Another HUGE Risk of the GENIUS Act: CBDC-Style Financial Slavery

Does the GENIUS Act Outsource Creation of a Programmable CBDC Capable of Surveilling & Controlling its Users?

I’ve addressed the pros and cons of the GENIUS Act of 2025, addressing how it can pull lendable reserves from the banking system and impact lending and interest rates. Now, I’ll address the “programmable money” risk.

The GENIUS Act of 2025 has been hailed as a step toward regulating the wild west of stablecoins. It promises clarity for issuers, consumer protections, and a framework to ensure U.S. dollar-backed digital currencies are safe and reliable. On the surface, it sounds like progress.

But dig deeper, and the GENIUS Act reveals a far more troubling reality: it risks transforming financial freedom from a fundamental right into a government-controlled privilege. By leveraging the transparency of blockchain and granting sweeping regulatory powers, this bill could usher in an era of unprecedented surveillance and control over your money. Here’s why, what it means, and how we can work together to preserve our financial freedom.

The Surveillance Machine: Blockchain’s Double-Edged Sword

Stablecoins, like USDC or Tether, operate on public blockchains, where every transaction is recorded with a timestamp, sender address, receiver address, and amount. The GENIUS Act doubles down on this transparency by requiring issuers to track and report reserve assets, enforce compliance protocols, and submit to rigorous oversight. Sounds responsible, right?

Here’s the catch: blockchain’s public ledger is a surveillance dream. Unlike cash, which can change hands anonymously, stablecoin transactions leave a permanent, traceable trail. With tools like Chainalysis already mapping crypto networks for law enforcement, and exchanges like Coinbase complying with government subpoenas, your wallet’s pseudonymity is an illusion. Once linked to your identity—through KYC requirements or data leaks—your entire financial history is an open book.

Real-World Risk: Mapping Your Life

Imagine buying coffee with a stablecoin at your local café. That transaction, timestamped and tied to your wallet, could reveal your location, habits, and routines. A bad actor—whether a stalker, a hacker, or an overzealous government—could use this data to:

• Track your movements for targeted crimes like abduction or theft.
• Profile you for advertising, bombarding you with hyper-specific ads based on your spending patterns.
• Flag you for investigation, using vague “patterns” to justify scrutiny without evidence.

The GENIUS Act’s oversight requirements amplify this risk by mandating issuers to collect and share detailed data, potentially feeding it directly to regulators. Your financial life becomes a transparent map for anyone with access.

Programmability: The Power to Control Your Money

The bigger threat isn’t just surveillance—it’s control. The GENIUS Act grants regulators like the Federal Reserve, the Office of the Comptroller of the Currency (OCC), and the Treasury unprecedented powers to:

• Freeze wallets without judicial oversight.
• Halt transactions deemed “non-compliant.”
• Seize collateral backing stablecoins under loosely defined “exigent circumstances.”

This isn’t theoretical. Section 6(b) and Section 7 of the bill explicitly allow regulators to freeze assets or issue cease-and-desist orders without a public court process. Even more chilling, the Act creates a loophole around the Fifth Amendment’s protection against asset seizure without compensation. How? Regulators could freeze a wallet, declare it “unredeemable,” and instruct the issuer to hand over the backing collateral to the Treasury or OCC, who then pocket it. No liability, no compensation, no recourse.

Real-World Risk: A Programmable Panopticon

Programmable money means the government could enforce behavioral compliance through your wallet. Picture these scenarios:

• Punishing dissent: You post criticism of a government policy online, and your wallet is flagged for “review,” locking you out of your funds for 60 days without explanation.
• Behavioral fines: Refuse a mandated vaccine? Your wallet automatically deducts $1,000 daily until you comply.
• Carbon limits: Exceed your “carbon footprint” for the year? Your wallet blocks purchases for flights or gas until the next reset.
• Bulk freezes: Regulators compile a secret blacklist of “risky” wallets—perhaps tied to political views or protest activity—and freeze them en masse through private administrative orders.

These aren’t dystopian fantasies. They’re technically feasible under the GENIUS Act’s current framework, which lacks mandatory judicial oversight or public accountability for enforcement actions. China is already doing these things using individual credit scores to limit access to places, goods and services. According to this article, Tether has frozen $2.5B in assets, sounds very profitable for the stablecoin issuer or the government pulling their strings.

Legal Loopholes: Lessons from FISA and Beyond

If you think constitutional protections like due process or the Fourth Amendment will save you, think again. The government has a playbook for bypassing constraints:

• The FISA Court precedent: Secret rulings and rubber-stamp warrants have enabled mass surveillance with zero public accountability. The GENIUS Act’s reliance on administrative discretion mirrors this, allowing freezes and seizures without transparent judicial review.
• Surveillance workarounds: Just as the NSA routes domestic data through foreign servers to skirt domestic privacy laws, regulators could use offshore wallets or vague “national security” claims to justify asset control.
• Due process erosion: The Act’s “exigent circumstances” clause lets regulators act first and justify later, potentially freezing funds indefinitely by chaining “temporary” orders.

Even if due process is required, the argument that public hearings could “tip off” criminals (like money launderers or traffickers) could justify secret actions. A simple fix, like limiting freezes to a one-time 30-day period, could balance enforcement with fairness. But the GENIUS Act includes no such guardrails.

The Core Issue: Freedom as a Privilege, Not a Right

At its heart, the GENIUS Act risks turning financial freedom into a permissioned privilege. Cash is a bearer instrument—you hold it, you spend it, no questions asked. Stablecoins under this bill become digital licenses, subject to revocation or restriction based on compliance with government rules. As one astute observer put it: “Private financial freedom becomes a permissioned privilege, not a right.”

This shift has profound implications. If money is programmable, it’s no longer just a medium of exchange—it’s a tool for control. A government could enforce social, political, or environmental compliance by tweaking wallet permissions, effectively creating a financial “social credit” system without ever saying the words.

How to Fight Back: Preserving Financial Freedom

The GENIUS Act isn’t inherently evil—it aims to regulate a chaotic industry. But without amendments, it’s a blueprint for financial tyranny. Here’s how we can push back:

Policy Fixes

• Mandate judicial oversight: Require court warrants for all freezes and seizures, with public hearings or published records.
• Limit freeze durations: Cap freezes at 30 days, eliminating chained or successive freezes.
• Ensure transparency: Publish a public ledger of all enforcement actions, preventing secret blacklists.
• Prohibit behavioral controls: Ban programmable restrictions tied to social, medical, or environmental compliance.
• Protect due process: Guarantee users the right to challenge freezes in open court with clear timelines.

Tech Solutions

• Support privacy tech: Advocate for stablecoins with zero-knowledge proofs (like zkUSDC) or decentralized protocols that prioritize anonymity without breaking laws.
• Build on-chain rights: Develop smart contracts that require judicial signatures for enforcement actions, embedding constitutional protections into code.
• Test legal limits: Use litigation to challenge unlawful freezes or seizures, setting precedents for financial privacy.

Citizen Action

• Contact Congress: Call your Senators and Representatives. Demand amendments to the GENIUS Act that protect financial freedom. Share this post to amplify the message.
• Support advocacy groups: Back organizations fighting for digital rights and financial privacy, like the Electronic Frontier Foundation or Coin Center.
• Spread awareness: Educate friends, family, and colleagues about the risks of programmable money. The public narrative is still forming—your voice matters.

Recent Developments: The Anti-CBDC Surveillance State Act – A Partial Win, But Missing the Bigger Picture

As of July 23, 2025, the Anti-CBDC Surveillance State Act (H.R. 1919, 119th Congress) has passed the House and is headed to the Senate, where it's supposedly set to sail through as an addendum to the Defense Funding bill. While this legislation prohibits the Federal Reserve from issuing a central bank digital currency (CBDC) or engaging in related activities, it does nothing to constrain the government's ability to freeze or seize stablecoins from wallets without judicial oversight or a court order, which remains the far larger issue fueling concerns over financial surveillance and control.

The Stakes Are High

The GENIUS Act could stabilize the stablecoin industry, but at a steep cost. It risks building a financial panopticon where every transaction is tracked, every wallet is permissioned, and every citizen’s freedom to spend is subject to government whims. If we don’t act, we’re paving the way for a world where money is no longer yours—it’s a license granted by those in power.

Let’s demand a future where financial freedom remains a right, not a privilege. Share this post, call your representatives, and support technologies that protect privacy. The fight for our financial future starts now.

Want to take action? Draft a letter to Congress, join a digital rights campaign, or explore privacy-preserving stablecoin projects. Together, we can shape a future where money empowers, not controls.

What are your thoughts? Leave a comment below and join the discussion!