Congress Is Trying to Ban the Digital Dollar. What Does That Mean for Crypto Stocks?

Digital dollars, also known as central bank digital currencies (CBDCs), are government-backed blockchain versions of actual dollars and are one of several ways to move money on-chain. Another is stablecoins, digital tokens pegged to traditional currencies and issued by banks, crypto firms, or other entities, which have gained traction in recent years.

On the face of it, a digital dollar ban would be good for stablecoin-focused crypto stocks, such as Circle Internet Group (CRCL +6.24%) and Coinbase Global (COIN +2.05%). However, in reality, digital dollars fell by the wayside years ago, and the on-chain battle is between traditional financial firms and stablecoin issuers.

The big appeal of blockchain transactions is their low costs and fast settlements. Today, the on-chain money space is a mish-mash of projects, with existing players exploring partnerships with various cryptocurrencies, crypto firms, and other banks and payment providers. Many are piloting several projects at once, as it isn't clear what shape this potentially lucrative market could take.

Image source: Getty Images.

What's going on with digital dollars?

President Trump issued an executive order in 2025 that halted government CBDC development. Last month, Congress went further by passing legislation that would prevent the Fed from issuing a digital dollar before the end of 2030. It was bundled into the housing affordability bill, but the president hasn't signed it into law for political reasons.

But digital dollar development had already stagnated in the years since the Federal Reserve first seriously investigated the idea in 2022. Although a couple of countries have CBDCs, the enthusiasm has mostly withered in the face of technical challenges and privacy concerns. Whatever happens to the latest legislation, there isn't much appetite for a digital dollar, and blockchain money is more likely to come through non-government channels.

Stablecoin firms face bigger threats

Stablecoins could play a role in global remittances, agentic artificial intelligence payments, crypto, e-commerce, and more -- with forecasts that the number of stablecoins in circulation could grow from over $310 billion today to trillions of dollars by 2030.

Many investors have zeroed in on Circle, a listed company that issues USD Coin (USDC +0.00%), the second-biggest stablecoin in circulation. It boasts a compliance-first approach, and each USDC token is backed by funds held in accessible reserves, such as U.S. Treasuries. It makes money through interest earned on those funds and transaction fees, so the more stablecoins in circulation and use, the more Circle can grow.

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NYSE: CRCL

Circle Internet Group

Today's Change

(6.24%) $4.03

Current Price

$68.65

Key Data Points

Market Cap

$17BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day's Range

$62.95 - $69.98

52wk Range

$49.90 - $262.97

Volume

173.8K

Avg Vol

14.7M

Gross Margin

4.98%

In truth, digital dollars haven't been a serious threat to Circle for years. The bigger threats are unfavorable regulations, rival stablecoins, and token launches by banks and payment providers. That came into sharp focus on June 30, when a consortium of 140 organizations, including big names like Visa, Mastercard, BlackRock, and Coinbase, announced a new Open USD stablecoin. Circle shares tumbled after Open USD announced it would share the reserve yields with partners, giving businesses a heavy incentive to switch.

Circle stock tumbled, but having seen stablecoin projects come and go over the years, I think it is much too early to write it off. After all, not so long ago, experts thought CBDCs would destroy Bitcoin, and today, digital dollars are dead in the water. Open USD is an interesting proposition, but it will be hard to replicate Circle's regulatory progress or payment networks.

Even so, it is a reminder that this sector is rapidly evolving. I like Circle's interest-generating revenue model, but I prefer the way innovative banks and fintechs are approaching blockchain integrations because they are less dependent on a single route to success.