On May 26, 2026, The Wall Street Journal, in a commentary, directly named tools like USDT and USDC, which are pegged to the dollar, as "private currencies," and warned that even if they are nominally pegged 1:1 to the dollar, secondary market prices may still de-peg. This fragmented "on-chain dollar system," operating across multiple public chains and private infrastructures, may evolve from merely a game for speculators into a source of structural financial risk as its scale continues to grow. Notably, this commentary did not appear in a regulatory vacuum but coincided with the U.S. Congress's push for the GENIUS Act and CLARITY Act, federal compliance frameworks attempting to bring issuers under licensing and prudential regulation; the media's use of the historical metaphor of "private currencies" evokes a collective memory of the monetary chaos of the 19th-century free banking era and brings to the forefront the key issue in reality: even with new laws, licenses, and regulators stepping in to provide backing, can regulators truly assume the ultimate backup responsibility, and to what extent, in a multi-chain, multi-platform, and multi-institution fragmented on-chain dollar system.
The Media Sounds the Alarm: Private Currency Named
It is no longer scholars or regulatory officials who call dollar-pegged tokens as "private currencies," but mainstream financial media like The Wall Street Journal. This commentary on May 26, 2026, no longer frames the issue as market volatility of a certain type of crypto product but directly places them within the discourse framework of "monetary system" and "financial stability": on one side, naming them as wanting to achieve both "the stability of the dollar + the payment efficiency of blockchain," while emphasizing that all of this is built on fragmented infrastructures stitched together from multiple public chains and various private entities. Coupled with the article's metaphor referencing the 19th-century free banking era, this characterization equates to upgrading these tokens in the public and legislators' minds from "high-risk financial products" to "monetary experiments that may repeat the era of private paper currency."
In terms of risk dissection, The Wall Street Journal's logic clearly targets the sensitive points for regulators: firstly, even though nominally pegged to 1 dollar, the historical deviation of tokens like USDT and USDC from 1 dollar reminds readers that this "peg" is not absolute under stress scenarios; secondly, traditional dollars operate within a unified payment, clearing, and regulatory network, whereas these dollar tokens are scattered across multiple chains and various issuing and custodial entities, lacking a unified clearing layer, where any run, technical failure, or compliance incident can propagate through this fragmented network. After framing these issues, the article emphasizes "systemic risk" and "financial stability"—trigger words within the U.S. regulatory context: once labeled as potential sources of structural risk, from issuers to banks responsible for reserve custody and account services, and to crypto platforms providing trading and clearing venues, all are more likely to be pushed towards bank-like or payment institution licensing and prudential regulatory tracks, raising the question of whether subsequent regulatory paths will raise federal entry barriers or encourage issuance and clearing led by regulated traditional institutions, which will be accelerated under such public pressure.
Can GENIUS and CLARITY Alleviate Concerns?
Under this pressure, hopes are pinned on the GENIUS Act and CLARITY Act currently on Congress's desk. They are seen as a key attempt by the U.S. to establish a federal regulatory framework for such tokens, with the main discussion axes being very traditional: who can issue, how to manage money, and who will oversee—bringing issuers into a regulatory licensing system and reviewing qualifications, limiting reserve assets, and empowering federal regulatory agencies for routine penetrative checks. Even if they are still in the advancement and negotiation stages of "framework drafts," The Wall Street Journal has already preemptively regarded them as samples of regulatory paths, but asks another question: even if licenses are issued, can the risks of such "private currencies" truly be caged?
From a regulatory technical standpoint, the GENIUS and CLARITY Acts target quantifiable risks at the surface level: issues like inadequate information disclosure, opaque reserve composition, and whether full custody is provided can be partially remedied through reporting obligations, audit requirements, and capital constraints, which can at least lower the chaos of the 19th-century "free banking era" where notes were issued out of thin air and the ability to redeem was unverifiable. However, The Wall Street Journal clings to a deeper structural contradiction: these tokens operate on infrastructures created by multiple public chains and various private entities, resulting in a fragmented and privatized clearing network that is fundamentally different from a unified dollar clearing system. The current legislative discussions focus much on the qualifications of issuers, reserve management, and regulatory authority, yet rarely touch upon the unity and interoperability of on-chain infrastructures, resulting in compliance allowing issuers to "clean up," but failing to eliminate the systemic puzzle effect brought by the concurrent existence of multiple private clearing systems, which is precisely why The Wall Street Journal believes that even with legislative progress, structural risks may still accumulate.
Old Wounds of Free Banking and New Pain Points of On-Chain Dollars
For American regulators, "private currency" is not an abstract concept but a financial wound written into textbooks. During the 19th-century "free banking era," state banks issued their own paper notes, lacking unified federal oversight, with the same "dollar" being discounted at different levels in varying states and times, with redeemability entirely dependent on the asset quality and reputation of the issuing bank. Local runs and regional crises erupted repeatedly, ultimately replaced by a federal unified currency and regulatory framework; whenever there are calls to relax currency issuance controls, this history is cited as a classic argument against private currencies and emphasizes the integration of monetary sovereignty.
By directly classifying stablecoins as "private currencies," The Wall Street Journal actually invokes this collective memory: once it was state banknotes, today it is on-chain dollars issued by various private institutions, varying in asset quality, governance structures, and technological implementations, similarly pushing users toward a choice of "whose coin is safer," thereby triggering runs and liquidity fractures under pressure scenarios. The instinctive comparison made by regulators and public opinion between the risks of stablecoins and the free banking era arises because, in their eyes, multiple private entities issuing and operating accounting units on fragmented private infrastructures essentially challenge the narrative of "uniform, safe money," naturally pushing policy preferences toward tightening licenses, unifying frameworks, or at least enabling strictly regulated traditional financial institutions to dominate issuance and clearing processes.
Licenses, Custody, and Which Trading Platforms are in Focus
When The Wall Street Journal named stablecoins as "private currencies" that may carry structural risks, the first to be spotlighted is the issuers themselves. In the past, they could present themselves as tech companies or on-chain infrastructure providers, but under the "private currency" narrative, legislators more easily place them within the discussion framework of bank-like or payment institutions: is a formal issuance license required? Should they bear hard constraints on capital adequacy and high liquidity asset ratios just like banks? The GENIUS Act and CLARITY Act are already seen as attempts to bring issuers into the federal regulatory track, and now, in the context of public emphasis on systemic risk, such attempts are more likely to tilt towards "high thresholds, high liquidity, strong disclosure," rewriting the simple "token issuance" business model into a heavily compliant and risk-controlled financial franchise.
Closely following are traditional financial institutions that provide reserve custody and banking services for these tokens feeling the pressure. They have repeatedly adjusted their collaboration scope with crypto businesses based on regulatory attitudes, and when stablecoins are publicly equated with private banknotes from the free banking era, continuing deep involvement in such businesses will require reassessing the marginal benefits and risks to their reputation and compliance: should they only manage upstream reserve asset custody, or completely cut ties with the issuers? Should they leave more regulatory leeway regarding contracts, disclosures, and asset portfolios? Such conservative choices will directly affect whether issuers can maintain their promise of a 1:1 peg. Further downstream, crypto trading platforms, as the main usage and distribution scenarios for stablecoins, themselves serve as secondary markets for token liquidity and price pegging. Once "private currencies" are labeled with structural risk, platforms will inevitably face increased scrutiny in listings, margins, and clearing stages regarding stablecoin usage: regulators will require them to achieve more thorough KYC/AML penetration concerning upstream reserve arrangements and downstream user identities, and to exchange more intense reporting and monitoring for continued qualification as liquidity hubs for on-chain dollars. The compliance costs and redefined business boundaries will become key variables that shape the entire ecological landscape in the near future.
Uncertain Regulatory Boundaries: Where Will On-Chain Dollars Go?
When The Wall Street Journal named these tokens "private currencies" and tagged them with potential structural risks on May 26, 2026, it has effectively constructed a problem framework for lawmakers: either acknowledge that this is a private clearing layer parallel to the dollar ledger and, through stricter licensing, reserve and audit requirements, bring issuers along with their custodial banks and partner platforms into the regulatory paths of bank-like or payment institutions; or view "on-chain dollars" as part of future official or limited private token infrastructures, where issuance and clearing are led by regulated traditional financial institutions under unified standards, interoperable networks, and clearing rules, replacing the current fragmented and privatized infrastructure with uniformity. The reality is that key legislations like the GENIUS Act and CLARITY Act are still in negotiation, with specific terms and implementation timelines not yet clarified, while current mainstream token demands remain heavily concentrated in the crypto trading market, with limited penetration into the real economy, which gives regulators a window period for "watching and taking action." Going forward, every slight adjustment by the U.S. in federal unified regulatory intensity, entry threshold designs, cross-border coordination pace, and industry self-regulation space will directly redraw the boundary regarding whether and how on-chain dollars can be formally absorbed into the mainstream financial system.
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