The United States must lead the development of Central Bank Digital Currencies (CBDCs) away from “coins of surveillance” and into “coins of freedom,” the former chairman of the Commodity Futures Trading Commission (CFTC) has said.
In an op-ed on March 13 in The Hill, Christopher Giancarlo, nicknamed “Crypto Dad” because of his pro-crypto outlook, said that the US “must influence” the development of CBDC to protect “democratic values like freedom of speech and the right to privacy. , ” uses the current technology used by several cryptocurrency protocols.
My op-ed on it @theHill with @Jim Harper: The question is okay #CBDCs can stop (they can’t), but what is sovereign and non-sovereign #digital currency shall free or free the citizens of a free society. https://t.co/h1oT14NalK
— Chris Giancarlo (@giancarloMKTS) March 13, 2023
Giancarlo, co-founder of the Digital Dollar Project which focuses on researching the implications of the US CBDC, elaborated on privacy considerations in a March 1 report co-authored for the policy think tank, American Enterprise Institute (API) with API fellow Jim Harper.
He said the US should support “freedom coins” – CBDCs that guarantee high privacy.
Giancarlo and Harper argue in their paper that the CBDC offers an opportunity “to re-evaluate contemporary financial surveillance activities” and possibly increase constitutional protections.
To achieve this, the CBDC can take advantage of crypto technologies, such as “zero-knowledge proofs, homomorphic encryption, and multiparty computing, which allow parties to prove the encrypted proposition is true without revealing the underlying information,” he said.
My report today w/@AEI‘s @JimHarper: #CBDC & #stablecoins must maintain privacy & security, economic independence, free speech & personal autonomy. https://t.co/pB8uaA3KIT
— Chris Giancarlo (@giancarloMKTS) February 28, 2023
The technology will create “intelligent enforcement” to prevent crime, the authors say.
First, the US needs to reexamine its current financial surveillance policies. The author takes particular issue with one recent document published by the administration of US President Joe Biden:
“A new White House Office of Science and Technology (OSTP) Technical Assessment for the US Central Bank’s Digital Currency System shows that financial surveillance in the West is more like China than many expected.”
The OSTP paper shows an “unwillingness to expand beyond the supposedly constitutional system of financial oversight,” he said.
Giancarlo and Harper pointed to Anti-Money Laundering (AML) and Know Your Customer (KYC) measures as problematic, saying they allow for excessive surveillance without reason.
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If CBDC privacy is not guaranteed, there is a risk of being used as in China, he said.
There, the e-yuan “will allow the Chinese government to link political conformity to individual prosperity and reverse political deviation into poverty” by making all transactions visible to the People’s Bank of China, he said.
The thoughts of many authors are similar to the concerns expressed by US Senator Tom Emmer, a vocal opponent of the US CBDC who introduced the CBDC Anti-Surveillance Act in 2022.
Emmer has expressed concern about CBDCs that “track transaction-level data down to individual users” and can be programmed “to reduce unpopular political activity.” Emmer is also the co-chair of the US Congress Blockchain Caucus.