With the historic return of Donald Trump to the White House, experts foresee a drastic change that would aid cryptocurrencies and hamper the development of the digital dollar in the United States. Don’t forget that the CBDC – centralized bank digital currency is a concept developed as a significant alternative to cryptocurrencies. As the name implies, the Federal Reserve – the apex bank in the United States controls the currency.
The outgoing administration in the U.S. led by Biden has left no stone unturned to combat cryptocurrencies. According to some analysts, Biden’s anti-crypto stance brought about the idea of a digital version of the dollar. In some respects, the United States, with its digital dollar, attempted to keep up with the likes of China and India, who have also launched their CBDCs. At press time, no less than 11 countries have established CBDCs. More so, 21 countries are in the pilot stage, while 79 are still researching them.
In 2022, the Fed initiated a twelve-week proof of concept pilot launch for the digital dollar, assessing its usability in a shared database.
Key Notes on Pros and Cons of the Digital Dollar
While the digital dollar initiative has its shortcomings, the innovation also has its advantages. One significant advantage is that since it shares similar features with cryptocurrencies, the digital dollar is poised to improve cross-border payments. It is designed to work with an underlying distributed ledger that gives interoperability among different jurisdictions.
Moreover, the blockchain version of the dollar, according to the Fed, will also enhance financial inclusivity, ensuring that the unbanked population is banked. Likewise, it is specifically effective in preventing rising occurrences of money laundering and many other financial crimes. While it does not essentially replace or reduce the U.S. dollars, it opens more payment channels in the country.
However, the major criticism against the digital dollar and other forms of CBDCs is that they threaten financial freedom. The apex banks in each country control the currencies, causing privacy and protection concerns. In essence, the digital dollar could undermine users’ control over their money. This is because the Fed could keep close watch on how users spend their money. By that, its adoption makes a mockery of the right to own and use private properties.
Meanwhile, the development process of this CBDC has been slow but steady. Before the electoral season, which led to the emergence of a new president, Biden gave an executive order on the launch of the CBDC. It also directed the OSTP to collaborate with other federal agencies to outline plans for the creation of the currency.
Donald Trump’s Approach
One major critic of the digital dollar is the new president – Donald Trump. During the campaign season, he pledged to block the development of the currency. Trump said the so-called “digital dollar” could be dangerous and would lead to a situation where money suddenly disappears from people’s bank accounts. He likened the development of the currency to a form of government tyranny. According to him, such innovation gives the government absolute control over “your money.”
Trump says he will order the Treasury Department and other agencies to cease and desist all steps necessary. Besides, there is a bill in place at the level of the House to even stop the creation of the currency. While the bill has been passed at the house level, it is yet to be ratified by the senate. If the ratification happens early next year, it would go to the president for approval. By that time, Trump would have been sworn in as president, meaning the bill will be waved through with gusto. This simply means the digital dollar project might not come to fruition anytime soon.
Parting Words
Throughout his campaign to the White House, Donald Trump has been vocal about his passion for Bitcoin and the cryptocurrency market at large. His emergence as the United States President ushered in a bull run that has pushed the price of BTC beyond the $102,000 price mark.
Under Trump’s watch, the idea of the digital dollar may not manifest, much to the advantage of the cryptocurrency market.
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