and decide how much you can lend to a certain person or company based on their risk profile. That service will have demand forever (at least in market economies).

Yes, stablecoin companies could do that too, but they wouldn't have a competitive advantage over a bank which has a lot of experience in that sector. And "traditional" banks could also become stablecoin companies themselves, or use stablecoins from other companies for that purpose.

The generation of credit, would be handled by stablecoin companies themselves. In essence, they would become banks' replacement. To put it simply for you, only two entities will be in-charge of the new digital Fiat money system (powered by stablecoins): governments and corporations (aka stablecoin issuers). Fees, and everything else would be charged and handled by a centralized app under such entities' control. You would be able to deposit, withdraw, and check your balance. But you won't be able to have access to your keys/seeds (not your keys, not your coins). Sort of like how a credit card works.

Since stablecoin issuers have the authority to blacklist/freeze accounts, stablecoins would effectively become CBDCs (but without central banks). Monetary policy would be handled directly by the government itself. Retail banks and central banks would be out of the picture. At least, that's what I think will happen in the future. Only time will tell... 

[Cheffe]

Yeah, that's a pretty strong argument. It really does make you think about how quickly something seemingly 'decentralized' can get co-opted once it gains enough traction. Why reinvent the wheel when you can just slap regulations on the existing one?

The part about pushing KYC/AML directly onto the stablecoin issuers to get complete control – that's the core of it, isn't it? It bypasses the need for a full-blown new CBDC infrastructure and just uses what's already popular. It's a clever, if unsettling, strategic move by governments, regardless of which administration is in power.

I guess the big question is whether the market, and crypto users, will just accept it. Will there always be a demand for genuinely decentralized, unregulated options, even if they're harder to access or have less liquidity? Or will convenience and mainstream adoption win out, pushing most users onto these 'CBDC-lite' stablecoins? It feels like a pivotal moment for how we define 'digital currency' moving forward.

[endut15]

Yeah, this point about stablecoins essentially becoming our future CBDCs is pretty smart, actually. For governments, it just makes so much sense, right? Why build something from scratch when Tether or USDC already have massive user bases and infrastructure?

The idea of them just adding rules for KYC/AML on top of what already exists... that's the shortcut to control. It's a bit scary how much power that puts into the hands of a few, cutting out banks as a middleman for monetary policy.

I've been thinking, if this really happens, how does it impact DeFi? Do we just see a split, where the 'official' stablecoins are used for regulated stuff, and truly decentralized ones become even more niche but important for privacy? It feels like the next big battleground. What do you guys think happens to the existing DeFi ecosystem if this plays out?

[d5000]

The generation of credit, would be handled by stablecoin companies themselves. In essence, they would become banks' replacement.

I still doubt that a stablecoin company can really compete with an established bank in their specialized fields. IMO it's much easier for a bank (once regulation is clear) to set up a new stablecoin themselves (as Societé Generale did with the EURCV) than a stablecoin company emerging from the crypto sector entering the loans/credit market and outcompete banks in this field. Banks have a lot of contacts to major companies in their countries, which are probably the most important thing in that business.

But maybe it's not that important who runs the stablecoin, if it's a "crypto firm" or a "traditional bank". I think we will definitely see more companies that will operate both - stablecoins and "business banking", with retail banking becoming less and less important.

The thing which makes me doubt most that Central Banks will disappear is however another thing: I guess that with a license which allows you to give out loans without a 100% reserve (i.e. fractional banking) is a big competitive advantage in the credit sector. And this will allow Central Banks to still control monetary policy more or less in the same way than now, only that their counterparties will manage also stablecoins.

From a "monetary" perspective, a stablecoin isn't much more than a traditional bank-based payment sytem, only with another technology, but with a similar relation to the underlying currency. The biggest difference is currently that a stablecoin can be held by people who aren't customers of any bank: you could buy USDT via P2P and store them in a non custodial wallet. And that can be indeed a competitive advantage too, but only if P2P stablecoin trade isn't banned.

Fees, and everything else would be charged and handled by a centralized app under such entities' control.

Yes, such centralized apps encompassing several banks' accounts under an unified API already exist for some time, I've seen them both in Europe and South America. The only step left would be to integrate stablecoins in that offer. That's mainly a regulatory issue.

[Abiky]

Yeah, this point about stablecoins essentially becoming our future CBDCs is pretty smart, actually. For governments, it just makes so much sense, right? Why build something from scratch when Tether or USDC already have massive user bases and infrastructure?

The idea of them just adding rules for KYC/AML on top of what already exists... that's the shortcut to control. It's a bit scary how much power that puts into the hands of a few, cutting out banks as a middleman for monetary policy.

I've been thinking, if this really happens, how does it impact DeFi? Do we just see a split, where the 'official' stablecoins are used for regulated stuff, and truly decentralized ones become even more niche but important for privacy? It feels like the next big battleground. What do you guys think happens to the existing DeFi ecosystem if this plays out?

Let's not forget that credit/debit cards will be phased out, once stablecoins become the de-facto digital Fiat currencies. Credit management will be taken care of a centralized app both stablecoin issuers and governments control. My guess is that countries that are already working on a CBDC or launched it, will change their mind and move to stablecoins instead. China and the EU are next. Now Russia is planning to build a stablecoin on the TRON blockchain. More info on that here: https://www.coindesk.com/business/2025/07/04/russian-state-giant-rostec-plans-ruble-pegged-stablecoin-payment-platform-on-tron-tass

This is the future whenever we like it or not. Better be prepared for such drastic changes, just in case. Who knows how long will it take before stablecoins take over the world (therefore putting an end to cash/paper money)?