Financial regulators around the world are mulling over the creation of Central Bank Digital Currencies (CBDC) but virtual currency enthusiasts are urging US regulators to ignore calls for a digital dollar.
The creation of a CBDC in the United States has reached a feverish pitch as proponents try to catch up with China’s digital yuan. As countries want to flex some sort of regulatory muscle over the virtual currency markets, a CBDC gives the government control and regulation over the sector.
The U.S. Bitcoin Policy Institute has urged US regulators to reject the idea of CBDCs and stick to Bitcoin and other stablecoins. The group released a white paper on Tuesday illustrating how the idea of state-backed digital currency will reduce financial freedom and privacy. The group argued that the idea of crypto is a break away from the old system, and CBDCs will not help ensure freedom.
Natalie Smolenski, an executive director at the Texas Bitcoin Foundation, stated that CBDCs will not solve any new problem and urged the United States to be different.
“As the world goes the way of China in the 21st century, the United States should stand for something different, it should stand for freedom”
Similarly former Kraken growth executive, Dan Held argued that CBDC will provide the government with direct access to every transaction making it a subject of “global perusal”.
“As a direct liability of central banks, CBDCs become a new vanguard for the imposition of monetary policy directly on consumers: such policies include, but are not limited to, negative interest rates, penalties for saving, tax increases, and currency confiscation,” he added.
The growth of state-backed digital currencies came as a direct response to the development of cryptocurrencies, with the government looking to be in control. At first, digital asset enthusiasts were happy with the move because governments were beginning to adopt blockchain technology, but now it raises privacy concerns.
CBDCs have been adopted in China, Russia, and other countries with the EU, strongly considering its digital euro. With its rise in many continents, governments are also looking to get involved with arguments that it could better protect investors than stablecoins.
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