Jeremy Kranz, founder and managing partner of venture capital firm Sentinel Global, has urged investors to exercise caution with privately issued stablecoins, warning that they carry risks similar to central bank digital currencies (CBDCs). Kranz refers to these assets as "central business digital currencies", highlighting that they include monitoring features, backdoors, programmability, and controls akin to CBDCs.
He elaborated that if a major institution like JP Morgan issued a dollar-pegged stablecoin under laws such as the Patriot Act, it could freeze funds or restrict banking services. Additionally, Kranz noted that stablecoins backed by cash and short-term government securities are vulnerable to "bank runs" if many holders cash out simultaneously, while algorithmic and synthetic stablecoins rely on software or complex transactions that could fail during market volatility or crypto derivative declines.
The total market value of stablecoins rose above $300 billion in October, according to DeFiLlama, signaling growing adoption. This surge coincides with the US Senate's approval of the GENIUS stablecoin bill in July by a 68-30 vote, which aims to regulate stablecoins but has faced criticism. Lawmakers like Marjorie Taylor Greene have called it a "CBDC Trojan Horse", warning it could enable authoritarian control over transactions in a cashless society.
Kranz emphasized that technology is neutral and can be misused, urging investors to read details, evaluate risks, and make prudent choices. He likened the rapid development of stablecoins and tokenization to "10 black swan events" due to the blend of opportunities and dangers.
BTC
SOL
AVAX
TAO
LUNA
LIVE
XRP
HYPE