The U.S. government is venturing into uncharted waters, contemplating the use of stablecoins as a potential surveillance tool. This initiative comes on the heels of President Donald Trump signing the GENIUS Act into law, aimed at regulating stablecoins and raising important questions about privacy and the future of digital currencies in the American financial landscape.
Stablecoin Surveillance Proposals: A New Oversight Era
In a move that could reshape the cryptocurrency landscape, the U.S. Treasury Department, in collaboration with the Bank for International Settlements (BIS), is actively exploring the implementation of stablecoins as a mechanism for financial surveillance. The stakes are high, as this proposal opens the door to monitoring transactions under the guise of anti-money laundering (AML) efforts and sanctions compliance.
This exploration was formally announced through a public comment request on August 18, 2025, allowing stakeholders to contribute their insights until the deadline of October 17, 2025. The breadth of potential monitoring solutions outlined includes sophisticated techniques such as API integrations and artificial intelligence-driven analysis. As noted by financial media outlet ZeroHedge, “None of [this] should surprise anybody… We’ve long said we expect the on-ramps and off-ramps to be heavily regulated.”
The GENIUS Act: A Legislative Milestone for Stablecoins
The signing of the GENIUS Act by President Trump on July 18, 2025, marked a significant milestone in U.S. cryptocurrency policy. This landmark legislation establishes a robust legal framework for stablecoin issuers, mandating that each stablecoin be backed one-to-one by U.S. dollars or other low-risk assets. Furthermore, it grants holders superpriority in bankruptcy proceedings, ensuring their claims are prioritized over other creditors.
With bipartisan support, the GENIUS Act has garnered attention not only for its regulatory intent but also for its implications on consumer protection, which some critics argue remain insufficient. During the signing ceremony, Trump emphasized the act’s positive implications, asserting, “It’s good for the dollar and it’s good for the country,” while candidly adding, “I also did it for the votes.” This reflects the delicate balance between political motivations and genuine efforts to stabilize the crypto market.
BIS AML Compliance Score Proposal: The Controversial Edge
On August 13, 2025, the BIS unveiled a proposal for an AML compliance score specifically for cryptoassets. This innovative scoring system seeks to identify and restrict transactions involving “tainted” assets that may be linked to illicit activities. By analyzing blockchain data, the BIS aims to establish a method that evaluates the risk associated with particular crypto units, potentially altering their market value and fungibility.
However, critics are raising alarms over the implications of such a system. Many liken it to a social credit score, arguing, “The BIS proposal for AML ‘compliance scores’ on cryptoassets dresses up an old idea in new tech. It’s the same subjective risk-based approach that has failed in traditional finance, now applied to blockchain data,” tweeted one user, highlighting concerns that this could fracture the very essence of fungibility in digital currencies.
Political Context and Privacy Concerns: A Tug of War
The political context surrounding the regulation of stablecoins is complex, particularly in light of President Trump’s earlier restrictions on Central Bank Digital Currency (CBDC) development, citing privacy concerns. While stablecoins are positioned as a more private alternative to CBDCs, their potential use in government surveillance raises significant privacy implications for users.
Trump’s administration has positioned itself as a pro-crypto advocate, aiming to make the U.S. the “crypto capital of the world.” However, the tension between preventing illicit activities and protecting consumer privacy remains a topic of heated debate in the crypto industry. Experts like former CFTC Chairman Timothy Massad advocate for zero-knowledge proofs as a solution for maintaining user privacy while combating illicit activity in decentralized finance.
Looking Ahead: The Future of Stablecoins in America
The forthcoming changes in U.S. stablecoin policy are poised to redefine the landscape of cryptocurrency usage, surveillance, and regulatory accountability. As both government and private stakeholders engage in dialogue about compliance, privacy, and consumer protection mechanisms, the evolution of stablecoins remains a significant focal point for financial innovation.
Ultimately, the balance between innovation and regulation will shape not only the future of stablecoins but also the broader acceptance and use of cryptocurrency within traditional financial systems. As the deadline for public comments approaches, the sentiment among users, industry leaders, and regulators will play a crucial role in determining how this new regulatory framework unfolds.
