Catherine Austin Fitts: Stablecoins ‘Are Much More Terrifying’ Than CBDCs

Overview

Catherine Austin Fitts argues that even if the U.S. blocks a direct CBDC, a more serious danger is the rollout of stablecoins and other “programmable” digital tokens under public-private regulatory frameworks. She contends this could be more concerning than CBDCs because it may enable pervasive transaction surveillance and automated control without the same legal accountability typically owed by a central bank.

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Core arguments and analysis

Central-bank control vs. private “programmable” systems

Fitts points to a remark attributed to Agustin Carstens (BIS): a CBDC would let central banks define and technologically enforce how digital currency can be used. She says that is frightening—but argues the stablecoin route is even more terrifying because it shifts enforcement to private actors, who may not have comparable legal obligations to citizens as a government institution.

Stablecoins as “automated third-lock” programmable money

Fitts describes a “lock” model for transactions:

• Two-lock: buyer/seller constraints, like normal cash transactions.
• Manual third lock: human or bank staff intervention due to compliance needs (e.g., sanctions freezes with some process and recourse).
• Automated third lock: software/AI scans transactions and enforces restrictions with no meaningful human intercession or customer recourse.

Her claim is that distributed-ledger infrastructure combined with AI-based decisioning can enable automated control.

CBDC bans won’t solve the problem

Even if legislation prevents the Fed from issuing a CBDC, Fitts argues that provides false reassurance. She says stablecoins can be engineered to replicate similar outcomes—tracking, restrictions, penalties, and even account impacts—without requiring a CBDC.

Regulatory and infrastructure convergence enabling programmability

Fitts argues that multiple systems are moving toward distributed ledgers:

• banks putting bank deposits on distributed ledgers
• stablecoin issuance under the Genius Act (with an implementation timeline beginning around 2027)
• securities infrastructure (including DTC piloting distributed-ledger trading/records for major markets)
• eventual programmability across additional asset classes (she references global BIS discussions, including real estate)

Her conclusion: once money, deposits, and financial assets are programmable on shared rails, a broad “social credit”-like system could extend to a significant portion of family wealth.

Examples of dystopian uses of programmability

• China: cited as an example of digital currency tied to surveillance/social control (including narratives around carbon/societal compliance and consequences for political dissent).
• ESG/carbon-based restrictions: potential limits on purchases (e.g., being denied travel or meat).
• UK banking access: she cites an example where political figures were allegedly pushed out of banking access.

Push for “guardrails” and human accountability

Fitts says her company (Salarius) works with state legislators and submits regulatory comments urging that any automated freezes, blocks, seizures, or “burns” must not be decided solely by software. She argues for legally accountable human review, framing manual third locks as a safeguard against “machines making decisions” without recourse.

Incentives and market mechanics she believes worsen systemic risk

Fitts argues stablecoin settlement and 24/7 trading, combined with leverage offered by some crypto platforms (she mentions up to ~20x margin), could amplify bubbles and systemic volatility—especially once large securities volumes are traded continuously on distributed systems.

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What she says stablecoins are, and why they matter

Stablecoin definition under the cited framework (Genius Act)

Under the Genius Act framework, Fitts describes stablecoins as crypto collateralized by relatively stable assets. Specifically, she says the collateral is primarily:

• short-term (≤ 93-day) Treasury bills, or
• high-quality bank deposits,

to keep price volatility low.

Connection to Treasury funding and adoption

She claims this design can attract retail demand into dollar-based instruments and potentially channel stablecoin inflows into U.S. Treasury markets, especially as institutional participation evolves.

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“As dangerous as a CBDC?”—real-world seizure scenario

Fitts argues stablecoins can be treated as programmable money that may be easier to freeze or seize because they exist on a distributed ledger.

As an example, she cites a scenario involving Iran: people reportedly moved to crypto/stable-like assets to preserve value amid currency collapse, and then wallets were reportedly seized—illustrating how quickly access can be disrupted.

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Addressing the “I’m not forced to use stablecoins” point

Fitts says model legislation she supports would:

• prohibit requiring people to use programmable money
• require a non-programmable alternative (e.g., keeping cash viable)

She also argues the aim is preventing private terms and conditions from eroding constitutional rights—innovation should be opt-in rather than coercive.

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Presenters/Contributors

• Catherine Austin Fitts (guest)
• Agustin Carstens (referenced in a video clip attributed to him/BIS context)
• Neel Kashkari (referenced in a separate clip; Minneapolis Fed president)
• Michelle (host/interviewer; named only as “Michelle” in the subtitles)
• John (mentioned in connection with clipping/recording Carstens’ remarks; name appears in the dialogue)
• Donald / Secretary Mnuchin (Steven Mnuchin) (referenced by title; discusses currency impact and a “financial bazooka”)