United States CBDC would ‘crowd out’ crypto ecosystem: Ex-Biden advisor

The creation of the United States’ digital dollar will “destroy” the cryptocurrency ecosystem and protect US national security, according to a former top adviser in the administration of president Joe Biden.

Daleep Singh – the former Deputy National Security Adviser for the International Economy in the Biden administration – made comments at a hearing of the Senate Banking Committee on February 28, suggesting that cryptocurrencies facilitate ransomware attacks and contribute to the evasion of US sanctions.

Singh believes the US government’s adoption of a Central Bank Digital Currency (CBDC) “is the best step we can take.” [to protect national interests] because it will destroy the crypto ecosystem.

Singh considers “crowd” a desirable development in discussions about CBDC, but the word is generally used by economists to refer to investments from the government that can reduce or eliminate investments from private companies that can limit job creation and slow economic growth.

In an interview with Cointelegraph in May 2022, Franklin Noll – president of the Noll Historical Consulting firm – also suggested that CBDC could follow crypto, noting:

“The disadvantage for crypto is that the CBDC will pursue private cryptocurrencies, especially stablecoins that focus on the retail payment area. Cryptocurrencies will remain in a niche in the payment system where they perform unique functions and provide special services.

While China has implemented its own CBDC, the US is still exploring the potential benefits and risks associated with CBDC.

Yana Fanusie, policy leader at the crypto advocacy group Crypto Council for Innovation suggested in a March 1 interview with Bloomberg that China is “leading the way” in CBDC development while the US is “on the fringes.”

related: Bank of England does not yet have the technological skills to issue CBDC: Deputy governor

He added that developing an alternative financial rail could cause “problems” for the US as it affects its “potential” power to impose sanctions.

Others are more critical of the digital dollar plan such as Representative Tom Emmer, who introduced legislation on February 22 that prohibits the Federal Reserve from implementing CBDC-based monetary policy and issuing digital dollars directly to individuals.

Emmer is concerned that CBDC could affect the financial privacy of Americans, and that it is being developed into a “dangerous surveillance tool.”