{"id":14480,"date":"2025-07-28T19:56:42","date_gmt":"2025-07-28T17:56:42","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=14480"},"modified":"2025-07-28T19:56:42","modified_gmt":"2025-07-28T17:56:42","slug":"big-brands-are-missing-the-boat-on-stablecoins","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/07\/28\/big-brands-are-missing-the-boat-on-stablecoins\/","title":{"rendered":"Big Brands Are Missing the Boat on Stablecoins"},"content":{"rendered":"

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Viewpoint by: Fahmi Syed, head of the Midnight Foundation<\/strong><\/em><\/p>\n

Stablecoins have emerged as the most desired advancement in blockchain since Bitcoin. Their attractiveness stems from their clear utility, providing the rapidity and versatility of digital assets alongside the steadiness of fiat, establishing a natural connection between conventional finance and decentralized frameworks.<\/p>\n

Currently, stablecoins are experiencing a swift adoption rate, particularly in developing markets where they facilitate fast, inexpensive cross-payments and offer a buffer against currency fluctuations.<\/p>\n

Recognizing an exceptional opportunity, the giants of traditional finance and nimble fintech companies are making a significant move into this arena. Last year, PayPal\u2019s PYUSD reached a $1 billion market cap<\/a>, positioning it squarely against Circle\u2019s USDC and Tether\u2019s USDT. This year, BlackRock aimed<\/a> to acquire a 10% share in Circle\u2019s IPO \u2014 further evidence that stablecoins are becoming integrated into the mainstream financial ecosystem.<\/p>\n

What’s even more surprising is the interest from non-financial giants. Recently, Amazon and Walmart revealed<\/a> that they were investigating the issuance of their dollar-pegged tokens. While it seems logical for banks and fintechs to adopt stablecoins, interest from major retailers indicates something more significant. It demonstrates that companies are viewing stablecoins not just as payment mechanisms but as strategic assets, enabling disintermediation, cost savings, and improved balance sheet management.<\/p>\n

While it\u2019s thrilling to observe companies’ pursuits of stablecoins, this trend brings up an important query: Do these entities genuinely grasp the privacy threats they might encounter by entering this domain?<\/p>\n

Privacy threats remain disregarded<\/h2>\n

Most, if not all, discussions surrounding stablecoins have predominantly concentrated on regulation, collateralization, and payment innovations. While these are valuable topics, they have unfortunately diverted focus from the vital issue of user privacy.<\/p>\n

Stablecoins operate on public blockchains, resulting in significant commercial and consumer confidentiality challenges. This is not merely about malicious entities stealing consumer information and harming brand reputations \u2014 it\u2019s also important for business scalability limitations.<\/p>\n

Designed with transparency in mind, each transaction on a public blockchain is logged and unchangeable. The complete transaction history of any wallet, address, or vault engaging with stablecoins is permanently accessible to the public and cannot be modified or erased.<\/p>\n

Related: <\/strong><\/em>Walmart, Amazon contemplate issuing proprietary stablecoins: WSJ<\/strong><\/em><\/a><\/p>\n

Customers\u2019 entire financial records, every product acquisition, every subscription paid, every merchant visited, and every medical appointment attended would be permanently traceable.<\/p>\n

This generates substantial concerns regarding surveillance, profiling, and identity theft for individuals. For businesses with millions of customers and intricate compliance and auditing needs, neglecting the inherent transparency of public blockchains \u2014 where stablecoins function \u2014 could result in significant reputational damage.<\/p>\n

When a global retailer or service provider launches a stablecoin to enhance transaction efficiency, competitors can observe how customers engage with their tokens. They can discern consumer spending trends, determine pricing and promotional strategies, and gain insight into revenue and business performance in real-time.<\/p>\n

This level of extraordinary transparency presents serious risks, exposing companies to competitive infiltration and allowing market participants \u2014 including analysts and traders \u2014 to leverage real-time performance data through tactics like front-running or shorting publicly-listed firms.<\/p>\n

Without transactional confidentiality, widespread acceptance may remain elusive. Stablecoins cannot expand across enterprise-level systems or global consumer markets until the privacy challenge is addressed. Provisioning liquidity will face hurdles without effective privacy and selective disclosure measures, undermining trust, usability, and long-term adoption.<\/p>\n

Yet, the conversation around privacy continues to be sidelined in the broader discussions regarding stablecoins.<\/p>\n

Without privacy guarantees, regulation becomes irrelevant<\/h2>\n

In the drive to legislate and unveil DeFi\u2019s potential, the dilemma of harmonizing regulatory adherence with privacy by design has largely been overlooked. A review of the prolonged GENIUS Act<\/a> illustrates this concern.<\/p>\n

This legislation aligns stablecoins with asset support and Anti-Money Laundering measures. While significant, it is equally critical that we take into account the threats that unchangeable blockchains pose to data protection and privacy. Since this concern was not addressed in the GENIUS Act, it is now incumbent upon developers and engineers to assess and alleviate these risks.<\/p>\n

Given the above, the regulation of stablecoins presents a surprising paradox. By formalizing these digital assets, we may inadvertently diminish user confidentiality, exposing consumers and the brands issuing the tokens to increased risks.<\/p>\n

These are uncharted territories for organizations bound by stringent data protection standards. Much of the stablecoin infrastructure lacks sufficient safeguards for restricting the exposure of sensitive information, let alone complying with emerging data privacy regulations.<\/p>\n

Blockchain is not yet ready for business<\/h2>\n

How do we reconcile blockchain\u2019s innovative features \u2014 immutability and transparency \u2014 with the data protection protocols and laws that mainstream brands and traditional institutions are obligated to follow?<\/p>\n

Cryptographic solutions that safeguard transaction privacy while allowing for auditability do exist, such as zero-knowledge proofs, which enable institutions to mitigate risks through functionalities like shielded balances and selective disclosure. However, these capabilities have yet to be standardized across most ecosystems that support stablecoins.<\/p>\n

As more brands and institutions adopt stablecoins, they need to look beyond just ticking off compliance boxes. Exposing user information on public blockchains can lead to disastrous outcomes. Failing to prioritize privacy could result in stablecoins losing favor among the public.<\/p>\n

With stablecoins on the verge of becoming genuine financial instruments, the transition to on-chain payments seems inevitable.<\/p>\n

Neglecting to prioritize privacy and safeguard consumer and enterprise data could impede the widespread acceptance of stablecoins. Preventing such an outcome will demand that the next generation of blockchain technology centers rational privacy in its design.<\/p>\n

Viewpoint by: Fahmi Syed, head of the Midnight Foundation.<\/strong><\/em><\/p>\n

This article serves as general information only and should not be construed as legal or investment advice. The views, thoughts, and beliefs expressed here belong solely to the author and do not necessarily represent the views and beliefs of Cointelegraph.<\/p>\n