Why stablecoins/CBDCs beat Bitcoin to become the default Medium of Exchange
No outright ban is needed. The Controllers make CBDC/stable the cheapest, safest, fastest way to get paid — with rebates, protection funds, instant working capital, and seamless audits.
Let’s explore the blueprint the Controllers will use to make stablecoins/CBDCs the default medium of exchange and push BTC into a contained “store-of-value” corner.
I’ll organize it by Carrots → Sticks → Defaults/Perimeter → Accounting/Legal → UX/Tooling → Rollout timeline.
I’ve already written about how we are in a transition from the current rails → regulated stablecoins (plus tokenized deposits) → phased CBDCs, with years of overlap.
To put things into perspective, Tether (USDT) recently reported that they have surpassed 500 million users worldwide, covering about 6.25% of the global population.
Reports suggest that Tether is in discussions to raise up to $20 billion at a valuation near $500 billion, placing the firm among the world’s most valuable private companies.
1) Carrots (make the “right” rail pay better)
Merchant economics
Merchant Discount Rate (MDR) discounts: 0.10–0.30% interchange on KYC stable/CBDC vs 1.5–2.9% cards; explicit “CBDC merchant rate”.
Instant, final settlement with float yield: T+0 to treasury wallets + interest on CBDC balances (policy rate passthrough).
Tax rebates & credits: automatic VAT/GST split at source → 1–2% tax credit on CBDC receipts; BTC receipts get no credit.
Chargeback fund (government/industry pooled): coverage for fraud on CBDC rails; no equivalent for BTC.
Subsidized hardware/POS: free terminals, SDKs, QR kits for CBDC/stable; BTC integrations get no subsidy.
Demand pull
Gov procurement preference: suppliers must accept CBDC/stable for tenders; pay faster if they do.
Public disbursements: UBI/rebates/benefits only to CBDC/stable wallets; merchants who accept them get instant redemption with fee waivers.
Loyalty rails: national rewards network (gas, transit, utilities) redeemable only if paid on CBDC/stable.
Working capital
Invoice financing at policy rate if invoices are CBDC-native (e-invoicing + programmable settlement).
Guaranteed same-day FX for cross-border on KYC stables; BTC redemption faces spread and delay.
2) Sticks (raise the price of the “wrong” rail)
Tax & compliance
Deem BTC payments disposals (cap gains per coffee) + monthly reporting; auto-file for CBDC/stable.
Higher audit probability flags if BTC share of revenue > X%; CBDC merchants get “trusted filer” status.
Travel-rule extension: merchants must collect and store payer identity for BTC above trivial thresholds; exempt on CBDC (ID already bound).
Liability & risk
Consumer protection asymmetry: mandatory refund/escrow on CBDC; merchant-only risk on BTC (“no recourse”).
AML presumptions: large BTC inflows = enhanced due diligence; bank partners pressured to debank BTC-heavy merchants.
Cyber insurance underwriting: discounts if CBDC/stable only; surcharges or exclusions if BTC accepted.
Operational friction
App-store policy: wallets/processors that enable non-KYC BTC face distribution friction (age-gates, region limits, private API throttles).
Bank policy: settlement accounts can’t auto-sweep BTC; wire-outs delayed for source-of-funds checks.
Cloud/Acceptable Use Policy: mainstream clouds restrict anonymous BTC payment gateways under “illicit content/abuse” risk; CBDC gateways get verified-partner lanes.
3) Defaults & Perimeter (win without new laws)
POS defaults: major acquirers ship CBDC/stable on by default; BTC toggle buried behind warnings.
Checkout UX: CBDC/stable appears in top 2 buttons (wallet + card), BTC under “other”.
E-invoicing (CTC) mandate: invoices must embed pay-to CBDC links/QR; BTC invoices trigger manual audit trails.
ID & device attestation: enable tap-to-pay via native wallets (iOS/Android) for CBDC; block unsigned BTC pay intents by default under “security”.
Stablecoin issuer whitelisting: only KYC’d, blacklist-capable stables get bank access; non-compliant stables lose ramps.
4) Accounting & Legal (make accountants hate BTC)
CBDC/stables = cash equivalents (no mark-to-market); BTC = intangible with impairment or capital-gains admin overhead.
Standardized statements & 1099/K-files emitted automatically for CBDC; DIY CSV hell for BTC.
Audit safe harbor for CBDC-only merchants (reduced attest procedures).
Industry codes: card network rules evolve into “preferred routing” that steers to CBDC first (like debit routing rules today).
5) UX & Tooling (behavior follows friction)
One-click CBDC SDKs for Shopify/Square/Stripe; BTC integrations require developer mode + extra KYC plugins.
Refunds/partial captures are trivial on CBDC; BTC refunds require on-chain change mgmt, fee spikes, and address bookkeeping.
Dispute portals for CBDC; BTC has none (make support time-sink).
Programmable payouts: automatic payroll/taxes/tips split on CBDC → removes back-office pain; BTC means manual reconciliation.
6) Phased rollout the Controllers would run
Phase 1: Seduce (6–12 months)
Benefits/discounts/instant settlement + free POS kits.
Government rebates only on CBDC/stable; marketing blitz on “fast, safe, final”.
Phase 2: Normalize (12–24 months)
E-invoicing mandate + preferred routing to CBDC.
Insurance and banks shift pricing — accept BTC and your premiums go up.
App-stores tighten wallet rules; non-KYC BTC wallets lose push-to-POS APIs.
Phase 3: Ratchet (24–36 months)
Tax/reporting intensifies for BTC merchants; “trusted merchant” regime formalizes for CBDC.
Procurement: “must accept CBDC” becomes standard.
Quiet debanking of BTC-heavy merchants escalates — no law needed.
Phase 4: Box-in (36M+)
“Safety by design” standards make ID-bound rails the legal norm; BTC remains legal but operationally costly and reputationally risky to accept.
Result: Most merchants migrate to CBDC/stables for Medium-of-Exchange because the total cost of accepting money (fees + chargebacks + admin + audits + access to credit) is lowest there. BTC lives as custodied ETF/paper exposure plus a small sovereign self-custody niche.
Are regulators setting tiered privileges (instant settlement, tax rebates, consumer protection funds) for KYC stables vs BTC?
Yes—explicitly tiered:
Tier 1 (KYC CBDC/stable): instant settlement, float yield, chargeback fund access, tax/VAT auto-split & rebates, procurement preference, audit fast-lane.
Tier 2 (KYC stable via licensed Payment Service Provider, auto-convert): most Tier-1 perks, slightly higher Merchant Discount Rate (the business pays a larger percentage fee to payment processors for handling credit and debit card transactions).
Tier 3 (BTC via compliant processor, auto-convert): no chargeback fund, limited rebates, extra reporting.
Tier 4 (BTC direct): no perks, cap-gains reporting, higher audit score, bank/insurer surcharges.
Merchants reveal their preference by migrating up the tier ladder to minimize pain. No bans required.
Worst-case (for BTC as MoE) the Controllers might engineer
Node liability scare + content FUD raises merchant legal risk.
Travel-rule enforcement at POS (collect payer identity for BTC) kills checkout UX.
Pool/template censorship (policy clients at major pools) increases confirmation risk for “un-KYC’d” flows.
Stablecoin payroll mandate (for large firms) makes vendor networks CBDC-native by gravity.
Card network alliances route crypto checkout through custodial stables only.
Bottom line
Expect paperization and volatility dampening. Avoid building a Medium-of-Exchange thesis for mainstream commerce.
No outright ban is needed. The Controllers make CBDC/stablecoins the cheapest, safest, fastest way to get paid — with rebates, protection funds, instant working capital, and seamless audits — while making BTC acceptance incrementally expensive in time, risk, and reputation. Merchants follow the gradient. That’s revealed preference, not rhetoric.