U.S. Crypto Regulation Crosses the Line! Lawmakers: GENIUS and CLARITY Bills Threaten Self-Custody Principles

U.S. Representative Davidson Warns that the “GENIUS Act” Is Incorporating Crypto Assets into Account-Based Surveillance Systems, Undermining Self-Custody and Decentralization, Potentially Paving the Way for CBDC and Digital Identity.

Davidson Warns That Regulatory Focus Is Off-Target, and the U.S. Is Slipping Toward a “Permitted Money System”

U.S. Congressman Warren Davidson recently issued a strong warning about the direction of U.S. cryptocurrency regulation, directly stating that current legislation is gradually diverging from the core values that gave rise to crypto assets. In a post on New Year’s information and social platforms, he pointed out that America is heading toward a financial system “requiring government permission and full surveillance,” with crypto legislation being a key driver of this trajectory.

Image Source: X/@WarrenDavidson U.S. Congressman Warren Davidson recently issued a strong warning about the direction of U.S. cryptocurrency regulation, directly stating that current legislation is gradually diverging from the core values that gave rise to crypto assets.

Davidson believes that the market’s stagnation is not due to technological stagnation or lack of demand, but because “decentralized usage scenarios are being systematically dismantled in the U.S.” He bluntly states that legislative bodies are choosing to deny the structural changes originally brought by digital assets like Bitcoin ($BTC), instead trying to incorporate them into traditional account-based financial frameworks, which will ultimately weaken innovation and personal freedom.

GENIUS Act Named, Stablecoin Framework Criticized as “De Facto CBDC”

Davidson criticizes the already enacted “GENIUS Act” first. He points out that the law appears to establish a regulatory foundation for stablecoins on the surface, but in reality, it creates a system architecture with “central bank digital currency (CBDC) features in the backend.”

In Davidson’s view, the “GENIUS Act,” with its account-centric design, not only favors the existing banking system but also paves the way for future wholesale CBDC development.

He warns that once combined with digital identity verification, this system will enable the government to monitor, restrict, or even intervene in individual funds. He emphasizes that this runs counter to the principles of Bitcoin, which stand for “permissionless, peer-to-peer payments.”

Davidson also mentions that as massive deficits continue to erode the dollar’s value, the government is simultaneously building highly controllable digital currency infrastructure, which is concerning. He reminds the public, “Don’t be fooled by appearances,” as the real issue lies not in the names but in the power structures behind the system design.

The “CLARITY Act” Outlook Is Conservative, Self-Custody May Only Receive Symbolic Protection

Compared to the “GENIUS Act,” which is still under Senate review, the “CLARITY Act” is seen by some legislators as a remedial measure. Davidson also admits that the law attempts to patch the flaws of the “GENIUS Act,” such as including provisions to protect self-custody. However, he is not optimistic about the final outcome.

Davidson bluntly states that as long as the “GENIUS Act” becomes law, even if the “CLARITY Act” passes, improvements to personal freedom will likely be “cosmetic fixes.” He expects that account-based financial systems will remain the policy focus, while truly decentralized, trustless forms of money will continue to be marginalized.

Lawmakers with similar views to Davidson are not few. Republican Congressman Marjorie Taylor Greene also publicly opposes the “GENIUS Act,” directly criticizing it for handing power back to banks and opening a backdoor for CBDC. She emphasizes that the real risks come from digital identity, central bank digital currencies, and the erosion of self-custody.

Bitcoin’s Original Promise Revisited, Self-Custody Becomes a Regulatory Divide

In multiple speeches, Davidson repeatedly emphasizes that Bitcoin’s original purpose was not as a “liquidity-starved inflation hedge,” but as a payment system that allows value transfer globally in real-time without third-party permission. He believes that current policies overly focus on account management and compliance controls, which stifles this fundamental innovation.

Davidson warns that future government and industry efforts will continue to push digital identity systems, linking “ability to use money” with identity verification. While appearing to enhance security and convenience, this could evolve into a highly monitored financial order. He advocates that transaction rights should be regarded as a basic freedom and should not be restricted without reasonable cause.

Faced with this trend, Davidson calls on voters to pressure Congress to oppose CBDC, resist mandatory digital identities, and defend the right to self-custody. He admits that reversing this course may require a “miracle,” but still believes that defending decentralization principles will determine the future shape of money.