How the U.S. Plans to Spy on Your Digital Dough (With a Smile)

by

Ah, the United States government – so devoted to privacy that it prefers stablecoins over those pesky central bank digital assets. President Donald Trump, the man who could block a breeze if it threatened his coiffure, famously put a halt to CBDCs, citing privacy concerns. But, darling readers, while he waved his executive wand, the Treasury Department and the Bank of International Settlements were quietly plotting to turn stablecoins into the world’s most charming little surveillance contraptions. 🎩🔍

To police on-chain villains, one must sacrifice a bit of privacy. After all, you can’t have your blockchain and conceal it too.

Table of Contents

The Treasury’s New Favorite Pastime: Monitoring Stablecoin Chatter

In a display of classic government hospitality, the Treasury Department issued a cordial invitation on August 18, 2025, asking “interested members of the public” to offer their two cents on how to detect and mitigate illicit financial risks involving digital assets. Executive secretary Rachel Miller signed off on this charming public entreaty-which will remain open for commentary until October 17, 2025. So dust off your quills! 📜✒️

Miller cheerfully notes this surveillance bonanza is mandated by the GENIUS Act (yes, that’s its acronym), a law Trump signed into existence on July 18, 2025. Its mission? To corral stablecoins under financial rules with all the subtlety of a Mardi Gras parade, protecting consumers from skullduggery (or at least trying to).

Since stablecoin issuers are now classified as financial institutions by this act, all the usual federal rules apply-because nothing says “fun” like a paperwork avalanche.

Ms. Miller suggests a smorgasbord of monitoring delights: APIs, AI, identity verification, and other technocratic wizardry. The real cherry on top? The document slyly requests help on how to overcome pesky privacy and legislative obstacles while snooping on your transactions. Because why be subtle when you can be thorough? 😏

The Eternal Tug-of-War: Privacy vs. Security

Former Commodities Futures bigwig Timothy Massad envisions a world where zero-knowledge digital credentials dance invisibly on the blockchain stage, hiding your secrets except when the authorities want to peek. Without this magical ID, smart contracts won’t even salute your transactions, darlings. 🕵️‍♂️✨

Meanwhile, a16z’s David Sverdlov and Aiden Slavin enlighten us with their bombshell: fighting illicit crypto shenanigans means waving goodbye to privacy’s innocence. Consumers may soon be forced to unmask their digital wallets, selectively or otherwise, just to prove they’re not the crypto equivalent of a Bond villain. Withdrawals and deposits? Screened and inspected like a high-security airport.

BIS Economists’ Brilliant (or Diabolical?) Plan to Unmask Stablecoin Transactions

On a summery August 13, 2025, the Bank of International Settlements economists dropped a love letter titled “An approach to anti-money laundering compliance for cryptoassets.” Their thesis? Traditional trusted intermediaries? Out. Snooping the blockchain data itself? In.

The pièce de résistance: an AML compliance score that rates your tokens’ likelihood of illicit mischief. Should your token get caught on the naughty list, banks might refuse to convert it to fiat currency. The diligent Rage journalist Lola Leetz argues this cheap little trick turns “permissionless” blockchain utopias into permissioned digital prisons. Oh, the humanity! 😱

Not to be outdone, ZeroHedge likened this AML scoring to the Chinese social credit system – a comparison that might make your blockchain blush.

“None of [this] should surprise anybody (unless you really believed that there would be no CBDCs in the US). We’ve long said we expect the on-ramps and off-ramps to be heavily regulated and KYC-ed as the crypto-economy becomes a bigger component of the global financial system.”

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.
The result? A system that could fracture fungibility, split…

– melaviola (@MartinaG2702) August 13, 2025

How Digital ID Politely Flips the Bird to Trump’s Privacy Crusade

President Trump, ever the privacy protector (or at least vocal pretender), slammed his executive gavel down on January 23, 2025, banning the digital dollar from gracing the financial stage. A tokenized dollar? Too risque! USD stablecoins still peg to the almighty greenback, but a digital dollar would have been a genuine electronic doppelgänger. Alas, such dreams were dashed on the rocky shoals of privacy concerns.

We chatted about the implications of the GENIUS Act with Crypto Dad @giancarloMKTS who has called out the loss of privacy in stablecoins:

Why block a US CBDC while also passing the GENIUS Act to impose similar surveillance among private stablecoin issuers? 🇺🇸⏬

– Coinage (@coinage_media) August 24, 2025

Stablecoins, glorified as the independent Robin Hoods of the digital economy, remain tethered quietly to government oversight. So, while the government pokes its nose into your financial closet, it assures you it’s just to keep things tidy. Cheers to Big Brotherism, served with a wink and a very sharp pencil. 🍸😉

Read More

2025-09-04 18:09