This weekend’s Cryptolina Bitcoin Expo sought to be the Carolinas’ “defining Bitcoin event.” The expo featured a diversity of presentations, which focused both on high-level Bitcoin theory and topics specific to cryptocurrency in the Carolinas. One of the more lively discussions took place during the Cryptolina Bitcoin Regulation Panel. The panelists discussed a variety of topics related to the government’s present and future role in the cryptocurrency industry, and several panel members suggested the United States government may try to implement its own fiat cryptocurrency – a USD coin.
The panel, moderated by Bitcoin Foundation Regulatory Affairs member Todd Erickson, featured Edmund C. Moy, who served as the 38th Director of the United States Mint from 2006-2011, David Aylor, the attorney who represented the first U.S. citizen to have his bitcoins seized by the government, Carol Van Cleef, a regulatory compliance consultant for financial services companies, Tyler Gibbons, a CPA who specializes in tax compliance, and Andrew Beal, a corporate attorney for a variety of Bitcoin companies.
Cryptolina Bitcoin Regulation Panel Believes U.S. Government May Create “USDcoin.”
While most of the Bitcoin community is currently worrying about how governments are going to regulate Bitcoin, several Cryptolina Bitcoin Regulation panelists–including former U.S. Mint Director Edmund C. Moy–believe the U.S. government is planning on releasing its own digital currency, a “USDcoin” of sorts.
Moy believes a future USDcoin is likely due to the immense cost associated with manufacturing and distributing fiat currencies.Even though they have not said so publicly, Moy believes U.S. government agencies are currently debating ways “co-opt” cryptocurrency features that would decrease the cost of U.S. Dollar management. He the cited the U.S. penny, which carries manufacturing costs amounting to three times its value. Taxpayers subsidize the extra 2 cents required to mint a penny, and Moy believes widespread adoption of digital currency could make this expense unnecessary.
Carol Van Cleef also believes U.S. government-sponsored cryptocurrency initiatives are already underway. Although she argues U.S. currency is already “digitized,” she thinks the current system is far too slow for the modern age. She believes the U.S. government is analyzing cryptocurrency protocols so they can improve the speed of the current U.S. monetary system without having to migrate to an entirely new platform.
Barriers to USDcoin Creation
Despite government interest in adopting digital currency features, the process will be far from simple. Edmund C. Moy noted governments are accustomed to possessing the ability to arbitrarily and instantaneously inflate their national currencies. Governments bristle at the thought of limited coin supplies or even fixed rates of inflation, so it is unlikely they will be willing to submit themselves to the limitations imposed by cryptocurrency’s algorithmic nature.
Additionally, a USDcoin blockchain would almost assuredly be centralized, controlled solely by the U.S. government. This raises a number of other questions, such as whether or not USDcoin would be open or closed-source. If current government practices are any indication, open-source transparency is unlikely.
Other Government-Sponsored Digital Currencies
Assuming the Cryptolina Bitcoin Regulation panel members’ hunches are correct, the United States will not be the first government to pursue its own digital currency. Recently, Ecuador announced a decision to ban Bitcoin and instead offer its citizens a government-sponsored cryptocurrency.