Donald Trump: “I will never allow” an American CBDC

Former President and US presidential candidate Donald Trump unequivocally stated that he would oppose the creation of a central bank digital currency (CBDC) by the Federal Reserve in the United States.

This declaration was made during a campaign speech in Portsmouth, New Hampshire, on January 17, where Trump pledged to safeguard Americans from what he referred to as the “tyranny of government.”

Trump Stance On CBDC And Crypto

The audience responded with resounding applause, prompting Trump to remark: “I didn’t know you knew so much about it… New Hampshire, very smart people.”

He then went on to elaborate: “A currency like this would give the federal government, our federal government, absolute control over your money […] they could take your money and you wouldn’t even know it was gone.”

Trump emphasized the perceived threat to freedom, asserting: “It would be a dangerous threat to freedom, and I will prevent it from coming to America.”

Donald Trump officially launched his 2024 presidential candidacy in November 2022. The 60th American Presidential election is scheduled for November 5, 2024.

Despite Trump’s stance, it’s important to note that his position should not be perceived as a broad opposition to cryptocurrencies. In fact, the former president and business tycoon has shown significant investment interest in cryptocurrencies, notably highlighted by his Ethereum portfolio. As of the latest available data  updated to August 14, 2023, disclosed by Citizens for Responsibility and Ethics, Trump’s holdings in ETH amount to $2.8 million.

Beyond personal investments, Trump even enables his supporters to contribute  to his presidential campaign by utilizing cryptocurrencies.

What Other Candidates Think Of CBDCs

In 2023, Florida governor and presidential candidate Ron DeSantis echoed a similar commitment, pledging to ‘eliminate’ central bank digital currencies on his first day in office.

However, recent developments have shown a shift in political dynamics. DeSantis faced defeat against Trump in the Republican Party primary election in Iowa on January 15, trailing consistently by more than 10 points throughout his campaign.

Another contender in the Republican Party nomination race, Vivek Ramaswamy, who proposed a political framework centered on cryptocurrencies, withdrew from the electoral race after the Iowa Caucus results, where he secured around 8% of the votes.

Upon retiring, Ramaswamy officially threw his support behind Trump. Notably, Ramaswamy is a vocal critic of digital currencies, leading some to humorously speculate on his influence over Trump’s stance on CBDCs.

The other candidate for the Republican primary, Nikki Haley, has never spoken openly about cryptocurrencies. But, according to media reports, she is not a supporter of digital currencies either.

What About Democrats?

On the other side, the current president, Joe Biden, facing no apparent electoral challenge within his party, has amassed a noteworthy track record on cryptocurrency during his administration’s tenure over the past three years.

His regulators, notably at the United States Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission, have wielded enforcement actions against the industry, accusing digital asset businesses of non-compliance with existing financial regulations deemed by crypto insiders as nearly impossible to meet.

Although the administration has yet to formulate comprehensive crypto regulations, significant proposals from the SEC and Treasury Department have surfaced, potentially imposing substantial limitations on the sector.

These range from the SEC’s propositions on custody and the classification of crypto platforms as exchanges to the Treasury’s recent proposal on taxing token gains. The president has expressed enthusiasm for closing ‘special interest tax loopholes’ benefiting crypto traders, with the White House advocating for a 30% tax on crypto mining.

The other Democrat candidate, Robert F. Kennedy Jr., seems to love crypto. He said: “Bitcoin embodies two of my highest ideals: transparency and trust. It’s important not only for bitcoin but for democracy to be decentralized.”

He has personally invested in Bitcoin and pledged to exempt such investments from capital gains taxes if elected. Additionally, he strongly opposes the introduction of a US CBDC. He asserted concerns about potential abuse by an oppressive government – a stance shared by Republican candidates Trump and DeSantis.

Central Bank Digital Currencies Overview

In the rest of the World, China is a frontrunner in the development of CBDCs, with its e-CNY initiative. The country aims to enhance the effectiveness of monetary policy, promote financial inclusion, and facilitate cross-border payments. However, concerns exist about disintermediation and surveillance.

The European Central Bank (ECB) is also exploring the feasibility of a digital euro. Similar to China’s e-CNY, the digital euro aims to improve the efficiency of the European monetary system and enhance financial inclusion. However, the ECB is carefully considering potential risks such as disintermediation and surveillance.

The US has not yet reached a decision on whether to adopt a digital dollar. The Federal Reserve (Fed) is conducting research and exploring the potential benefits and risks of a digital dollar. However, there is no consensus on the feasibility or desirability of such a move.

In emerging economies, CBDCs hold the potential to enhance financial inclusion, lower transaction costs, and optimize remittance processes for the unbanked population. Brazil’s successful adoption of instant payment systems suggests a potential openness to CBDC adoption. However, challenges persist in terms of technological infrastructure, cybersecurity, and financial literacy in these nations.

A CCN analysis on CBDCs around the world is available here.