Crypto Advisor Issues Alarm Over Potential Damage to Stablecoins by Treasury Secretary Bessent

In a move that could drastically reshape the cryptocurrency landscape, regulators are working in tandem with Ripple to establish infrastructure for Central Bank Digital Currencies (CBDCs). Despite the perception of resistance, integration is progressing behind the scenes.

This collaboration could potentially lead to a shift from peer-to-peer transactions to approval-based systems, paving the way for CBDCs – state-issued digital dollars, tied to individual identity and monitored by authorities.

U.S. Treasury Secretary, Scott Bessent, has been at the centre of controversy, with accusations of a plan that could potentially wipe out stablecoins like USDT or USDC. Bessent's comments suggest a focus on financial engineering, with CBDCs being tied to U.S. debt instruments to ensure ongoing demand for Treasuries.

Orbion (@cryptorbion) argues that Bessent's strategy points away from stablecoins and towards CBDCs. The ongoing dispute between the SEC and Ripple is seen as a public distraction, masking a deeper alignment between Ripple and regulators regarding the setup of CBDC infrastructure.

Bessent's mention of "selling debt through stablecoins" signals a potential link between digital money and U.S. Treasuries, which could increase demand for government bonds. However, it's important to note that Bessent's specific role in the development of CBDCs and his exact comments regarding the connection to U.S. Treasuries are not documented in the provided sources.

Under this new system, the relevance of private options like USDT and USDC could diminish rapidly. Critics argue that this structure hands control of liquidity to regulators, potentially forcing exchanges to integrate CBDCs, leaving stablecoin issuers sidelined.

CBDCs could also come with programmable restrictions, such as the ability to freeze wallets, block payments, or set expiration dates on tokens. This raises concerns about privacy, as every transfer would be logged and controlled under the CBDC system.

Ripple's existing technology may be used to build the infrastructure for CBDCs, due to its proven rails for settlement and liquidity management. The integration of CBDCs could lead to a significant shift away from the current decentralized nature of cryptocurrencies towards a more controlled and regulated system.

As the integration of CBDCs continues, the future of cryptocurrencies and their role in the financial world remains a topic of intense debate and speculation.