Blockchain Association Policy Head: US Shouldn’t Compete With China’s CBDC Using Surveillance Tools

Jake Chervinsky, head of policy at crypto advocacy group the Blockchain Association, said the United States should be careful to avoid a “totalitarian nightmare” in its potential launch of a central bank digital currency, or CBDC.

In a panel on ‘Financial Surveillance in a Cashless Society’ at Austin’s SXSW festival on Tuesday.

Chervinsky said that while US President Joe Biden had issued an executive order establishing a national strategy for cryptocurrencies in the US.

There were potential privacy concerns about the country launching a CBDC.

According to the Blockchain Association’s policy director, empowering a government to monitor its population through a CBDC “seems like the kind of thing China would do” with its digital yuan.

“It seems that a central bank digital currency would be under the total and complete control of the government,” said Chervinsky. “So at all times the government would know what you are spending, where you are spending on it.”

 

“They could program the central bank digital currency so they could put in restrictions and say ‘you are only allowed to spend these dollars in these certain places but not in those other places.’ They could freeze accounts or take money out of the accounts at any time.”

The Blockchain Association policy head added:

“Our hope is that when the government conducts this investigation [as required by the executive order]. They will come to the conclusion that we will not compete with China — an authoritarian dictatorship — by acting like an authoritarian dictatorship as well.” Instead, we’ll provide our private sector the tools it needs to come up with innovative ideas.”

What You Need To Know

The Federal Reserve of the United States released a long-awaited discussion paper on the merits and hazards of a digital currency in January.

The central bank noted at the time that a CBDC’s potential privacy concerns would be considered.

But that a US-issued digital currency “could help sustain the dollar’s international position.”

Stablecoins might be a “useful, efficient consumer-serving aspect of the financial system if they’re properly regulated.”

According to Fed head Jerome Powell, who also believes that a digital dollar would eliminate the need for cryptocurrencies and stablecoins.

Some lawmakers in the United States, however, are opposed to the idea of a Fed-issued CBDC.

In January, Minnesota Representative Tom Emmer announced that he would introduce legislation to limit the central bank’s “power to offer retail bank accounts.”

According to reports, some analysts believe China’s digital yuan might pose a challenge to the US dollar’s dominance.

If usage of the CBDC continues to rise within the country and outside.

Though it was “theoretically possible” to issue a CBDC in the United States without the technology being used for digital surveillance.

Sheila Warren, CEO of the Crypto Council for Innovation, said on the same panel that she foresaw the digital currency being used for wholesale bank-to-bank transactions rather than retail.

Since April 2020, China has been testing its CBDC in key cities in the hopes of eventually replacing currency with the digital yuan.

As of January, 261 million people had created digital wallets for the e-CNY, resulting in over $13 billion in transactions.