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Why GENIUS Act Could Lead to CBDC-Like Surveillance

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Why GENIUS Act Could Lead to CBDC-Like Surveillance

For many, the passage of the GENIUS Act closed the doors on the creation of a Central Bank Digital Currency (CBDC). Stablecoins, though digital, were marketed as a private form of currency, in contrast to a government-issued digital dollar.

Aaron Day, a fellow at the Brownstone Institute and a staunch critic of the crypto industry, argued that the GENIUS Act facilitates increased government surveillance despite this ban.

Surveillance Concerns Under the GENIUS Act

The GENIUS Act explicitly prevents the Federal Reserve from issuing a CBDC directly to individuals or through a third party. Its goal was to block the creation of a government-issued digital dollar at all costs.

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Its July 2025 passage tied in nicely with President Trump’s early campaign promises to oppose the creation of a CBDC, describing it as a form of tyranny

According to Day, stablecoins and CBDCs are essentially the same thing. The only difference is that the former is privately issued, whereas the latter is issued by a central bank. Yet, as long as the government is involved, the degree of surveillance remains the same.

“The issuance by the Federal Reserve is not actually the part of this that people are concerned about. The Federal Reserve is a private organization that is a collection of banks. Whether you end up having a stablecoin issued by Jamie Dimon at JP Morgan Chase or by the Federal Reserve doesn’t matter,” Day told BeInCrypto.

What privacy-preserving people are really concerned about, he argued, is a government entity being able to program, track, and censor money

This line of thinking has prompted him to define the GENIUS Act as a “backdoor CBDC.” Day highlighted the urgency of the issue, especially given the exponential growth in stablecoins.

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“Last year, there was $33 trillion worth of stablecoin transactions. Globally, this is larger than the amount processed through Visa,” he said, adding, “What they’ve done essentially is they’ve taken stablecoins… and they put [them] under the surveillance and control of Congress.”

According to him, this level of surveillance already existed before the passage of the GENIUS Act. The recently signed bill only represents a new degree to an already established order.

Day noted that most of the dollar is already digital.

When asked for examples, he pointed to the Bank Secrecy Act (BSA). This legislation, passed in 1970, requires financial institutions to assist government agencies in detecting and preventing money laundering, terrorism financing, and other illicit activities.

According to Day, the BSA allows government agencies to engage in overreach in certain contexts.

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“We have something called suspicious activity reports. Anytime you do a financial transaction through your bank greater than $10,000, a report is automatically generated and sent to the Treasury Department. This shows you that we already have tracking within the system,” he said.

While these tools are often used for public protection, government agencies can implement them without specific authorization.

Day pointed to a specific example. In March 2025, the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Treasury Department, issued a geographic targeting order to combat money laundering activities in the southwest border of the United States. 

As part of that order, FinCEN mandated that money services businesses in 30 ZIP codes report transactions over $200.

“Understand what this means. The Treasury Department, without Congress, without a bill, without a law, can simply send a memo and banks will start adjusting the dollar transaction amount with which they start automatically reporting to Treasury,” he said.

In light of these examples, he argued that surveillance frameworks already exist. The GENIUS Act merely allows Congress to supervise stablecoins, potentially expanding control over digital currencies in ways that mirror those of a CBDC.

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Indian court clears CoinDCX founders in impersonation fraud probe

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Crypto Breaking News

A Thane magistrate court in India has granted bail to CoinDCX co-founders Sumit Gupta and Niraj Khandelwal after a 71 lakh rupee cheating complaint tied to a fake trading platform impersonating the Indian crypto exchange. The March 23 common order found no prima facie case against the founders, who were questioned and remanded over the weekend amid allegations they defrauded an investor. The court noted that the informant had admitted in court that another person, not the applicants, was involved in the fraudulent scheme and that an amicable settlement had been reached in the matter.

In a move that underscores the ongoing risk of impersonation in the crypto space, CoinDCX responded on March 24 via X (formerly Twitter), saying the proceedings reinforced a third‑party impersonation scenario. The firm emphasized that the fraud occurred on a counterfeit site, coindcx.pro, which has no connection to CoinDCX. The company urged users to verify domains and interact only with the exchange’s official platform and social profiles.

Key takeaways

  • The Thane court granted bail to CoinDCX co-founders Sumit Gupta and Niraj Khandelwal after ruling there was no prima facie case, based on the information available at the initial stage of the investigation.
  • The alleged fraud involved a lookalike site, coindcx.pro, described by CoinDCX as unaffiliated with the company, illustrating a broader impersonation risk facing Indian crypto platforms.
  • Judges noted that the informant had filed an affidavit stating another accused, Rana, had repaid the cheated amount, and that the founders were not present at the café in Mumbra where the deal occurred. The matter was described as amicably settled, reducing the likelihood of evidence tampering claims.
  • CoinDCX publicly framed the incident as a case of third‑party impersonation, reinforcing the need for users to verify domains and interact only with official channels to curb phishing and scam risk.
  • The case highlights the ongoing tension between fast‑moving crypto‑sector growth in India and the persistent risk of brand impersonation, phishing, and counterfeit platforms targeting investors and users.

Legal framing: What the bail order reveals

The court’s order indicates that the investigation officer had “no objection” to releasing Gupta and Khandelwal on bail, a procedural signal often used when authorities see insufficient immediate evidence to justify continued detention. The magistrate also observed that the accused were not present at the location of the alleged offense and that the informant acknowledged in court that another individual could have represented themselves as the accused to defraud the investor. The “amicable settlement” between the informant and the principal accused further complicated the prosecution’s case, suggesting a potential resolution that could limit the scope of trial proceedings.

Both founders were released on bail upon a bond of 50,000 Indian rupees (about $530) with conditions to cooperate with the investigation and stand trial if required. While bail offers temporary relief from detention, it does not conclude the merits of the underlying allegations, and the case could proceed if prosecutors pursue further charges or uncover new evidence.

Impersonation, phishing, and the risk to users

The broader context of this episode is the rising incidence of impersonation and phishing aimed at India’s crypto ecosystem. CoinDCX’s statement frames the incident as part of a pattern in which fraudsters mimic well-known brands and create lookalike platforms to deceive investors. The company urged users to validate domain names, avoid responding to offers from unverified sources, and rely on the exchange’s official channels for trading and communications. For readers watching regulatory developments, this case underscores why incident‑response and security best practices are increasingly central to crypto firms’ operating models.

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The incident also resonates with a wider industry concern: how to differentiate legitimate platforms from counterfeit sites, especially when the lookalikes copy branding and user interfaces with alarming fidelity. For investors and traders, the episode reinforces the practical need to scrutinize URLs, bookmark official sites, and remain vigilant against phishing attempts that can surface even when a high‑profile exchange is involved. CoinDCX’s emphasis on third‑party impersonation will likely feed into ongoing industry conversations about brand protection and user education as structural responses to fraud risk.

For those seeking more background on security best practices in crypto, industry observers often highlight the importance of confirming site authenticity and using hardware wallets for large holdings, in addition to platform‑level protections and verifications. As fraud schemes evolve, platforms may increasingly adopt stricter identity checks, domain monitoring, and rapid takedown processes to reduce exposure to impersonation. Readers can follow updates through official exchange communications and regulatory disclosures as the case unfolds.

Impact on CoinDCX and market trust

From a market trust perspective, the bail decision points to the complexity of policing a fast‑growing crypto landscape in which legitimate ventures are sometimes entangled with opportunistic fraud. While the court’s ruling removes a layer of immediate personal risk for the founders, the broader case keeps investors’ attention on the structural challenges of brand protection and consumer safety in crypto. CoinDCX’s public response—framing the incident as impersonation—seeks to reassure users while spotlighting the need for robust checks beyond a single exchange’s controls.

The case also intersects with ongoing regulatory discourse in India about crypto activity, consumer protection, and enforcement. As authorities sharpen their focus on compliant operations and risk controls, exchanges may face increased expectations to demonstrate transparent incident handling, rigorous verification processes, and proactive user education. For now,CoinDCX’s stance emphasizes that users should treat only official nodes of communication as authoritative and stay vigilant against lookalikes and spoofed platforms.

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Readers should monitor subsequent updates from the court regarding the status of the investigation and any further filings. While the bail order provides temporary clarity on the personal risk to the founders, it does not close the door on potential civil or criminal follow‑ups, nor does it diminish the ongoing need for improved security protocols across the sector. The event serves as a reminder that, in crypto’s rapid expansion, legitimacy and trust hinge as much on governance and consumer safeguards as on product innovation.

CoinDCX’s March statements and the court’s March order together illustrate a broader narrative: as crypto platforms scale in India, the risk environment for users grows more complex, demanding heightened scrutiny of websites, vigilant due diligence, and continuous investor education. The industry will likely watch closely how enforcement bodies evolve their investigations and what technical and regulatory measures exchanges adopt to prevent impersonation and safeguard user funds.

What remains uncertain is how the case will proceed beyond the bail stage—whether prosecutors will pursue further charges or whether the amicable settlement will influence future proceedings. Investors and users should stay tuned for continued coverage of the investigation’s trajectory and any policy developments that could shape brand protection standards across India’s crypto landscape.

Risk & affiliate notice: Crypto assets are volatile and capital is at risk. This article may contain affiliate links. Read full disclosure

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Bhutan Moves 519 Bitcoin as Sovereign Wallet Drawdown Continues

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Bhutan Moves 519 Bitcoin as Sovereign Wallet Drawdown Continues

Bhutan moved more Bitcoin from its state-linked wallet on Wednesday, extending a March drawdown in its sovereign holdings.

Arkham data showed a Bhutan government-linked wallet transferred about 519.7 BTC, worth roughly $36.7 million, to two wallets on Wednesday. Onchain Lens said one of the destination wallets was linked to trading firm QCP Capital.

The move marked the Bhutan-tagged wallet’s third large Bitcoin transfer in March, following the $72 million moved in six separate transactions in the 24 hours leading up to March 18, and the $11.8 million moved on March 9.

The latest transfer adds to a heavier March outflow pattern after Bhutan moved just over 284 BTC in February. The wallet still holds 4,453 BTC worth around $315 million, down from over 13,000 BTC in October 2024, according to Arkham.

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Royal Government of Bhutan (Druk Holdings) wallet. Source: Arkham

As of March 12, Bhutan was the fifth-largest country by Bitcoin holdings, behind the US government, the United Kingdom’s government, El Salvador, and the United Arab Emirates Royal Group, according to a report by Arkham.

Related: Bhutan deepens green Bitcoin strategy with Cumberland-backed infrastructure

Bhutan leverages Bitcoin mining to support its economic growth

Bhutan was among the earliest countries to adopt Bitcoin mining in 2019 and has since constructed multiple hydroelectric power plants along its glacial rivers to harness cheap hydroelectric power.

In May 2023, Bhutan’s sovereign wealth fund, Druk Holding and Investments, announced a $500 million partnership with Bitdeer to expand its Bitcoin mining operations.

In December 2025, Bhutan said it will tap into BTC from its stash to help build its special administrative region, the Gelephu Mindfulness City (GMC). The initiative is part of the wider national Bitcoin Development Pledge, which aims to support Bhutan’s long-term economic development through its Bitcoin holdings and mining operations.

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On Jan. 8, 2026, Bhutan’s GMC revealed plans to set up a strategic cryptocurrency reserve comprising major tokens, including Bitcoin, Ether (ETH) and BNB (BNB).

Magazine: Big questions: Would Bitcoin survive a 10-year power outage?