A NEW “Fedcoin” digital currency could replace cash, hurt savers and allow the government to track payments, crypto experts have warned.
President Joe Biden announced the move towards a US Central Bank Digital Currency (CBDC) on Wednesday in a historic executive order on cryptocurrency regulation.
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President Joe Biden announced historic moves towards a Central Bank Digital Currency in an executive order on WednesdayCredit: AP
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Experts have warned about the dangers of CBDCs but believe they may strengthen the position of the original cryptocurrency BitcoinCredit: Getty
He gave the heads of federal agencies including the Treasury, Justice Department and Homeland Security 180 days to come up with a report on how the new digital currency would work.
Biden also asked the chairman of the Federal Reserve Jerome Powell to “develop a strategic plan for Federal Reserve and broader United States Government action” on CBDCs.
It comes as governments around the world are scrambling to respond to the explosion in cryptocurrencies which are not state-controlled.
But experts say there are worries the new CBDCs could pose a threat by allowing the government to program money to control how and by who it is spent.
Alex Gladstein, chief strategy officer of the Human Rights Foundation and a well-respected voice in the Bitcoin community, told The Sun: “I’m concerned because there’s a lot of language about Central Bank Digital Currencies in the executive order and I think they are dangerous for civil liberties.
“It looks like Fedcoin is coming and I don’t think that’ll be good for the average American.
“Fedcoin would replace cash, it would replace paper money and coinage.
“It would permit instant analysis of transactions, as opposed to the privacy that cash affords.
“It would also obviously allow for blacklisting of people that the government doesn’t like, which I’m sure would rotate through different administrations.
“These are concerning powers and they would also permit monetary powers that are concerning.
“Just like withdrawing from an ATM gives you the power to be private with your spending, withdrawing from an ATM also gives you the power to save in different ways.
“And if you don’t have an ATM, the government will be very easily able to do things like negative interest rates, expiration dates on money, stuff like that.
“I don’t think it’s gonna be great for savers, let’s put it that way.”
Gladstein added that he is concerned about how CBDCs would give the government even more power to keep spending and inflating the currency.
He said: “CBDCs pave the way for a truly expansionary monetary policy.
“It allows the central government and the central bank to do programmable stimulus, basically.
“They could just program credits like the stimulus checks that we saw post COVID.
“It just lends itself to a lot more loose, easy spending.”
BITCOIN BOOST
Bitcoin – the largest and original cryptocurrency – rose almost 9% to almost $42,000 on Wednesday evening following Biden’s executive order to study potential regulations for crypto, according to CoinDesk.
The order – titled “Ensuring Responsible Development of Digital Assets” – was welcomed by crypto industry leaders such as Coinbase crypto exchange chief policy officer Faryar Shirzad.
Shirzad tweeted: “We applaud the White House for recognizing this as a defining moment for U.S. innovation on the world stage.
“We look forward to continuing our work with regulators and lawmakers.”
Gladstein told The Sun that despite concerns over the new CBDCs, their introduction could be “pretty bullish” for Bitcoin.
He said: “I think in some ways they’re a big advertisement for Bitcoin.
“You’re gonna earn your money in this credit system that’s easily confiscated or inflated away and that probably has negative interest rates.
“I think people are going to be very interested in transforming those credits into Bitcoin, which is not a liability, can’t be frozen and can’t get arbitrarily inflated.
“If you could get 5% on your savings account and 3% on a checking account and there was no threat of cash disappearing, there would be less of a case for Bitcoin.
“We know that the United States government’s not going to ban Bitcoin, we know they’re not going to adopt Bitcoin as legal tender.
“The reality will be somewhere in the middle and we don’t know yet, we just don’t know what’s going to happen.
“It is crazy that this idea conceived of by a person that remains a mystery – we don’t know who Bitcoin creator Satoshi Nakamoto is – and that this message board post from 2008 has become something that the White House feels the need to issue an executive order on.
“That’s extraordinary and historic for Bitcoin’s ongoing march of adoption and progress.”
‘CONCENTRATED POWER’
Coin Stories podcast host and Bitcoin educator Natalie Brunell added: “I’m optimistic that U.S. policy makers will make sound decisions regarding adopting and regulating Bitcoin, but I hope no one equates the Central Bank Digital Currency they are trying to create to the pristine hard money qualities and network of Bitcoin.
“CBDCs will be a digital version of the current system – centralized, with concentrated power and decision-making in the hands of the few.
“CBDCs will allow the government to give, but also take, while Bitcoin offers individual sovereignty and a finite asset aimed at helping us plan for the future.
“I’m curious to see what the outcome of the upcoming research being conducted by government agencies regarding regulation and how that will impact Bitcoin adoption.”
*story by The US Sun
