Digital Dollar CBDC Could Leave Crypto Lagging, Says Ex-Biden Advisor

There is a belief that a U.S. digital dollar CBDC could change the face of the current crypto space. 

Daleep Singh behind a transparent building icon next to a floating dollar bils.

The potential of Central Bank Digital Currencies (CBDC) is yet to be fully realized, even with countries like China and the UK moving to implement digital versions of their currencies. However, from discussions in the Senate, there is a belief that a U.S. digital dollar CBDC could change the face of the current crypto space. 

Niche and Irrelevant?

Daleep Singh — a former adviser for international economics in the Biden administration — spoke about a ‘Digital Dollar’ at the Senate Banking Committee hearing on Tuesday, February 28. Singh believes implementing a U.S CBDC “would crowd out the ecosystem of crypto.”

Sponsored

Singh’s use of the term “crowd out” indicates that the U.S Digital Dollar would have the gravitas and adoption to make the current crypto ecosystem, including Bitcoin, niche and irrelevant in the private sector by comparison. 

In economics, “crowding out” is when increased government involvement in a sector of the economy affects the remainder of the market.

Primary to Singh’s reasoning is the nation’s priority on protecting U.S. national interests. 

Singh sees the rollout of a digital dollar as “the single best step that we could take [to protect national interests].“ The view represents the prevalence of negative sentiment around crypto concerning U.S. regulators, especially towards Stablecoins

Sponsored

According to Thinking Crypto Podcast host Tony Edward, the U.S. government is allegedly coordinating the crackdown on Stablecoins. He has cited an unnamed government source that claims the Federal Reserve sees stablecoins as a threat.

The influencer also emphasizes that a Digital Dollar is coming and that it cannot be ”‘usurped” by Stablecoins, which would explain the ongoing negative sentiment from lawmakers in the U.S.

Persistent Sentiment

Negative sentiment at this level is nothing new. Notorious economist Nouriel Roubini, nicknamed “Dr. Doom,” wrote in the Guardian four years ago that “central bank digital currencies would crowd out worthless cryptocurrencies, [and] they should be welcomed.”

Roubini added: “Better yet, CBDCs would not have to rely on public ‘permissionless,’ ‘trustless’ distributed ledgers like those underpinning cryptocurrencies.”

CBDCs have been on the global discussion table for many years already. However, China has taken the most steps to lift its digital Yuan, implementing a direct ban on private digital coins due to their permissionless and trustless nature. 

Championing Financial Privacy

Some in the Senate demand the Digital Dollar maintain the same permission-less and trustless attributes. Representative Tom Emmer, who is working to prohibit the Federal Reserve from implementing monetary policy based on a CBDC, is concerned that a Digital Dollar could impact the financial privacy of Americans.

He labels the current iteration of the U.S. CBDC a “surveillance-style digital dollar that is not open, permissionless, or private.”

Emmer has maintained he is not opposed to technological innovation that could come from creating a CBDC. However, he says these innovations should not infringe on citizens’ rights.

On the Flipside

  • In the working paper for ‘Britcoin’—a digital British pound CBDC—the Bank of England and HM Treasury stated  that “new forms of money on the horizon could pose risks to the UK’s financial stability” and “In light of these trends[ …] there is likely to be a future need for, and benefits from, a digital pound.” 

Why You Should Care

Governments worldwide seem worried about the ramifications of a thriving private cryptocurrency sector. Instead of building CDBCs to work alongside Bitcoin and others, many appear to be positioning these banking digital assets as tools to crowd out the individual financial freedoms that cryptos offer.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Darryn Pollock

Darryn Pollock is a South African-born, UK-based journalist and content writer for DailyCoin with a focus on regulation and legislation revolving around the cryptocurrency space. He has covered the evolving crypto regulatory space, and examined how the US has approached law-making to offer protection in the growth of innovation. Darryn values traditional journalistic principles of truth, accuracy, independence, fairness, and impartiality, and has a Bachelor of Arts degree in Journalism and Law from Rhodes University in South Africa.