States are afraid of competition from the private sector and other central banks
The digital dollar project already exists, but it has not yet been approved by regulators
Other countries are well ahead of America in the development of national digital currencies
International consortium of news organizations developing transparency standards.
Many countries around the world are engaged in the development of national cryptocurrencies, which are also often referred to as digital central bank currencies (CBDCBills and coins may be a thing of the past due to a new financial instrument – central bank digital currency (CBDC) . As … More). America is no exception. In order to understand at what stage the United States is, the editorial staff of BeInCrypto has collected all the information about the cryptoversion of the dollar in one material..
Competition is the engine of progress
American regulators began talking about the possibility of creating a digital dollar in the fall of 2019. It was during this period that the members of the US House of Representatives sent a letter to the member of the Board of Governors of the US Federal Reserve System Jerome Powell with a request to consider the prospects of issuing a crypto version of the dollar. The main argument in favor of exploring the alternative is the risks associated with the release of national cryptocurrencies by other countries and private companies..
In particular, the representatives of the initiative drew attention to the potential negative impact of the stablecoin Libra. In June 2019, Facebook announced preparations for the release of the digital currency Libra. The social networking project immediately attracted attention … More, developed by the Facebook team, In June 2019, Facebook announced preparations for the release of the Libra digital currency. The social networking project immediately attracted attention … More, on the position of the US dollar.
“If the launch of the Facebook cryptocurrency is implemented, as well as in the event of the spread of the asset, America risks losing some of the control over the financial field outside the country,” – this is how the authors of the letter explained the risks associated with the release of the Libra stablecoin.
The concerns of representatives of the initiative are not hard to understand. According to media reports, in January 2020, the number of Facebook users reached a third of the world’s population. In the case of a cryptocurrency release, a company can easily gain a large audience. During the presentation of Libra, project representatives noted that their cryptocurrency is targeted at people who do not have access to banking services. The designated audience, according to Facebook, exceeds 1 billion users.
With Libra, potential customers will no longer need an alternative. As a result, Facebook’s crypto project could narrow the audience for the US national cryptocurrency, if released.
The second problem for the United States is the upcoming release of the crypto version of the Chinese yuan. Experts believe that the primacy of the PRC in the creation of a national cryptocurrency may negatively affect the financial position of the United States and the status of the dollar on the world stage. Fears, among other things, are associated with the possible loss of partners. Many companies can switch to cooperation with China and its more profitable financial instrument in comparison with the fiat dollar.
Jerome Powell agreed with the concerns of experts. In early February 2020, during his speech before the US House of Representatives Committee, the head of the US Federal Reserve System said that Facebook was provoking the country to release a national cryptocurrency. The banker also shared with the audience information about the preparation of tools that could be a response to the release of the Chinese crypto-yuan.
LIVE: Fed Chair Jerome Powell addresses the U.S. House Financial Services Committee https://t.co/O4FhA7XnLT
– Bloomberg Economics (@economics) February 11, 2020
Recall, immediately after the presentation, Facebook’s crypto project was criticized by American regulators. To improve Libra’s position, social network CEO Mark Zuckerberg tried to introduce stablecoins Stablecoins – literally translated from English “stable” coins – continue to gain popularity in the digital asset market. With … More as the US response to the upcoming launch of China’s national cryptocurrency. Despite the fact that America, at the time of the developer’s proposal, did not have its own crypto project, local regulators preferred to abandon the initiative.
Crypto project USA
As time went. Various and experts continued to discuss the prospects for issuing the US national cryptocurrency, but no one was actually involved in the development. Crypto enthusiasts and representatives of the traditional financial market decided to change the situation.
History of Cryptocurrency
In early 2020, Former Commodity Futures Trading Commission (CFTC) Chairman Christopher Giancarlo announced the creation of the Digital Dollar Fund. As part of the organization, he and other specialists, including ex-CFTC director of oversight of the fintech sector Daniel Gorfine, decided to develop a crypto version of the US national currency..
Accenture has become a partner of the Digital Dollar Fund, whose experts are taking part in the creation of a crypto version of the Swedish cryptocurrency.
The History of the US Dollar
“By creating the digital dollar, we will secure the future of the US national currency. With the help of the crypto version of the currency, individuals and international companies will be able to make payments in dollars anywhere and at any time “, – this is how another Fund participant, investor Charles Giancarlo presented the project.
The participants of the initiative presented the first results of the work six months later – in early June 2020, Christopher Giancarlo published the whitepaper of the US national cryptocurrency.
I Asked Bill Gates What’s The Next Crisis?
The #DigitalDollarProject White Paper is live here: https: //t.co/FHraK6L4pJ. Check it out.
– Chris Giancarlo (@giancarloMKTS) May 29, 2020
The document provides a brief description of the American CBDC, as well as information on the prospects for the transition of the United States to work with a new financial instrument. Among the advantages of the national cryptocurrency, the authors of the whitepaper included the following points:
- the ability to use the digital dollar as an international reserve currency;
- increasing the speed of operations and reducing operating costs;
- increasing the availability of the national currency and operations with it;
- the transition of the fiat market to the digital plane.
Benefits of the US national cryptocurrency. Source: cryptodollar whitepaper
To other details of the project that the authors presented in the whitepaper:
- The US Federal Reserve System will issue cryptocurrency.
- After the release of the cryptocurrency by the Central Bank, they plan to transfer the assets to commercial banks. They will spread the crypto dollar.
Scheme of issuance and distribution of the US cryptodollar. Source: cryptodollar whitepaper
At the same time, the developers of the initiative proposed several scenarios for the use of the national cryptocurrency, which take into account the needs of individuals and businesses..
Schemes for the use of the US national cryptocurrency. Source: cryptodollar whitepaper
To make working with a digital asset safe, the authors of the whitepaper proposed using a set of KYC and AML procedures aimed at deanonymizing the user’s identity and combating money laundering..
The scheme for issuing and distributing a cryptodollar presented by the authors of the documents is in many similar to that offered for the national cryptocurrency of the PRC. Chinese crypto-yuan, in turn, according to the deputy director of the payment department of the People’s Bank of China (PBoC) Mu Changchun, will be in many ways similar to Libra. Unlike the US, China’s and Facebook’s crypto projects are at a high stage of readiness..
After the presentation of the cryptodollar whitepaper, market participants and regulators started discussing the project. To the surprise of the representatives of the initiative, not everyone approved the release of the national cryptocurrency. During one of the hearings, representatives of the American Bankers Association (ABA) spoke out against the crypto version of the dollar. In their opinion, the release of the national cryptocurrency will open the FRS access to abuse of power. For example, ABA members are concerned that the American Central Bank will become too politicized due to a digital asset..
As of this writing, no final decision has been made on the Digital Dollar Fund’s crypto project.
The decision to create a crypto version of the US dollar was forced. The country, according to Jerome Powell, was literally forced to initiate work on the project. To other conclusions:
- The engine of progress in the development of the US national cryptocurrency was the fear of lagging behind potential competitors.
- Crypto project developed by experts from the Digital Dollar Fund has not yet been approved by regulators.
- America is lagging behind its competitors. Accordingly, the United States risks losing part of the potential audience that can be attracted with the help of a crypto project..
Until Facebook, China and the US have released their crypto projects, a large audience of users remains free.
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