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Are You a Senior Crypto Architect? The Fed Wants You! To Build a CBDC — But it May be Criminalized

Published July 24, 2023 3:01 PM
Teuta Franjkovic
Published July 24, 2023 3:01 PM
Key Takeaways
  • US Rep, Davidson reacted to FED’s crypto architect job posting and attacked Central Bank Digital Currencies (CBDCs)
  • Davidson has in the past demanded the dismissal of SEC Chair Gary Gensler, claiming several wrongdoings as his justification
  • Additionally, the $6.8 trillion budget proposal included a 30% tax on cryptocurrency miners, which the Ohio lawmaker opposed

Warren Davidson, a Republican in Congress, reacted to FED’s job ad and spoke out against CBDC, calling on Congress to outlaw and penalize their creation. Congressman Davidson claimed in a tweet on July 23 that the Federal Reserve was “building the financial equivalent of the Death Star,” adding that CBDCs turn money into a means of coercion and control.

“Congress must swiftly ban then criminalize any effort to design, build, develop, test or establish a CBDC,” he stated.

Reaction To FED’s Job Posting

Davidson’s remarks responded to a job posting  for a “senior crypto architect” to work on a CBDC project by the Federal Reserve Bank of San Francisco.

In response to a tweet, Davidson stated that money should be a reliable store of value and not be subject to centralized control.

He continued, “Permissionless peer-to-peer transactions should be made possible by sound money.”

The Federal Reserve has been investigating the technology for a prospective digital currency, but no decisions on its issuance have been made. The prospect of a digital U.S. dollar has sparked debate in the nation and is certain to come up frequently during the 2018 presidential election.

Davidson is, however, not the only person who worries about a possible Fed-controlled digital dollar.

Florida Governor and presidential hopeful Ron DeSantis declared on July 14 that he would “nix any central bank digital currency.”

In March, Republican Tom Emmer warned that a programmed CBDC might be “easily weaponized” as a spying device to “choke out politically unpopular activity.” Emmer has been outspoken in his opposition to state-controlled digital currency.

Legislative Reactions to CBDCs

Emmer introduced  the CBDC Anti-Surveillance State Act in February in response to these worries. It aimed to block any attempts by unelected officials in Washington, DC, to deny Americans their right to financial privacy. Senator Ted Cruz of Texas, who introduced legislation opposing CBDCs in March, endorsed this measure.

Under this bill, the Federal Reserve was forbidden from creating a retail CBDC because it was not allowed to issue “a central bank digital currency directly to an individual.” Additionally, the bill expressly prohibited the Fed from managing “an account on behalf of an individual” and from providing “products or services directly to an individual.”

The growing dispute about CBDCs highlights the delicate balance that must be struck between the necessity for financial innovation and the protection of individual liberties. The ongoing discussion about the ownership and usefulness of digital currencies is about to take center stage as the world rushes toward a financial future based entirely on computers.

Ted Cruz Against CBDCs

Ted Cruz then stated  that CBDCs operate on a controlled, permissioned blockchain and are created and supported by governments, in contrast to decentralized digital currencies like Bitcoin.

According to him, CBDC concept might be used to directly monitor Americans’ private transactions in addition to centralizing their financial data, making it subject to attack.

He asserted that the federal government lacks the power to create a central bank currency on its own.

“This law makes significant strides toward preventing the big government from trying to monopolize or regulate Bitcoin and instead allowing it to flourish in the United States. Instead of suppressing it, we ought to encourage innovation, empower entrepreneurs, and increase personal freedom,” he commented.

Cruz was supported by two other senators – Senator Mike Braun and Senator Chuck Grassley

Braun commented that allowing the government to centralize American financial data and expand its monitoring of American financial activity is a bad idea.

“Your personal finances shouldn’t fall under even greater federal government control. In order to promote entrepreneurship and prevent the federal government from further invading on your right to privacy, I support this measure,” he said.

Senator Grassley added that the American people should have the freedom to spend their money however they see fit without worrying that the government might be keeping tabs on every transaction.

“Our bill will make sure that no one is prying into the wallets of hardworking Americans and would ensure that policy this significant is decided by Congress and not government officials. Every American is entitled to that tranquillity,” he concluded.

Florida Governor and U.S. presidential candidate Ron DeSantis declared on July 14 that, if elected, he will “nix any central bank digital currency.” A law regulating the use of CBDCs in the state was signed by DeSantis in May.

Davidson Opposes the 30% Tax, Urges Gensler’s Leave

A longtime supporter of cryptocurrency, Davidson called for the resignation of Securities and Exchange Commission (SEC) Chair Gary Gensler earlier this year and even put out legislation to do so. He gave a “long series of abuses” as his justification.

Over the past year, the SEC has been a pain in the Bitcoin market’s side. Recently, their significant conflict with Ripple came to an end, with the cryptocurrency startup mostly winning. Some detractors said that the SEC distorted the results to support the organization.

Davidson also expressed disapproval of the 30% tax levied on cryptocurrency miners. In March 2023, a $6.8 trillion budget proposal that included the tax was made public. As most other politicians have often claimed that the cryptocurrency market is a significant source of tax avoidance, Davidson is one of the few who disputed this.

The fee was implemented to address the environmental impact of cryptocurrency mining. For a number of reasons, the sector slammed the tax. However, several governments have followed suit, with Texas approving a measure that would limit the activities of Bitcoin miners. A ban on cryptocurrency mining was also implemented in North Carolina in April.

Powell: CBDC Far From Reality

In a testimony  before the House Financial Services Committee last month, Federal Reserve Chair Jerome Powell talked about the potential of CBDCs and the standing of stablecoin in the Fed’s eyes.

“We do see payment stablecoins as a form of money, and in all advanced economies, the ultimate source of credibility in money is the central bank. We believe it would be appropriate to have quite a robust federal role,” he then stated.

The Fed Chair also discussed the possibilities for a Central Bank Digital Currency (CBDC), but her response—that the US was far from implementing one—was unsatisfactory.

In response to the possibility of a CBDC, Powell stated that the central bank would not be in charge of monitoring retail accounts, or those held by a single person. These accounts would instead be administered by the nation’s banks.

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