Will the SEC vs. crypto drama further promote CBDCs?

Key Takeaways:

• SEC Chair Gary Gensler says the US public doesn’t need more digital currencies.
• Is a CBDC an answer to the agency’s woes?
• More Central Bank control will not solve any problems, Minneapolis official says.

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YEREVAN (CoinChapter.com) – During his latest interview with CNBC, Gary Gensler, the Securities and Exchange Commission (SEC) Chair, commented on the agency’s lawsuit against Binance and Coinbase, saying that the regulations regarding crypto have been clear “for years.”

He asserted that the mentioned crypto exchanges are “a web of deception and conflicts.” The Chair also mentioned that the US “doesn’t need more digital currency.”

We don’t need more digital currency. We already have digital currency. It’s called the US dollar; it’s called the euro; it’s called the yen. They’re all digital right now. We all have digital investments. […] So what is the real underlying value of these tokens?

asserted Gensler.

The official also added, “We have not seen, over the centuries, that economies and the public need more than one way to move value.” Meanwhile, in 2019 Gensler called blockchain technology a “change catalyst,” assuring the public that he was “fascinated by Satoshi’s invention.”

IF his opinion on blockchain stands, the Chair would be more than willing to push Central Bank-issued Digital Currency (CBDC). As evident from the name, CBDCs are digital forms of fiat currencies.

They are introduced, launched, and controlled by the Central Bank. Thus, these currencies present a segway into the domain of digital assets without giving up governmental control. 

To be clear, when Gensler mentioned the “digital dollar” in the interview, he did NOT mean CBDC. However, the intention to control the cryptocurrency market could start there. Meanwhile, the US government has already launched its blockchain-based dollar research.

United States CBDC is coming?

The US jumped on the CBDC bandwagon in 2023, progressing in the “digital dollar” development. Federal Reserve’s innovation center has partnered with the Monetary Authority of Singapore to determine how wholesale central bank digital currencies can improve cross-border payments.

The US government has also unfolded another project with the participation of the New York Fed. The proof-of-concept test will determine the feasibility of digital currencies operating in a network of financial institutions. 

Several US financial giants joined, including BNY Mellon, Citigroup, PNC, TD Bank, Truist, US Bank, and Wells Fargo. Notably, the US still categorizes the previous research as experimental.

Testifying before the House Financial Services Committee in March 2023, Chair Powell said a central bank digital currency is “something we would certainly need Congressional approval for.”

The Federal Reserve has made no decision on issuing a central bank digital currency (CBDC) and would only proceed with the issuance of a CBDC with an authorizing law.

read the official Fed website.

“CBDC doesn’t solve any problems,” says official

According to Canadian Senior Deputy Governor Carolyn Rogers, the country already started CBDC development. The official advertised the blockchain-based CAD as a “safe, stable and official payment option” for the public.

However, the President of the Federal Reserve Bank of Minneapolis, Neel Kashkari, disagreed. He did not see CBDCs as a solution to the “ungoverned” crypto market. Kashkari commented that the main reason to develop those is increased “monitoring,” as CBDCs seem not to have any other use case.

I’m pretty skeptical. I keep asking anybody at the Fed and outside of the Fed to explain to me what problem this is solving. All I get is a bunch of handwaving. Is there any evidence that it is [better]? I can see why China would do it.

said the executive.

Also read: CBDC projects pump in 2023 – crypto folks not thrilled.

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