If one day you find that your stablecoin suddenly can’t be transferred, withdrawn, or even explained—only then will you realize: the money you thought was yours may not truly be yours.
This is not an assumption.
Recently, two nearly simultaneous events made this issue concrete, real, and impossible to ignore: on one side, Circle faced public scrutiny over a freeze operation; on the other, Tether began gradually unfreezing USDT addresses previously blacklisted.
Two seemingly separate issues actually point to the same core question: How much power do USD stablecoin issuers really have, and where are the boundaries?
A freeze that was publicly exposed as incorrect
The story began, somewhat ironically.
Dollar-stablecoin issuer Circle has been named to Fast Company’s 2026 Most Innovative Companies list, boldly stating: “The speed of money is upgrading to the speed of the internet, and we’re building the infrastructure to enable instant global value exchange.”
But almost simultaneously, a “heavy blow” landed. On-chain investigator ZachXBT publicly revealed that Circle had frozen 16 completely unrelated commercial hot wallets. These addresses exhibited normal operational behavior on-chain, and the related cases were even undisclosed civil matters. Without any public justification, these commercial addresses were directly frozen.
His evaluation was very direct: “This is likely the most incompetent freeze operation I’ve seen in my five-year investigative career.”
More importantly, it’s not that you froze the wrong account—it’s that “you outsourced your freezing decision to a federal judge instead of establishing your own review mechanism.”
This is the real key.
Freezing isn't just about freezing
Many people underestimate the impact of "freezing," thinking it only affects a single address. But this event has proven that freezing never targets just one address—it targets an entire stream of funds.
A chain reaction quickly occurred:
- The user is unable to withdraw to the associated address from the exchange.
- The exchange's KYT (Know Your Transaction) system has been triggered.
- Normal business operations were directly interrupted.
This means that a single wrong decision could directly cut off an entire stream of funds.
Just as Circle was thrust into the spotlight, Tether suddenly unfroze multiple previously blacklisted USDT addresses.
At this point, it's hard to simply regard this as a coincidence.
Although on the surface both companies did the same thing—unfreezing—the details reveal a key difference: Circle reacted passively to public scrutiny, while Tether made synchronized corrections without any explicit allegations.
Who really owns stablecoins?
This incident has brought back to light a long-ignored fact: dollar-stablecoins have never been "uninterruptible dollars."
As of the time of writing, USDT and USDC together account for 82.4% of the total stablecoin market cap, nearly monopolizing the market. This means that the vast majority of USD-pegged stablecoins held by users are fundamentally built on the same set of rules:
- Centralized issuance
- Hold freeze permissions
- Can be manually intervened
So the question arises: are you using "on-chain USD" or "freezeable USD"? At its core, this is a classic question: is a USD stablecoin a financial infrastructure or a regulatory tool?
A gray area that is being opened
After this event, the focus of industry discussions has shifted to:
- Who has the authority to freeze?
- Is the basis for the freeze disclosed?
- Is on-chain transparent review required?
- How are wrongful freezes compensated?
In other words, the issue with dollar-stablecoins is shifting from a "technical problem" to a "power issue."
Many might think this is just a game between institutions. But in reality, if you hold stablecoins, trade with them, or participate in on-chain activities, you’re already part of this system.
And the question left by this incident is very direct: What can you do if your funds are accidentally frozen one day?
The debate over the "sphere of power" surrounding dollar-stablecoins is far from over. Stablecoins are becoming the foundational vehicles for global capital flows—and any vehicle that holds the power to freeze assets is no longer merely a tool.
It itself has become a power that needs to be constrained.
The content of this article is sourced from the Hong Kong Monetary Authority and is for reference only; it does not constitute any investment advice. The market carries risks; investments should be made with caution.