U.S., ECB, China discussed on The Breakdown with NLW


Looking for ways to step up your crypto game, then go with nexo. For starters, you get free crypto for each purchase or swap. How about earning guaranteed yields up to 17% paid out daily? Ideal for you hardcore HODLers. You don't even need to sell. Instead, borrow instant cash against your assets. Get the most out of your crypto, with nexo. Add nexo IO. That's N EXO dot IO. Meet arculus, the next generation cold storage wallet. Arcu was secures your crypto using three factor authentication, providing a simpler, safer and smarter way to store, buy, swap, send and receive crypto. Arculus is offline cold storage. Your private keys are encrypted on the Oculus keycard and are never online. Stay safe from hackers with no cords, no charging, no Bluetooth. Just crypto security made simple. By arculus on Amazon today. The breakdown is sponsored by FTX U.S. FTX U.S. is the safe, regulated way to buy and sell Bitcoin and other digital assets. With up to 85% lower fees than competitors. There are no fixed minimum fees, no ACH transaction fees, and no withdrawal fees. One of the largest exchanges in the U.S. FTX U.S. is also the only leading exchange that supports both Ethereum and Solana NFTs. When you trade NFTs on FTX, you pay no gas fees. Download the FTX app today and use referral code breakdown to support the show. Now a question how has Russia and Ukraine change things if at all? There was an interesting discussion in Reuters from a former bank of Japan official. He said, China's rapid progress in developing a digital yuan has alarmed some lawmakers in G 7 advanced economies as a potential threat against the U.S. dollar's global hegemony. There's a chance a country like China could promote usage of digital yuan for cross border transactions and create a currency block to counter the dollars dominance. That idea of a new currency block is obviously something that people are thinking a lot about right now as it relates to the dollar, the ruble, the Chinese currency, et cetera. What now about the European Central Bank? As you've heard in a few different shows, we've seen an acceleration in tone around digital asset regulation, have we seen the same thing around a digital Euro? The answer is sort of. On March 11th, coindesk wrote ECB's Lagarde supports acceleration of digital Euro work. This was during an ECB press conference and referred to the ECB's two year investigation into a digital Euro that started last October. Lagarde said, I think we have to be a little bit ahead of the curve if we can on that front. So I hope we can accelerate the work. Also, like in China, the Russian Ukraine war created a new context again from coin desk on March 31st. Small digital Euro payments won't need laundering checks, ECB official says. The article writes a potential new digital Euro would allow anonymous transactions for small payments in spite of anti money laundering norms, a leading member of the European Central Bank said. The suggestion stands in contrast to propose rules for private cryptocurrencies like Bitcoin where lawmakers are debating a plan to outlaw privacy for even low value transactions. You really don't love to see it. What about the U.S.? Well, there has been a lot going on over here as well. In early February, the Boston fed released its discussion paper regarding the U.S. CBDC design, codenamed project Hamilton, and then in March, The White House released the long awaited executive order on cryptocurrencies that included a call for governments to quote explore a U.S. Central Bank digital currency. In the event that issuances deemed in the national interest. Now much more than previous documents and statements, this executive order made the administration's intention to pursue a digital currency clear, whereas the fed has hedged in the past, this document did not. One of the 6 bullets on the summary fact sheet was, quote, explore a U.S. Central Bank digital currency by placing urgency on research and development of a potential United States CBDC should issuance be deemed in the national interest. The order directs the U.S. government to assess the technological infrastructure and capacity needs for a potential U.S. CBDC in a manner that protects American interests. The order also encourages the Federal Reserve to continue its research, development and assessment efforts for a USC BDC, including development of a plan for broader U.S. government action and support of their work. This effort prioritizes U.S. participation in multi country experimentation and ensures U.S. leadership internationally to promote CBDC development that is consistent with U.S. priorities and democratic values. Now, while the EO was greeted largely within enthusiasm in the cryptocurrency industry, particularly around the productive tone as it related to digital assets as a whole, there was some concern, especially from the crypto aligned part of Congress and the Senate on the CBDC provisions. On March 30th, congressman Tom emmer tweeted the U.S. is not quote behind China on crypto. CBDCs are not crypto. They're a government surveillance tool. Crypto creates freedom, it doesn't destroy it. Remember, earlier in the year emmer had introduced legislation that would prevent unilateral fed control of a U.S. digital currency. In a statement at that time, emmer said as other countries like China develop CBDCs that fundamentally omit the benefits and protections of cash, it is more important than ever to ensure the United States digital currency policy protects financial privacy, maintains the dollar's dominance and cultivates innovation. CBDCs that fail to adhere to these three basic principles could enable an entity like the Federal Reserve to mobilize itself into a retail bank, connect personally identifiable information on users, and track their transactions indefinitely. Not only with the CBDC model centralized Americans financial information, leaving it vulnerable to attack, but it could also be used as a surveillance tool that Americans should never tolerate from their own government. Senator Ted Cruz also just released something very similar in the Senate. Meanwhile, on the other side of the aisle, Warren has come out in favor of a Central Bank digital currency. So seemingly some partisanship growing, but don't let that fool you as it's not that simple. There is another entire type of CBDC Bill in the E cash Bill. It was introduced in the House by Stephen lynch, the chair of the House financial services committee's FinTech task force. This is basically a CBDC without the Central Bank. The act was instructed the treasury, not the fed to lead a pilot program to test the digital dollar safety functionality and interoperability with other payment systems and financial institutions. This would be something that would be on cards on mobile wallets. It would have a physical dimension. According to a press release, the bill mandates that the E cache includes features, quote, generally associated with the use of physical currency, including anonymity, privacy, and minimal generation of data from transactions. Not only that, but the digital dollar must also work for peer to peer payments offline and be stored on hardware devices that are quote distributed directly to the public. I think it's clear that there is going to be a much bigger debate around not just Central Bank digital currencies in the U.S., but cash and monetary privacy more broadly. And it's a conversation we sorely need to have. So I think it's safe to say that we are nudging towards the CBDC era. It is not fully here yet. You don't have any of the great economies with the CBDC up and running, although China is certainly getting close. This conversation about CBDCs is going to shape discussions of stablecoins and crypto regulation more broadly. And frankly, I think it's a good thing that we're making financial privacy such an issue now. But with that, I want to say thanks again to my sponsors, nexo IO, arculus and FTX, and thanks to you guys for listening. Until tomorrow be safe and take care of each other. Peace. Hey, breakdown listeners come join coin desks consensus 2022. The festival for the decentralized world, this June 9th through the 12th in Austin, Texas. This is the only festival showcasing and celebrating all sides of blockchain, crypto ecosystems, web three, and the metaverse, and is designed for crypto newbies, investors, entrepreneurs, developers, and creators. Don't miss speakers like Kathy wood, SPF, CZ, punk 6 5 two 9 and Joe lubin to name just a few. Use code breakdown to get 15% off your pass at coindesk dot com slash consensus 2022..

Coming up next