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Senate hearing on CBDC – No CBDC for the US?

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The US regulators are torn between their stance on cryptocurrencies. Where one side would like to see the total adoption and acceptance of cryptocurrencies, the other side does not want anything to do with cryptocurrencies.

After China rolled out its version of central bank digital currency – the digital yuan – the US also took its first step towards the initiative. A senate hearing was organized for discussion on the viability of a CBDC – a digital dollar. However, the session did not go as well as some may have hoped.

Senator Elizabeth Warren thrashed the cryptocurrencies – throwing even the possibility of a digital dollar out of the window. The speech of Senator Warren was all that was left after the session as the for-side’s arguments failed to convince the senator. Senator Elizabeth Warren called cryptocurrencies “a lousy investment” and a “haven for illegal activities”. The senator’s argument revolved around the volatility of cryptocurrencies and how that makes them unfit to take the role of a digital currency.

Furthermore, Warren also highlighted the role of cryptocurrencies in the recent ransomware of JBS USA and Colonial Pipeline. Per the senator, cryptocurrencies lack all the characteristics that a digital currency needs to have – wide acceptance, security and stability.

The arguments of the four witnesses varied but all favored a centrally-issued digital currency. Pros like lower fees and increased efficiency were cited in the support. China was also a major pro-argument. As the country launched its own digital yuan, more developments in the space can be expected from the country. The only way the United States can catch up with China is by taking an initiative in this direction as soon as possible. The digitization of the world would eventually require the US to issue a digital version of the dollar if it wants the dollar to remain the global reserve currency.

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