Our president and Congress, egged on by powerful crypto interests, are racing to a momentous decision. If current legislative momentum continues, digital currency — the future of American money — will be forged by Silicon Valley, not by the state.
This would be an enormous win for the crypto industry. But it would saddle Americans with a monetary system that is less clear, less innovative and less safe. It also hands our global rivals a perfect opportunity to lure global trade and investment away from the dollar, which could have major consequences for America’s standing and its economic future.
This choice is primarily driven by two pieces of legislation. The GENIUS Act creates a regulatory structure that allows private corporations to issue stablecoins, a form of crypto pegged to the dollar. It was signed into law in July. Now the crypto lobby is pushing Congress to pass the Digital Asset Market Clarity Act, which, among other things, would bar the Federal Reserve from issuing or even piloting a government-issued digital currency (in other words, a rival to privately issued stablecoins) without congressional approval.
The Clarity bill, which has already passed the House, would also shift more oversight to the Commodity Futures Trading Commission, widely seen as more industry-friendly than the Securities and Exchange Commission.
If the measure becomes law, the United States would become the only major economy to voluntarily rule out government-issued digital money. Meanwhile, our global rivals are rushing ahead, marketing their digital currencies as safer, state-backed alternatives to the dollar with the aim of redirecting trade and investment to their systems.
China’s digital yuan is already in use. The European Union has passed a sweeping framework that treats digital assets as part of sovereign infrastructure — public systems built and controlled by governments — while the European Central Bank is testing a digital euro. Dozens of countries, from India to Brazil, are building their own sovereign digital payment systems.
These countries are trying to degrade the primacy of the American dollar and wrest from the United States the ability to enforce sanctions, set payment norms and influence capital flows. For Americans, that could mean higher borrowing costs and diminished global influence.
It doesn’t have to be this way. Over the years, Democrats have floated digital dollar proposals. Done right, such a dollar could combine crypto’s efficiency — instant settlement, round-the-clock availability, low transaction costs and no need for intermediaries like banks or card networks — with the safety of public money. Imagine a service like Venmo, PayPal or Zelle, but with no risk of frozen funds or transfer reversals, no corporation mining your personal data, no fees for foreign transactions and backed by the full faith of the U.S. government.
A public digital dollar would also let policymakers deliver aid directly to wallets, keep payments clearing if banks falter, and provide targeted liquidity during shocks — tools that private platforms can’t reliably supply.
Instead, Washington is embracing paralysis framed as prudence. When plans for a public digital dollar were floated in previous years, the Biden administration cited concerns about civil liberties and data privacy, while Republicans aligned with Donald Trump emphasized the need to guard free enterprise and resist government control. Supporters in both parties argue that privately issued stablecoins, which are pegged to the dollar, will extend our currency’s use globally because they can be built quickly, tailored to users and integrated seamlessly into platforms like PayPal, Coinbase and Stripe.
But crypto is vulnerable in a crisis. Like uninsured deposits at Silicon Valley Bank in 2023 and money-market funds in 2008, stablecoins can unravel quickly when confidence breaks. For that reason, the GENIUS Act hems in stablecoin issuers with strict rules: they must hold reserves sufficient to cover redemptions in full and are barred from paying interest (a win for the banking lobby). And because these are private tokens — not sovereign money — they are not instruments of monetary policy or crisis response.
The result is the worst of both worlds. The private sector is stuck with the responsibility for keeping the dollar relevant without the flexibility or authority needed to do so.
Users will probably have to navigate a maze of stablecoin issuers, each peddling different products. Access to these currencies will surely be limited to those Americans deemed sufficiently profitable, and privacy will be governed by whatever policies companies adopt rather than by federal law. And unlike government-issued money, these tokens carry no government guarantee if an issuer fails.
Rather than punt the future of our monetary system to Silicon Valley, our lawmakers need to start building public infrastructure again. Like clean air or national defense, public digital money would create greater benefits for all of us. It would foster public trust in government, give the less wealthy access to efficient banking, and equip America with a powerful tool to expand its influence globally. We’ve built public infrastructure before when it mattered: the Interstate highways, the internet, even the original Fed. Those weren’t acts of regulatory tidiness. They were acts of national ambition. Digital money could be next.
America’s decision to step aside from the rise of digital currency isn’t neutral. It’s a bet the world will keep playing by yesterday’s rules. History says otherwise.
Amit Seru is a finance professor at Stanford Graduate School of Business and a senior fellow at the Hoover Institution.
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