Digital dollars, also known as central bank digital currencies (CBDCs), are government-backed blockchain versions of actual dollars and are one of several ways to move money on-chain. Another is stablecoins, digital tokens pegged to traditional currencies and issued by banks, crypto firms, or other entities, which have gained traction in recent years.

On the face of it, a digital dollar ban would be good for stablecoin-focused crypto stocks, such as Circle Internet Group (CRCL +4.20%) and Coinbase Global (COIN +3.92%). However, in reality, digital dollars fell by the wayside years ago, and the on-chain battle is between traditional financial firms and stablecoin issuers.

The big appeal of blockchain transactions is their low costs and…