Jake Chervinsky is the head of policy for the Blockchain Association. He said that the United States should avoid creating a “totalitarian disaster” when it launches a central bank digital currency.
Chervinsky spoke at Austin’s SXSW festival Tuesday, in a panel entitled “Financial Surveillance In A Cashless Society”. He stated that even though the U.S. President Joe Biden issued an executive order creating a national strategy to support cryptocurrencies in the United States of America, privacy concerns could arise from the country’s launch of a CBDC. According to the Blockchain Association policy chief, empowering a government with a CBDC to monitor its citizens sounds like what China would do with its digital currency.
Chervinsky stated that it seemed like a central bank’s digital currency would be under total and complete government control. Chervinsky stated that the government would be able to see at all times what you spend and where you spend it. They could program the central banking digital currency to allow them to place restrictions on spending and restrict the amount of money that can be taken out.
The policy head of the Blockchain Association was also added:
“Our hope is that the government will conclude, as per the executive order […], that we won’t compete against China — an autoritarian dictatorship — by acting like one. Instead, we will give the opportunity to our private sector for innovative solutions.
SXSW 2022: Financial Surveillance in Cashless Society Panel
The U.S. Federal Reserve released a long-awaited paper in January on the risks and benefits of a digital currency. While the central bank indicated that it would be reviewing privacy concerns arising from a CBDC, the central bank also stated that U.S.-issued currency “might help maintain the international role for the dollar.”
Related: Powers on… The Fed endorses cryptocurrency — Sort of
Jerome Powell, Fed Chair, has spoken out in favor of stablecoins. He said they could be “useful, efficient consumer service part of the financial systems if properly regulated” and suggested that a digital currency might eliminate the need to use stablecoins and cryptocurrencies. Some U.S. lawmakers have resisted the idea of a Fed CBDC. In January, Tom Emmer, a Minnesota Representative, stated that he would introduce legislation to limit the central bank’s authority to issue retail bank accounts.
According to some experts, the U.S. dollar’s dominance could be threatened by China’s digital currency. If the CBDC continues to grow in China and elsewhere, it is possible that the Chinese yuan will threaten the U.S. dollar. Sheila Warren (CEO of the Crypto Council for Innovation) stated that while it is theoretically possible to issue a CBDC within the United States, without the technology being used for surveillance, she foresaw digital currency being used for wholesale transactions, rather than retail.
Related: Republican legislators introduce bill targeting China’s CBDC regarding sanctions and privacy
China has been testing its CBDC in major cities starting in April 2020, in an attempt to replace cash with digital yuan. According to reports, 261 million people have created digital wallets for the eCNY that can handle more than $13 billion in transactions.