Reject CBDCs and look to BTC and stablecoins instead

U.S. think tank Bitcoin Policy Institute is calling for the United States to reject Central Bank Digital Currencies (CBDCs) and look to Bitcoin (BTC) and stablecoins as alternatives. 

In a whitepaper shared on Sept. 27, authors including Texas Bitcoin Foundation executive director Natalie Smolenski PhD, and former Kraken growth lead Dan Held argue CBDCs would strip the public of financial control, privacy and freedom.

#CBDCs don’t solve any problem.

They do extend state control to the last remaining free areas of individual economic life.

My latest white paper for the #Bitcoin Policy Institute. ⬇️ https://t.co/PS4rOlvcOw

— Natalie Smolenski (@NSmolenski) September 27, 2022

Smolenski and Held argued that CBDCs would essentially “provide governments with direct access to every transaction […] conducted by any individual anywhere in the world and that it will only be a matter of time before “transaction data will eventually become available for global perusal” as government IT infrastructure is a “target of constant and escalating cyberattacks.” 

The pair also argued that CBDCs would also enable governments to “prohibit, require, disincentivize, incentivize, or reverse transactions, making them tools of financial censorship and control.”

“As a direct liability of central banks, CBDCs become a new vanguard for the imposition of monetary policy directly on consumers: such policies include, but are not limited to, negative interest rates, penalties for saving, tax increases, and currency confiscation.”

Smolenski and Held suggest this greater focus on surveillance will mimic “the Chinese government’s surveillance efforts” in bringing state visibility to all financial transactions that are not already observed through the digital banking system.

“As the world goes the way of China in the 21st century, the United States should stand for something different,” they argued.

The authors also say many of the functions CBDCs provide can already be solved with a combination of Bitcoin, privately-issued stablecoins, and even the U.S. dollar, noting:

“For most people, a combination of physical cash, bitcoin, digital dollars and well collateralized stablecoins will cover virtually all monetary use cases.”

Smolenski argued that BTC and private stablecoins will allow instant, low-cost digital transactions both domestically and across borders, while “digital dollars and stablecoins will continue to be subject to AML/KYC compliance by the platforms that…