- US Congressman Warren Davidson has warned fellow lawmakers and stakeholders about the potentially negative implications of some of the GENIUS Act’s provisions on the future of American financial freedom.
- The lawmaker warns market participants against accepting digital IDs and other permissioned, surveillance structures that could undermine true decentralized principles.
- Davidson urges crypto enthusiasts and policymakers to secure their financial future by pushing for strong protections for decentralized payment systems like Bitcoin and Zcash.
US Representative from Ohio, Warren Davidson, has raised alarm over what he described as a declining crypto market, influenced by the expansion of the gatekeeper-based systems that defeat the original decentralized ideology behind crypto. The lawmaker particularly calls out the GENIUS Act’s account-based approach, which inherently paves a path for a wholesale CBDC.
True Decentralization Over Account-Based System
Davidson has linked the ongoing general crypto market decline to a discernible negative market sentiment caused by the failure of Congress and regulators to uphold the “disintermediation use case, which should be one of the American crypto market’s competitive advantages.
“In 2025 GENIUS Act became law, providing a federal framework for stablecoins,” stated the lawmaker. “This is an account-based approach, favored by banks, that prevents non-banks from paying interest, fails to protect self-custody and by design enables a “wholesale CBDC”.”
For context, in an account-based system, transaction values are recorded with accounts held and controlled by institutions, exchanges, or banks, and require intermediaries to approve and manage changes to such accounts.
On the contrary, a token-based system, widely adopted in cryptocurrency and self-custody environments, allows owners to control their keys and ownership and transfer are confirmed on the blockchain without any intermediary.
The Congressman maintains that an account-based crypto industry, which aligns with the GENIUS Act’s provisions, does not meaningfully change existing market dynamics. Instead, it allows the infiltration of CBDC characteristics from the back-end via centralized ledgers, permissioned access, and regulatory monitoring.
The Digital Asset Market Clarity (CLARITY) Act, according to Rep. Davidson, remains the most viable legislation that could “fix some of the deficiencies in GENIUS” by upholding self-custody among other provisions.
However, the bill awaits Senate passage, since clearing the House in July 2025, qualifying what he described as “legislative inertia,” which has contributed to the crumbling markets, alongside regulatory and legal misconduct.
Davidson Warns Crypto Owners Against Accepting Digital IDs, Other Permissioned Instruments
Given the precarious future of stablecoin markets, the broader crypto market should look to the Senate for intervention, but Davidson believes the best outcome will be a ceremonial or cosmetic provision for individual freedom that amounts to continuity rather than reform of the account-based model.
“At some point, the industry and government will offer digital ID to grant permission to their permissioned network for money, ” added Davidson. “Do not be deceived; this is a cosmetic illusion of freedom designed to enable more surveillance, coercion, and control.”
Without urgent, concentrated intervention, the lawmaker sees the US heading into a “permissioned, surveilled, and debased” digital finance ecosystem. He ultimately presses market participants to reject globalist surveillance provisions like the third-party doctrine and instead, endorse protections for technologies like Bitcoin and ZCash that foster privacy, decentralization, and permissionless self-custody.
