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Minnesota Congressman Tom Emmer, former co-chair of the bipartisan Congressional Blockchain Caucus, made rumblings this past month over the Fed’s role of issuing a CBDC.
He introduced a bill that would prohibit the institution from issuing digital currency directly to individuals, noting that,
“[A]s other countries like China develop CBDCs that fundamentally omit the benefits and protections of cash, it is more important than ever to ensure the United States’ digital currency policy protects financial privacy, maintains the dollar’s dominance and cultivates innovation.
CBDCs that fail to adhere to these three basic principles could enable an entity like the Federal Reserve to mobilize itself into a retail bank, collect personally identifiable information on users and track their transactions indefinitely. Not only would this CBDC model centralize Americans’ financial information, leaving it vulnerable to attack, but it could also be used as a surveillance tool that Americans should never tolerate from their own government.”
At issue is the ability of the Fed to offer retail bank accounts something that is well outside of its current purview. A direct-to-consumer CBDC would be, in Emmer’s view, akin to such retail banking duties.
He argued,
“Any CBDC implemented by the Fed must be open, permissionless and private. This means that any digital dollar must be accessible to all, transact on a blockchain that is transparent to all and maintain the privacy elements of cash.”
Emmer notes that the United States must lead on the issue of CBDCs in order to “maintain the dollar’s status as the world’s reserve currency in a digital age,” but that at the same time, the country must aim to encourage innovation in the profit sector rather than compete against it.
Congressman Emmer is known for his thoughtful approach to digital currencies, and as the country prepares itself to discuss CBDCs in earnest, those making decisions would be wise to consult with him on the best way to bring about our digital future. In addition to the debate on CBDCs, the time has come and gone for a more standardized set of rules for digital assets of all stripes.
Many believe that regulators will begin developing such a rulebook for cryptocurrencies and stablecoins, as well as exchanges. During this time, it is critical that they continue to look at the custody situation as well, as it is an area that would also benefit from a more standardized set of expectations and regulations.
However, during all of this, we are in the midst of an election year. Elections have a way of politicizing issues that are or should be decidedly apolitical. The bipartisan nature of the Congressional Blockchain Caucus should prove that the blockchain economy is one item that transcends Republican and Democrat.
Politically diverse areas, including bright red Texas and bright blue New York City, have leaders grappling to show innovators that they understand the gravity of the situation while offering havens for startups and other businesses even tangentially related to cryptocurrency and the budding digital assets space.
Now is not the time to politicize the technology which has and will continue to fundamentally alter the state of the industry. The concerns that Tom Emmer has remain in line with the spirit of the birth of the cryptocurrency movement. As we consider how to move forward, his words should remain with us.
Richard Gardner is the CEO of Modulus. He has been a globally recognized subject matter expert for more than two decades, offering complex insight and analysis on cryptocurrency, cybersecurity, financial technology, surveillance technology, blockchain technologies and general management best practices.
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