- Ex-CFTC Chair said the rise of CBDCs is a change to reassess and rebalance current financial surveillance with American constitutional norms, the presumption of innocence and the rule of law.
- He also said that CBDCs should protect privacy, not be a surveillance tool.
Chris Giancarlo, ex-Chair of the Commodity Futures Trading Commission (CFTC) aka the “Crypto Dad,” talked over CBDCs. In a March 13, op-ed in The Hill, he said that the US must lead the development of Central Bank Digital Currencies (CBDCs) quite far from being “surveillance coins” and toward being “freedom coins.”
Giancarlo said that Anti-Money Laundering and Know Your Customer measures are quite outdated and constitutionally questionable and that crypto technology could do better. He said, “in the digital future of money, the US must influence the development of global standards for CBDC that affirmatively protect democratic values like freedom of speech and the right to privacy and lay the foundation for a freedom coin model of CBDC.”
CBDCs Need to Protect Privacy: Giancarlo
According to Giancarlo, influencing CBDC development in the US causes “the US to reconsider its existing financial surveillance activity in light of fundamental constitutional freedoms.” Many believe that CBDCs will disturb financial privacy and economic liberty. He continued with an example of China, “China’s digital Yuan, e-CNY, is designed to increase the government’s powers of surveillance and control as a surveillance coin.”
Earlier, when Bitcoin came into the market, it represented a new era of money as an internet of value. It has been a challenge to the accustomed monopoly of governments over money creation and wholesale payments. At present, more than 100 governments are exploring CBDCs that can be passed phone-to-phone the way paper bills pass hand-to-hand.
As Giancarlo discussed, “CBDCs may strengthen the ability of central banks to implement monetary policy.” This allows direct infusions of money across the economy and vastly improves the administration of benefits and economy-boosting payments.
A CBDC needs to run on a digital ledger, whether it is a Bitcoin-inspired distributed blockchain or not. It will make every payment a digital “communications event,” which is easily recorded and tracked. This, too, has been an obstacle for Bitcoin and other blockchain-based cryptocurrencies. Meanwhile, the “wallet” comes to serve as an identifier.
The crypto industry is working on solutions that the CBDC competitors can follow. Additionally, many privacy-enhancing technologies are being developed to respond to the privacy weakness of the blockchain format. In a new report by the American Enterprise Institute, Giancarlo said they are expanding on privacy principles published by the digital dollar.
The current US financial system is quite similar to China’s as it has moresocially acceptable to admit. Under the present US law, “financial services providers build dossiers about their customers, share customer information and report an increasing number of transactions to the government,” Giancarlo further said.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.