Private Money, Public Power: Stablecoins, Bitcoin, & the U.S. Monetary Worldview

Introduction

The debate over stablecoins and Bitcoin is often framed as a technical argument about speed, fees, or volatility. I think that framing misses the deeper issue. What is really at stake is not payments technology, but which monetary worldview policymakers are trying to preserve—and which they are willing to tolerate only at the margins.

A recent 2026 monograph by Henry H. Perritt Jr. (Private Money: Stablecoins, Bitcoin, and the GENIUS Act), written in support of the USA 2025 GENIUS Act, is valuable precisely because it makes that worldview visible. Perritt does not write as an industry advocate or as a Bitcoin critic. He writes as a senior legal scholar working comfortably inside the dominant U.S. governance paradigm. That is what makes the paper worth engaging seriously.

His core argument is straightforward. Private digital money can be permitted but it must be tightly constrained. In Perritt’s framework, stablecoins can function as legitimate payment instruments if they are fully reserved, supervised, redeemable at par, and embedded within existing compliance and bankruptcy frameworks. Bitcoin, by contrast, is treated as too volatile to serve as payment money and is therefore pushed outside the payments system altogether.

Taken on its own terms, the argument is coherent. But taken seriously, it also does something more consequential. It implicitly reinforces a monetary structure in which the unit-of-account remains firmly under state control, payments remain legible and governable, and monetary innovation is channeled into forms that extend, rather than challenge, U.S. fiscal power.

In this blog post, I have three goals. First, I want to reconstruct Perritt’s argument carefully and fairly, showing why it resonates so strongly with policymakers. Second, I examine what his framework overlooks, particularly Bitcoin’s evolution into a modular system with Layer 2 payment networks. Third, I situate the paper within a broader geopolitical and monetary context, where stablecoins and Bitcoin may be playing complementary rather than competing roles.

My aim is not to dismiss Perritt’s work, but to understand what kind of world it is designed to stabilize—and what kind of worlds it quietly rules out.

Perritt’s Thesis in One Pass

Perritt’s long paper (107 pages) advances a clear and disciplined thesis. Private digital money can be permitted within the U.S. financial system, but only if it is narrowly defined, tightly constrained, and explicitly subordinated to the existing monetary order. The GENIUS Act, in his telling, is an attempt to draw that boundary line cleanly.

The statute does not seek to ban stablecoins or force them into the full banking regulatory framework. Instead, it creates a distinct category of payment stablecoins—private instruments that are allowed to circulate so long as they meet strict conditions. These include full reserve backing, limits on reserve composition, mandatory supervision and examination, enforceable redemption at par, priority treatment in bankruptcy, and full compliance with existing AML and sanctions regimes. The design goal is straightforward: allow innovation in payments without reintroducing the instability historically associated with private money.

Within this framework, stablecoins are not treated as new forms of sovereign money or as competitors to the dollar. They are framed as payments infrastructure: modern rails for moving an existing unit-of-account more efficiently, especially in cross-border and digital contexts. Their legitimacy comes not from decentralization or scarcity, but from legal enforceability and reserve credibility.

Bitcoin is treated very differently. Perritt consistently characterizes Bitcoin as too volatile to function as payment money. That volatility is not presented as a temporary problem or a technical limitation to be solved, but as a structural feature that disqualifies Bitcoin from everyday transactional use. As a result, Bitcoin is routed out of the payments discussion entirely. It may exist as an asset, but it does not belong in a regulatory framework designed to stabilize payments.

Seen this way, the GENIUS Act is not trying to choose winners among digital assets. It is trying to domesticate one category of private money while deliberately excluding another. Stablecoins are pulled inside the perimeter of payments law. Bitcoin is left outside it. That distinction, more than any technical detail, is the organizing principle of Perritt’s argument—and the foundation for everything that follows.

Perritt’s Regulatory Lineage

To understand why Perritt frames stablecoins and Bitcoin the way he does, it helps to understand where he is writing from. Perritt is not a market participant, a protocol designer, or an industry advocate. He is a senior legal scholar whose career has been shaped by administrative law, technology regulation, and institutional governance.

That background shows up immediately in how he approaches the problem. He is primarily concerned with supervision, enforceability, jurisdiction, and failure modes that spill into public crises. His instinct is not to ask how a system works when everything goes right, but how it behaves when confidence breaks, liquidity dries up, or legal responsibility becomes ambiguous. From that vantage point, payments are not an abstract coordination problem: they are critical infrastructure.

This also explains the tone of the paper. Perritt does not argue for stablecoins, nor does he rail against Bitcoin. He treats both as objects to be classified and governed. The question he is trying to answer is not “what is the most elegant monetary system?” but “what can be safely integrated into the existing legal and regulatory order without producing systemic instability?”

For that reason, I read this paper as articulating a default worldview, not an advocacy position. Perritt is giving voice to the assumptions that already dominate U.S. payments regulation: that private money must be made legible to the state; that redemption promises must be enforceable; and that volatility is a governance problem rather than a user choice. Bitcoin challenges those assumptions, but Perritt does not engage that challenge directly. Instead, he works around it.

This is precisely what makes the paper worth engaging. It is not trying to persuade skeptics. It is documenting how the current system thinks about itself.

A Long View of Private Money and Payments Infrastructure

Perritt situates stablecoins within a long historical lineage of private money and payments systems, and this historical framing is central to how he justifies the GENIUS Act. His story runs from pre-Civil War banknotes through national banking, checks, cards, and modern digital payment platforms, with a consistent lesson: private money can circulate widely only once trust mechanisms are sufficiently mature.

In the early U.S. experience with private banknotes, redemption was uncertain, information was uneven, and discounts varied by issuer and geography. Those systems did not fail because private money was conceptually flawed, but because the surrounding infrastructure—clearing arrangements, supervision, reserve transparency, and legal enforceability—was weak or absent. The result was instability, runs, and recurring crises.

Perritt uses this history to emphasize that payments systems are not primarily technological artifacts. They are institutional systems that depend on credible promises, predictable redemption, and shared expectations about value. Over time, private money became more reliable not because it became more decentralized, but because it became more tightly integrated into legal and supervisory frameworks.

From this perspective, modern payment platforms—credit cards, ACH, PayPal, Venmo—are not fundamentally different from earlier forms of private money. They succeed because users trust that balances will clear, disputes can be resolved, and failures will be absorbed by institutions with legal accountability. The novelty lies in the rails, not in the monetary logic.

Stablecoins, in Perritt’s telling, belong squarely in this lineage. They are not framed as an attempt to replace sovereign money or undermine the dollar’s role as unit-of-account. Instead, they are presented as the next iteration of payments infrastructure—digital instruments designed to move an existing unit-of-account more efficiently, especially in cross-border and on-chain contexts.

This framing matters. By placing stablecoins in the historical category of payments innovation rather than monetary rebellion, Perritt narrows the scope of what is being debated. The relevant question becomes not whether private money should exist, but under what conditions it can be made trustworthy enough to scale. The GENIUS Act, in his view, is an attempt to answer that question using lessons drawn from the long history of private money failures and repairs.

That historical lens sets up the central distinction he draws next: between instruments that can be safely absorbed into the payments system, and assets that, by their nature, cannot.

The Architecture of the GENIUS Logic

Perritt treats the GENIUS Act less as a political compromise and more as a piece of institutional engineering. His analysis focuses on how the statute assembles a set of mutually reinforcing constraints designed to neutralize the classic failure modes of private money.

At the center of that architecture is the reserve requirement. Stablecoin issuers must hold assets that are liquid, high quality, and tightly specified. This is meant to eliminate ambiguity about whether redemption promises can be honored under stress. In Perritt’s framework, reserve opacity is not a secondary concern; it is the original sin of private money systems that fail.

Redemption is the second pillar. Stablecoins are permitted only insofar as holders have a legally enforceable right to redeem at par. That promise is not informal or reputational—it is embedded in statute and reinforced through supervision and examination. Perritt is explicit that payments instruments cannot rely on market discipline alone. When redemption confidence collapses, market discipline arrives too late.

Supervision and examination complete the loop. Issuers are not trusted to self-attest indefinitely. They are subject to ongoing oversight designed to surface problems before they become runs. This reflects a deeply administrative-law instinct: prevention matters more than ex post punishment when systemic confidence is at stake.

Bankruptcy priority plays a quieter but equally important role. By giving stablecoin holders priority claims on reserves, the GENIUS framework aims to prevent the kind of value leakage and legal uncertainty that amplifies panic during insolvency. Perritt treats this as essential to maintaining the credibility of the redemption promise under worst-case conditions.

Finally, the compliance perimeter—AML, sanctions, and reporting obligations—ensures that stablecoins remain fully embedded within the state’s legal and enforcement architecture. From Perritt’s perspective, a payments system that cannot be monitored or constrained when necessary is not merely innovative; it is dangerous.

Taken together, these elements are meant to prevent the pathologies associated with free-banking eras: discounts on circulating instruments; sudden loss of confidence; fraud hidden behind complexity; and runs driven by asymmetric information. Perritt’s claim is not that GENIUS eliminates risk entirely, but that it channels risk into forms that institutions already know how to manage.

This is why he views the statute as neither radical nor experimental. In his telling, GENIUS applies long-standing lessons about private money to a new technological substrate. The rails change; the logic does not.

The Critical Distinction: Payments Instruments vs. Volatile Assets

Having laid out the institutional architecture of GENIUS, Perritt then makes a decisive analytical move: he draws a hard line between payments instruments and volatile assets. This distinction is not merely descriptive. It determines which instruments are eligible for regulatory domestication and which are excluded from the payments conversation altogether.

In Perritt’s framework, payments instruments must satisfy a narrow set of criteria. They must be stable enough that ordinary users can transact without bearing price risk. They must support predictable settlement at par. And they must be governable through supervision, enforcement, and legal recourse. Payments, in this view, are not a domain for experimentation with value; they are infrastructure that underpins everyday economic life.

Volatile assets fail these tests by definition. Price variability is not treated as a feature some users might accept, but as a systemic liability. An instrument whose purchasing power fluctuates meaningfully over short horizons cannot, in Perritt’s telling, function as a reliable medium for wages, invoices, or consumer transactions. Volatility is therefore not a technical problem to be engineered around; it is a categorical disqualification.

This is where Bitcoin is routed out of the payments analysis. Perritt consistently treats Bitcoin as a volatile asset rather than as a candidate payments instrument. That classification does not depend on transaction speed, settlement mechanics, or custody models. It rests on the premise that volatility alone makes Bitcoin unsuitable for routine payments, regardless of any improvements in how transactions are executed.

Stablecoins, by contrast, are framed explicitly as payments infrastructure. Their defining characteristic is not decentralization or programmability, but nominal stability anchored to an existing unit-of-account. Because they promise redemption at par and are backed by reserves designed to support that promise, they can be evaluated as payments tools rather than speculative assets. This makes them eligible, in Perritt’s framework, for the full apparatus of payments law.

Once this distinction is accepted, much of the rest of the argument follows naturally. Instruments that can be stabilized and governed are pulled inside the regulatory perimeter. Instruments that cannot are left outside it. The debate is no longer about which system is more innovative or more elegant, but about which instruments can be safely absorbed into the payments layer without undermining the monetary order it is meant to support.

What Perritt Gets Right About Stablecoins

Before turning to what Perritt overlooks, it is important to be clear about what he gets right. His analysis of stablecoin risk is grounded in a realistic understanding of how private money systems fail, and it avoids the tendency to excuse failures as mere technical glitches or growing pains.

At the center of his concern is run risk. Perritt treats run dynamics not as a theoretical possibility, but as the primary failure mode of any private payment instrument that promises redemption at par. Once confidence in reserves erodes, redemption pressure becomes self-reinforcing. In that environment, even solvent institutions can fail quickly.

This is why reserve quality and transparency matter so much in his framework. Reserves that are illiquid, encumbered, misrepresented, or simply fictitious undermine the redemption promise before a run even begins. Perritt is attentive to the way opacity accelerates panic: when users cannot verify backing, the rational response is to exit early.

Crucially, Perritt does not shy away from the fact that fraud and criminal behavior have played a central role in recent failures. The collapse of Terra Luna (a scarring moment for myself and thousands of other investors) was not a benign experiment gone wrong; it involved criminally deceptive representations about stability mechanisms that could not function under stress. Similarly, the failure of FTX was not simply a liquidity mismatch or a volatile market event. It involved extensive fraud, misuse of customer funds, and criminal misconduct.

From a payments-law perspective, this distinction matters. Systems that rely on trust but lack enforceable constraints are not merely fragile—they are attractive targets for abuse. Perritt’s insistence on supervision, examinations, segregation of reserves, and clear legal obligations is explicitly aimed at reducing the surface area for both mismanagement and outright criminality.

This is why Perritt treats these episodes as dispositive rather than incidental. Terra/Luna and FTX are modern reminders that private money failures are rarely just about market volatility. They are often about incentives, opacity, and the absence of institutional guardrails. In that sense, his framework reflects a sober reading of history: payments systems must be designed not only for honest operators and normal conditions, but for bad actors and worst-case scenarios.

Even critics of the GENIUS Act should concede this point. If stablecoins are to function as payments infrastructure at scale, they must be resilient to fraud, not merely to price swings. On that narrow but crucial question, Perritt’s analysis is difficult to dismiss.

Voice, Exit, and Controlled Monetary Pluralism

Up to this point, I have tried to reconstruct Perritt’s argument largely on its own terms. Having laid out how he understands private money, payments infrastructure, and stablecoins, it becomes possible to step back and ask a different question: what kind of monetary order does this framework ultimately produce?

The most useful way I have found to think about Perritt’s approach is through the lens of voice and exit.

In this framing, stablecoins are instruments of voice. As Perritt envisions them, they operate fully inside the system. They are regulated, supervised, examinable, and sanctionable. They give users improved functionality—faster settlement, broader reach, lower friction—without requiring them to leave the dollar-based monetary order. If something goes wrong, there are institutions to appeal to, rules to enforce, and authorities empowered to intervene.

Bitcoin, by contrast, is an instrument of exit. It does not rely on issuer promises. It does not offer redemption at par. It does not embed discretionary recourse or institutional backstops. When held and used in self-custody, it allows economic actors to step outside mediated financial relationships altogether. That is not merely a technical difference; it is a structural one.

Perritt’s framework strongly reinforces the voice side of this divide. That is not a moral judgment on his part. It is a design choice that follows naturally from the goals of the fiscal state. Payments are where taxation, sanctions, monetary transmission, and financial surveillance converge. From that vantage point, exit must remain marginal, optional, and inconvenient relative to voice.

What is striking, however, is that Perritt’s framework does not require eliminating exit. Bitcoin can exist. It can be held. It can even be used at the margins. What it cannot be allowed to do—within this worldview—is displace the unit-of-account or become the dominant payments rail. The system does not need to suppress Bitcoin; it only needs to ensure that Bitcoin remains peripheral to everyday economic coordination.

This is what I mean by controlled monetary pluralism. Multiple forms of money are tolerated, but only one governs pricing, taxation, and settlement at scale. Stablecoins extend that core outward, modernizing the payments layer while preserving its institutional foundations. Bitcoin is permitted to orbit around that core, but not to reorganize it.

Seen this way, Perritt’s apparent dismissal of Bitcoin payments is not a failure to understand Bitcoin’s evolution. It is an expression of a system that knows exactly where it draws the line. Payments are voice. Bitcoin is exit. And as long as exit does not threaten the unit-of-account, it can be tolerated—even quietly accumulated—without destabilizing the order Perritt’s framework is designed to preserve.

The Bitcoin Omission: Base Layer Framing

With that voice–exit distinction in place, a specific omission in Perritt’s paper becomes much easier to see. Bitcoin is evaluated almost entirely as a base-layer system, as if all transactions must inherit the same settlement latency, fee dynamics, and throughput constraints as on-chain transfers.

This framing matters because it silently constrains the set of conclusions Perritt can reach. When Bitcoin is treated only as a base-layer payments system, it is easy to characterize it as slow, expensive at times of congestion, and poorly suited to everyday transactions. From there, excluding Bitcoin from payments law looks like a straightforward empirical judgment rather than a classification choice.

What is missing is any serious engagement with Bitcoin as a layered or modular system. Perritt does not ask whether the base layer is intended to serve as retail payments infrastructure in the first place, nor whether higher layers might absorb most transactional activity while the base layer plays a settlement role. By collapsing Bitcoin into a single layer, the analysis implicitly compares it to stablecoins on the wrong terms.

This omission is not accidental. Perritt’s paper is focused on instruments that can be governed through issuer obligations, reserve supervision, and redemption law. Bitcoin’s base layer is the most legible target for critique precisely because it is the least compatible with those tools. Once attention shifts to layered architectures, the question is no longer “does this payment rail work?” but “who, if anyone, can be supervised?”

Seen this way, the base-layer framing functions as a gatekeeping move. It allows Perritt to dismiss Bitcoin as payments money without engaging the more difficult institutional question of what it would mean for a non-issuer system to support high-volume transactions. That question sits outside the legal categories his framework is built to manage.

Bitcoin as a Modular System: What Layer 2 Changes, and What It Doesn’t

Perritt evaluates Bitcoin almost entirely at the base layer, as if all transactions must inherit the same settlement latency, fee dynamics, and user experience. That framing increasingly misdescribes or ignores how Bitcoin is actually used.

Layer 2 solutions—most notably the Lightning Network—change the payments calculus in important ways. They allow transactions to settle near-instantly, at typically low cost, while ultimately anchoring to Bitcoin’s base layer for final settlement. From a narrow payments perspective, this directly undermines several of Perritt’s practical objections: speed; throughput; and fee volatility during execution. Other layered approaches address adjacent needs, but Lightning is the clearest counterexample to the claim that Bitcoin cannot support payment-like user experiences.

Layer 2 also reframes the volatility argument. Volatility matters most over holding periods, not over milliseconds or minutes. If exposure time is compressed, price variability becomes a weaker objection to transactional use. That does not eliminate volatility, but it does change its relevance.

At the same time, it is important not to overstate what Layer 2 accomplishes. These systems do not solve the problems Perritt is actually trying to solve. They do not introduce an issuer who can be supervised. They do not create reserve assets that can be examined. They do not provide bankruptcy priority, redemption rights, or compliance choke points. In other words, Layer 2 makes Bitcoin more usable as a payment medium, but it does not make Bitcoin legible to the regulatory state.

This is why I see Perritt’s omission of Layer 2 not as a fatal flaw, but as a revealing one. Perritt’s framework is not primarily about whether payments work. It is about whether payments can be governed. Layer 2 improves Bitcoin’s functionality, but it leaves its institutional profile unchanged.

From that perspective, Bitcoin’s modular evolution weakens Perritt’s comparative claims—especially when stablecoins are presented as the only viable path to fast, cheap payments—but it does not threaten his deeper legal logic. Bitcoin becomes harder to dismiss technologically, yet it still sits outside the issuer-based legal categories that make GENIUS administrable.

Unit-of-Account Supremacy: The Assumption Doing the Most Work

One reason Perritt’s argument feels intuitively persuasive to policymakers is that it rests on an assumption that is seldom challenged within payments law: the unit-of-account must remain under state control, anchored through taxation and contract enforcement. Once that premise is accepted, much of his framework follows almost mechanically.

In Perritt’s paper, volatility is not merely inconvenient; it is disqualifying. Bitcoin’s price variability is treated as a decisive reason to exclude it from payments, regardless of transaction speed, settlement finality, or custody model. That only makes sense if the primary function of money is assumed to be stable nominal pricing, rather than settlement finality or long-term value preservation.

This hierarchy—unit-of-account first, medium-of-exchange second, store of value last—is characteristic of Keynesian and post-Keynesian monetary thinking. Prices, wages, taxes, and contracts must all remain legible in a common denomination, and that denomination must be one the state can reliably enforce. Payments systems exist to support that structure, not to challenge it.

Stablecoins fit neatly into this worldview. By design, they promise par redemption into legal tender. Their reserves are constrained to state-backed instruments. Their issuers submit to supervision and enforcement. Whatever technological novelty they introduce, they ultimately reinforce the existing unit-of-account rather than compete with it.

Bitcoin does the opposite. Even when used purely as a settlement medium, it preserves the structural possibility—however distant in the near term—that economic actors could coordinate value transfers outside the state’s chosen denomination and outside issuer-mediated promises. From a unit-of-account–centric perspective, that possibility is not an innovation to be explored; it is a risk to be managed.

Perritt never states this explicitly. He does not need to. In law, the supremacy of the unit-of-account is not treated as a theory—it is treated as background reality. Bitcoin’s failure, in this framework, is not technical. It is ontological.

Implicit Keynesianism Without Naming It

Perritt never labels his framework as Keynesian, post-Keynesian, or Chartalist, and he never needs to. The assumptions that drive his analysis are already embedded in the legal and regulatory environment he is writing within. What appears in the paper as pragmatic governance is, in fact, the institutional residue of a long-settled macroeconomic consensus.

In this tradition, money is defined less by scarcity or neutrality and more by its role as a unit-of-account enforced by the state. Taxes, contracts, wages, and liabilities anchor that unit-of-account, and payments systems exist to ensure that obligations denominated in it can be settled smoothly. Stability at the level of prices and payments is therefore not just desirable; it is foundational.

This logic is unmistakably Chartalist in structure, even if it is never named as such. The state does not merely regulate money after the fact; it constitutes money through enforcement, taxation, and legal tender rules. Private money can exist, but only insofar as it clears obligations denominated in the state’s unit-of-account and remains subordinate to that hierarchy.

Payments regulation quietly encodes this worldview. Instruments that preserve nominal stability and can be supervised are treated as legitimate extensions of the system. Instruments that resist supervision, lack an issuer, or introduce denomination risk are treated as threats, regardless of their technical merits. Volatility becomes a governance problem, not a market signal.

This is why Bitcoin never appears in Perritt’s paper as a serious monetary alternative. It is not evaluated as a candidate unit-of-account or as a parallel settlement layer with different trade-offs. It is evaluated as a volatile asset that fails to meet the criteria payments law already presupposes. The question of whether those criteria should themselves be revisited is never raised.

Seen this way, Perritt’s analysis is less a defense of stablecoins than an expression of how modern states understand money. The GENIUS Act does not invent a new monetary philosophy; it operationalizes an old one in digital form. And once that philosophy is made explicit, the enthusiasm for stablecoins—and the discomfort with Bitcoin as payments money—becomes much easier to understand.

Stablecoins as Fiscal Infrastructure

Once I make Perritt’s monetary premises explicit, the fiscal logic of his stablecoin framework becomes much easier to see. He is not endorsing stablecoins as a new form of money in competition with the dollar. He is endorsing them as payments infrastructure that extends state money without expanding state balance sheets.

Under the GENIUS Act framework Perritt supports, stablecoins must be fully reserved in high-quality liquid assets. In practice, that means short-dated U.S. Treasurys and Treasury-adjacent instruments. Every dollar of stablecoin in circulation therefore represents a marginal increase in demand for U.S. government debt.

This has important fiscal consequences. Stablecoins allow dollar-denominated payments to circulate globally without relying on U.S. bank intermediation, without requiring the Federal Reserve to expand its balance sheet, and without forcing foreign central banks to accumulate reserves in the traditional way. Instead, private issuers hold Treasurys, foreign users hold stablecoins, and the U.S. state retains control over the unit-of-account, the compliance perimeter, and the sanctionability of the system. From a fiscal perspective, this is a highly efficient arrangement.

Perritt’s framework also ensures that the system remains governable. Issuers are identifiable. Reserves are examinable. Redemptions are enforceable in bankruptcy. AML and sanctions obligations are embedded at the issuer level. Stablecoins may operate on new rails, but they do not escape the gravitational pull of the state.

This is why I think it is a mistake to read Perritt’s work as neutral technocratic regulation. What he is describing—whether intentionally or not—is a way to modernize dollar dominance rather than retreat from it. Stablecoins become a mechanism for exporting the dollar’s reach while keeping its institutional core intact.

Bitcoin, by contrast, offers no such leverage. It does not generate Treasury demand. It does not provide compliance choke points. It does not reinforce the unit-of-account. From a fiscal-state perspective, that does not make Bitcoin useless—but it does make it unsuitable as infrastructure.

Seen in this light, Perritt’s exclusion of Bitcoin from payments is not hostile. It is strategic. Payments are where fiscal authority lives. Value storage can be tolerated elsewhere.

Bitcoin’s Paradoxical Role

One of the more counterintuitive implications of Perritt’s framework is the role it assigns to Bitcoin by exclusion rather than by design. By routing Bitcoin out of the payments system, Perritt does not marginalize it in every respect. Instead, he implicitly reclassifies it.

Bitcoin is excluded from payments, but it is not prohibited. It is treated as an asset rather than as infrastructure. That distinction matters. Payments instruments must be supervised, stabilized, and integrated into the unit-of-account regime. Assets, by contrast, can be volatile, bearer-based, and politically uncomfortable without immediately threatening fiscal authority.

This has an unintended consequence. Once Bitcoin is no longer evaluated as a candidate payments rail, it becomes easier to conceptualize it as a reserve-adjacent asset. Volatility that disqualifies Bitcoin from everyday transactions is far less problematic for a long-duration holding. Lack of issuer accountability is a liability for payments, but it is a defining feature for a bearer reserve asset. Even self-custody, which is unacceptable in a payments context, is arguably a feature rather than a bug for a reserve instrument.

In that sense, Perritt’s framework quietly narrows Bitcoin’s role while simultaneously clarifying it. Bitcoin is not invited into the payments layer, but neither is it forced out of the monetary landscape altogether. It is allowed to exist in a space where durability, optionality, and independence matter more than price stability or transactional convenience.

This helps explain why Perritt’s apparent dismissal of Bitcoin is less antagonistic than it first appears. The framework does not seek to crush Bitcoin or replace it with stablecoins. It seeks to contain Bitcoin’s relevance to domains that do not interfere with the state’s control over payments and the unit-of-account.

From the perspective of the fiscal state, this is a rational compromise. Payments are where monetary sovereignty is exercised day to day. Reserves are where optionality and insurance can be tolerated. Bitcoin, confined to the latter, becomes easier to live with, even if it remains ideologically uncomfortable.

That paradox sets the stage for the next step in the analysis. Once Bitcoin is positioned as an asset rather than as money-in-use, the question shifts from payments law to which monetary futures this framework actively supports, and which it quietly constrains.

Positioning Perritt Within the Bitcoin Worlds Framework

Now that Perritt’s framework has effectively positioned Bitcoin as an asset rather than as payments infrastructure, I can map his argument cleanly onto my Bitcoin Worlds framework (click here to view a copy of my working paper). That framework is designed to surface exactly this kind of divergence: not disagreements over technology, but disagreements over which monetary properties are treated as foundational. Read through that lens, Perritt’s paper does not sit ambiguously between worlds. It aligns strongly with one family of futures and resists another.

At a high level, Perritt’s work reinforces what I describe as stability-first Bitcoin worlds. These are futures in which Bitcoin exists and even thrives, but primarily as a balance-sheet asset, a reserve, or collateral—while payments, pricing, and contracts remain anchored to the dollar’s unit-of-account. In these worlds, resilience comes from institutional depth: regulated custodians, deep Treasury markets, clear supervisory authority, and predictable legal recourse.

Stablecoins are a natural fit here. They act as connective tissue between Bitcoin and the existing financial system, allowing Bitcoin exposure without requiring a break from dollar-denominated payments. Perritt’s insistence on full reserves, supervision, and bankruptcy priority maps directly onto this stability-first logic. The goal is not to eliminate risk, but to bound it within institutions that already know how to manage stress.

By contrast, Perritt’s framework sits uneasily with sovereignty-first Bitcoin worlds. In those futures, the defining feature is not institutional robustness but distributed control: self-custody, bearer settlement, minimal reliance on intermediaries, and, eventually, the possibility of unit-of-account migration. Payments matter in these worlds not because they are efficient, but because they habituate users to transacting outside state-defined monetary rails.

From that perspective, Perritt’s exclusion of Bitcoin from payments is decisive. If Bitcoin cannot be widely used to denominate prices, settle everyday transactions, or anchor contracts, then sovereignty-first trajectories are constrained to the margins. Exit remains possible, but it is no longer normal.

What is important is that Perritt does not deny the existence of these alternative worlds. He simply designs policy in a way that selects against them without naming them. Stablecoins are legalized and normalized. Bitcoin payments are deprioritized. The unit-of-accountt remains untouched. Over time, this shapes which Bitcoin worlds feel plausible, investable, and politically acceptable.

This is why I find Perritt’s paper so useful analytically. It does not argue against sovereignty-first outcomes in ideological terms. It makes them structurally unlikely by reinforcing the monetary layer where state power is strongest. In doing so, it clarifies the terrain. If sovereignty-first Bitcoin futures are to emerge, they will not do so by persuading policymakers operating in Perritt’s framework. They will emerge, if at all, through usage, habit formation, and stress—outside the domains his model is built to govern.

In that sense, Perritt helps define the center of gravity of the current policy moment. Stability-first worlds are being actively constructed. Sovereignty-first worlds are being implicitly deferred. That distinction also sets up the next question: whether the U.S. is merely regulating stablecoins, or positioning them as an instrument of strategy.

What This Paper Signals About U.S. Strategy—Intentionally or Not

At this point, the question is no longer just how Perritt understands stablecoins and Bitcoin, but what kind of strategic configuration his framework enables, whether or not that outcome is explicitly intended.

Read narrowly, Perritt is offering a legal theory of payments regulation. Read more broadly, his framework supports a world in which payments are tightly governed while value storage is loosely tolerated. That combination is not accidental. It is exactly where state power is most effective, and where it is least threatened.

Stablecoins, as Perritt designs them, extend the dollar’s reach without ceding control over the unit-of-account. They preserve the dollar as the medium in which prices are set, contracts are written, and taxes are assessed, while allowing payments to move faster and more globally than traditional banking rails permit. At the same time, they embed compliance, supervision, and sanctionability at the issuer level. This keeps payments legible to the state even as they move onto new infrastructure.

Bitcoin occupies a different position in this configuration. By excluding Bitcoin from the payments layer, Perritt’s framework prevents it from becoming a widespread alternative to dollar-denominated economic coordination. But by tolerating it as an asset, the framework avoids the need for outright suppression. Bitcoin can exist as a hedge, a reserve-adjacent instrument, or an option for those willing to bear volatility—so long as it does not reorganize the payments system or challenge the unit-of-account.

This looks less like indecision and more like controlled monetary pluralism at a strategic level. Dollar-denominated payments remain dominant, governable, and exportable through stablecoins. Alternative stores of value are permitted to exist, but are kept outside the domains where fiscal authority is exercised daily.

Crucially, this strategy does not need to be stated to be real. It emerges naturally from the legal categories Perritt treats as commonsense. Once stablecoins are legalized as payments infrastructure and Bitcoin is excluded from that category, the likely equilibrium is clear: widespread use of dollar-based digital payments alongside a tolerated—but peripheral—Bitcoin asset layer.

Whether policymakers consciously frame this as strategy is almost beside the point. Legal frameworks shape outcomes by defining what is easy, normal, and scalable. Perritt’s paper helps make clear which futures are being actively constructed, and which are being quietly deferred.

What Perritt’s Paper Does Not Address—and Why That Matters

Perritt’s paper is careful and internally consistent, but its conclusions depend as much on what it does not consider as on what it does. These omissions are not mistakes; they define the boundary conditions of the framework. Still, they matter for anyone thinking about Bitcoin’s longer-term trajectory.

The first omission concerns unit-of-account migration thresholds. Perritt never asks what concrete conditions would force policymakers to treat Bitcoin as more than a volatile asset. There is no discussion of invoicing practices, wage denomination, long-term contracting, tax remittance, or balance-sheet accounting in non-state units of account. Without engaging those thresholds, the analysis implicitly assumes that unit-of-account continuity is not only desirable, but durable by default. That assumption may hold in the near term, but it is an empirical claim, not a law of nature.

The second omission is non-custodial payments at scale. Perritt evaluates payments almost entirely through issuer-based systems that can be supervised and examined. He does not consider what happens if non-custodial payment systems—especially layered systems built on Bitcoin—become routine rather than marginal. Even if such systems never displace the dollar unit-of-account, their widespread use would change the political and regulatory salience of self-custody. Exit looks very different when it is habitual rather than exceptional.

Finally, Perritt does not situate stablecoins within long-run geopolitical competition over monetary standards. If dollar-backed stablecoins become a dominant global payments layer, they are not merely a domestic regulatory achievement. They are an extension of U.S. fiscal and monetary influence beyond traditional banking channels. That invites countermoves—by other states, by regional blocs, or by alternative settlement systems—that sit outside the scope of payments law but not outside the scope of strategy.

None of these omissions invalidate Perritt’s argument. But they do clarify what it is designed to do. The paper stabilizes a particular monetary order under current conditions. It does not ask how that order might be contested, eroded, or reconfigured over time. For Bitcoin thinkers, those unanswered questions are not peripheral. They are where the most consequential uncertainties lie.

Conclusion: Why This Is a Paper Bitcoin Thinkers Should Take Seriously

Perritt’s paper is not hostile to Bitcoin in the way many critiques are. He does not call for bans, prohibitions, or aggressive suppression. Instead, he makes a subtler move: he removes Bitcoin from the category that matters most to the state—payments—and leaves it to operate elsewhere.

Within his framework, stablecoins become regulated instruments of payment, fully anchored to the dollar unit-of-account and backed by U.S. Treasurys. They extend dollar usage globally while preserving supervision, compliance, and fiscal control. Bitcoin, excluded from this role, is tolerated as an asset—volatile, unsuitable for everyday transactions, and therefore politically containable.

This outcome is neither accidental nor incoherent. It reflects a deeply internalized Keynesian and post-Keynesian monetary worldview in which the unit-of-account is paramount, payments are treated as infrastructure, and private money is acceptable only when it reinforces state authority. Perritt does not label this worldview because, within law and governance, it no longer presents itself as theory. It presents itself as common sense.

Read this way, the configuration Perritt supports looks like a form of controlled monetary pluralism. Stablecoins operate as voice: they modernize payments while keeping the system legible, governable, and anchored to the state’s unit-of-account. Bitcoin operates as exit: it can exist, be held, and even be used at the margins, but it is not allowed to become the dominant payments rail.

That division also explains why the stablecoin project carries strategic weight. Stablecoins can function as an outward-facing extension of U.S. fiscal dominance, generating sustained demand for Treasurys and extending dollar settlement beyond the traditional banking system. Bitcoin, stripped of a payments role, becomes easier to imagine as a reserve-adjacent asset—a hedge, an option, an escape valve—precisely because it no longer threatens the unit-of-account or the payments system.

This division—soft rails for payments and hard money at the margins—maps cleanly onto the stability-first worlds policymakers appear to be building. It also clarifies the tension with sovereignty-first Bitcoin futures, where bearer settlement, self-custody, and unit-of-account migration are central rather than peripheral.

For Bitcoin thinkers, the lesson is not that Perritt is wrong. The lesson is that he is articulating the default logic of the governing class, and that logic is already being translated into law. Engaging it seriously is a prerequisite for any credible alternative.

The question Perritt leaves unanswered—perhaps because his framework cannot ask it—is the one that ultimately matters: what would it take for the unit-of-account itself to move? Everything else in the stablecoin versus Bitcoin debate flows from that unresolved tension.