US CBDC: Thin Line Between Innovation and Privacy Concerns
The development of a US CBDC has sparked controversy over the years with proponents and critics divided on key concepts. This division has led to the crypto industry flagging the development of a CBDC for stifling digital assets amid privacy concerns. Other days these central bank technology could lead to widespread government control.
At the moment, there are over 130 countries and financial institutions exploring CBDCs with partnerships with blockchain firms. Wholesale and retail pilots have also been announced in some jurisdictions with participation drawn from traditional finance firms and businesses.
Central Banks Tip Public Innovation
Central Banks have backed a CBDC drive with reasons ranging from public sector innovations into blockchain technology, government-backed assets unlike private cryptocurrencies, programmable money to increase the tax net, etc. The regulatory debacle of crypto spurred authorities for alternatives citing the need to protect investors from fraudulent platforms leveraging blockchain technology.
The United States House of Representatives just passed a bill to ban the Federal Reserve from issuing a CBDC. Only three Democrats voted to block efforts by the Federal Reserve with the majority stating that the public sector should develop and innovate around the technology.
Jerome Powell, Federal Reserve Chair previously allayed fears of US consumers adding a potential CBDC would be implemented through the banking system. This will reduce fears of government spying among others.
Crypto Community Doubles Down on Privacy Concerns
Digital asset enthusiasts have kicked against a US CBDC on privacy, authoritarian, and other grounds. According to analysts, governments could spur on citizens’ data opening up cases of breaches. Similar sentiments were also recorded by European data agencies in the case of the proposed digital Euro.
The community criticized the idea of the government having the power to decide what citizens spend. Senator Ted Cruz also rolled out a bill seeking to ban a CBDC although the chances of such dicey in the Senate. Florida Governor Ron DeSantis promised to ban CBDC efforts if elected President alongside ending Biden’s administration ‘war’ on crypto.
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