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Censorship-resistant “dark stablecoins” could come in increasing demand as governments tighten their oversight of the industry. 

Stablecoins have been used for various groups to store assets due to a lack of government interference; however, with regulations pending, that could soon change, Ki Young Ju, CEO of crypto analytics firm CryptoQuant, said in a May 11 X post.

“Soon, any stablecoin issued by a country could face strict govt regulation, similar to traditional banks. Transfers might automatically trigger tax collection through smart contracts, and wallets could be frozen or require paperwork based on government rules,” he said.

“People who used stablecoins for big international transfers might start looking for censorship-resistant dark stablecoins instead.”

On the heels of US President Donald Trump’s crypto-friendly administration assuming power earlier this year, lawmakers are weighing stablecoin legislation, which seeks to regulate US stablecoins, ensuring their legal use for payments. 

The European Union has already brought in its Markets in Crypto-Assets (MiCA) regulation, which, among other measures, mandates that stablecoins be regulated and transparent.

Ju speculates that a dark or private stablecoin could be created as an algorithmic stablecoin, with the value maintained through algorithmic mechanisms rather than being pegged to an external asset like gold, which makes it susceptible to interference from authorities. 

“One possible example could be a decentralized stablecoin that follows the price of regulated coins like USDC using data oracles like Chainlink,” he said.

Another way would be stablecoins issued by countries that don’t censor financial transactions, or, for example, if Tether chooses not to comply with US government regulations in the future.

“USDT itself used to be considered a censorship-resistant stablecoin. If Tether chooses not to comply with US government regulations under a future Trump administration, it could become a dark stablecoin in an increasingly censored internet economy,” Ju said.

Privacy technology in crypto is already being used

Zcash (ZEC) and Monero (XMR) — while they aren’t stablecoins —already shield transactions and allow users to send and receive funds without revealing their transaction data on the blockchain.

Related: Russia finance ministry official floats country making own stablecoins: Report

Several projects are also working on using similar technology for stablecoins, such as Zephyr Protocol, a Monero fork that hides transactions from being revealed on the blockchain. PARScoin also hides user identities, transaction values, and links to past transactions.

The market cap of US dollar-denominated stablecoins has continued to grow, crossing $230 billion in April, a report from investment banking giant Citigroup found. That’s an increase of 54% since last year, with Tether (USDT) and USDC (USDC) dominating 90% of the market.

Meanwhile, total stablecoin volumes hit $27.6 trillion in 2024, surpassing the combined volumes of Visa and Mastercard by 7.7%. 

Magazine: Ridiculous ‘Chinese Mint’ crypto scam, Japan dives into stablecoins: Asia Express

Hardware wallet provider Ledger has confirmed its Discord server is secure again after an attacker compromised a moderator’s account to post scam links on May 11 to trick users into revealing their seed phrases on a third-party website.

“One of our contracted moderators had their account compromised, which allowed a malicious bot to post scam links in one channel,” Ledger team member Quintin Boatwright wrote on the Ledger Discord server. 

“The issue was quickly contained: the compromised account was removed, the bot was deleted, the website was reported, and all relevant permissions were reviewed and secured.”

Some members in Ledger’s Discord channel claimed the attacker abused moderator privileges to ban and mute them as they tried to report the breach, possibly slowing Ledger’s reaction.

Boatwright said the security breach was an isolated incident and that Ledger has taken additional measures to strengthen its security on Discord, a chat platform many crypto projects use to share protocol developments and engage with their community. 

Using the compromised Ledger community manager account, the hacker told Ledger Discord members that there was a recently discovered vulnerability in the firm’s security systems and strongly urged all users to verify their recovery phrases with a scam link, according to several screenshots shared on X. 

Ledger users were asked to connect their wallets and follow on-screen instructions.

It isn’t clear whether anyone was affected by the security breach. Cointelegraph has reached out to Ledger for comment.

Ledger scammers were sending physical letters last month 

In April, scammers were mailing physical letters to owners of Ledger hardware wallets, asking them to validate their private seed phrases in a bid to access and empty the wallets.

The letter used Ledger’s logo, business address and a reference number to feign legitimacy and asked users to scan a QR code and enter the wallet’s recovery phrase.

One Ledger user who received the letter speculated whether scammers were sending letters to Ledger customers whose data was leaked in July 2020.

Related: Jameson Lopp: Most don’t realize how easy self-custody has become

That incident saw a hacker breach Ledger’s database and dump the personal information of over 270,000 of its customers online, which included names, phone numbers and home addresses.

The following year, several Ledger users claimed to have been mailed fake Ledger devices that were tampered with and designed to install malware upon use, Bleeping Computer reported at the time.

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