{"id":39358,"date":"2026-09-14T07:29:49","date_gmt":"2026-09-14T14:29:49","guid":{"rendered":"https:\/\/www.itmtrading.com\/blog\/?p=39358"},"modified":"2026-09-14T07:29:49","modified_gmt":"2026-09-14T14:29:49","slug":"stablecoins-more-dangerous-than-cbdc-fitts","status":"publish","type":"post","link":"https:\/\/www.itmtrading.com\/blog\/stablecoins-more-dangerous-than-cbdc-fitts\/","title":{"rendered":"They Will Turn Your Money Off! Incoming Stablecoins More Dangerous Than CBDCs – Fitts"},"content":{"rendered":"

What if the biggest threat to your financial freedom isn\u2019t a government-issued CBDC\u2014but a privately issued stablecoins sitting quietly inside the financial system?<\/strong><\/h2>\n

For years, Americans worried that CBDCs<\/strong> could create programmable money capable of monitoring, restricting, or potentially controlling how people transact. But Catherine Austin Fitts, former U.S. Assistant Secretary of Housing and Federal Housing Commissioner, says investors may be watching the wrong door.<\/p>\n

Her warning: stablecoins could create many of the same control mechanisms people feared from CBDCs\u2014while placing critical infrastructure in the hands of private issuers.<\/strong><\/p>\n

And unlike a hypothetical U.S. CBDC, the stablecoin system is no longer theoretical.<\/p>\n

The United States has already created its first federal regulatory framework for payment stablecoins, Treasury is writing the implementation rules, and government officials openly describe dollar-backed stablecoins as a mechanism for expanding global demand for the U.S. dollar and Treasury securities. (The White House<\/a>)<\/p>\n

That is why Fitts believes the next stage of the monetary reset may not arrive with a Federal Reserve logo.<\/p>\n

It could arrive through an app.<\/p>\n

Why Stablecoins May Be More Dangerous Than CBDCs<\/h2>\n

The political battle over a Federal Reserve digital currency appeared to move decisively in January 2025.<\/p>\n

President Trump issued an executive order prohibiting federal agencies from establishing, issuing, or promoting a U.S. CBDC while simultaneously directing the government to encourage the worldwide development of lawful dollar-backed stablecoins. (The White House<\/a>)<\/p>\n

To many CBDC critics, that sounded like a victory.<\/p>\n

Fitts sees something very different.<\/p>\n

Her argument is that the real concern was never simply whether a digital currency was issued by a central bank. The deeper question was whether money could become programmable, permissioned, and controllable from a distance.<\/strong><\/p>\n

As she told Daniela Cambone, the form of the currency matters less than the control architecture behind it.<\/p>\n

A CBDC would be a direct liability of a central bank. A privately issued stablecoin, on the other hand, places another layer between government authorities and the individual.<\/p>\n

Fitts argues that this arrangement could actually reduce transparency and public accountability\u2014not increase it.<\/p>\n

Her warning boils down to a disturbing possibility:<\/p>\n

Washington may not need to build a CBDC if private companies can provide much of the same digital infrastructure.<\/strong><\/p>\n

\u201cThey Will Turn Your Money Off\u201d: The Freeze Function Is Real<\/h2>\n

The most controversial part of Fitts\u2019 warning sounds extreme: money that can effectively be switched off.<\/p>\n

But the underlying technical capability is not speculation.<\/p>\n

Treasury’s 2026 proposed rules implementing the GENIUS Act state that permitted stablecoin issuers must possess the technological capability to comply with lawful orders requiring them to \u201cseize, freeze, burn or prevent the transfer\u201d<\/strong> of specified payment stablecoins. (OFAC<\/a>)<\/p>\n

That authority is intended for legitimate sanctions, anti-money-laundering and law-enforcement purposes. It is not evidence that ordinary Americans will arbitrarily lose access to their money.<\/p>\n

But it establishes an important fact:<\/p>\n

Dollar-denominated digital tokens can be designed with centralized control points that physical cash does not have.<\/strong><\/p>\n

Circle’s current USDC terms provide a real-world example. The company states that it can block certain addresses, freeze associated USDC under specified circumstances, and comply with legal orders from government authorities. (Circle<\/a>)<\/p>\n

That distinction is at the heart of Fitts’ concern.<\/p>\n

A $100 bill in your possession does not require a payment processor to approve each transaction. A privately issued digital token can operate very differently.<\/p>\n

The issue, therefore, isn’t whether law enforcement should be able to freeze criminal assets.<\/p>\n

The bigger question is how much economic infrastructure Americans are willing to place inside systems where remote restrictions are technologically possible.<\/strong><\/p>\n

Washington Is Building a Stablecoin System\u2014Not a CBDC<\/h2>\n

The regulatory landscape has shifted dramatically.<\/p>\n

On July 18, 2025, the GENIUS Act became law, establishing the first federal framework governing payment stablecoins in the United States. The law requires qualifying stablecoins to maintain reserve backing using approved liquid assets, including U.S. dollars and short-term Treasury securities. (The White House<\/a>)<\/p>\n

Treasury is now moving toward implementation. In August 2026, the department announced additional proposed regulations and said the GENIUS Act’s expected effective date is January 18, 2027<\/strong>. (U.S. Department of the Treasury<\/a>)<\/p>\n

That creates a fascinating monetary contradiction.<\/p>\n

Washington has rejected a U.S. CBDC while embracing privately issued digital dollars.<\/p>\n

Fitts believes investors should pay close attention to that distinction.<\/p>\n

The government doesn’t necessarily have to own the digital currency network to influence its rules.<\/p>\n

And private stablecoin issuers are already being brought inside the sanctions, anti-money-laundering, reporting and lawful-order architecture of the financial system. Treasury’s April 2026 proposal explicitly requires permitted issuers to maintain sanctions-compliance programs. (OFAC<\/a>)<\/p>\n

The CBDC debate may have ended politically. The programmable-money debate did not.<\/strong><\/p>\n

Stablecoins Could Become a New Treasury Demand Machine<\/h2>\n

There is another reason Washington has embraced stablecoins: government debt.<\/p>\n

Stablecoins need reserve assets.<\/p>\n

And under the emerging U.S. framework, Treasury securities are positioned to play a major role.<\/p>\n

Secretary Scott Bessent made the strategy remarkably clear after passage of the GENIUS Act. Treasury said stablecoins could expand access to dollars globally and produce increased demand for U.S. Treasuries backing those digital dollars. Bessent described the stablecoin market as having the potential to become a multitrillion-dollar industry.<\/strong> (U.S. Department of the Treasury<\/a>)<\/p>\n

This is where Fitts sees a much larger financial transformation.<\/p>\n

Treasury’s own advisory committee reported in 2025 that the stablecoin market was approximately $234 billion<\/strong>, with roughly half reportedly invested in Treasury bills and another $90 billion held in money-market funds. At the time, some industry projections contemplated growth toward roughly $2 trillion<\/strong>. (U.S. Department of the Treasury<\/a>)<\/p>\n

Treasury analysis also estimated stablecoin issuers were holding more than $120 billion in T-bills<\/strong>, with a scenario suggesting holdings could approach $1 trillion as the sector expands. (U.S. Department of the Treasury<\/a>)<\/p>\n

By early 2026, Treasury reported that assets associated with major issuers Tether and Circle had been expanding rapidly, with T-bills accounting for a significant portion of their holdings. (U.S. Department of the Treasury<\/a>)<\/p>\n

Consider the mechanism.<\/p>\n

Stablecoins can potentially:<\/p>\n