However, his executive order fell short of creating a strategic bitcoin reserve outright, as some crypto advocates had hoped. Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. The National Law Review is not a law firm nor is intended to be a referral service for attorneys and/or other professionals. The NLR does not wish, nor does it intend, to solicit the business of anyone or to refer anyone to an attorney or other professional.
The interactive database now tracks over 130 countries— triple the number of countries we first identified as being active in CBDC development in 2020. “I believe the U.S. will eventually issue a digital dollar, but I think we are years away from that happening,” Juhle says. “The U.S. may issue a CBDC, but in my opinion it is more likely to lean on public-private collaborations as it does with most infrastructure, research, and economic development projects,” he says. As for Americans in general, it is unlikely they will form a consensus for or against a digital dollar until they get a sense of the structure of a U.S. CBDC and how much of an impact, if any, it would have on the average American.
These transactions are recorded publicly on distributed, tamper-proof ledgers known as blockchains. This open-source framework prevents coins from being duplicated and eliminates the need for a central authority such as a bank to validate transactions. Bitcoin, launched in 2009 by the pseudonymous software engineer Satoshi Nakamoto, is by far the most prominent cryptocurrency, and its market capitalization has peaked at more than $1 trillion. Numerous others, including Ethereum, the second-most popular, have proliferated in recent years. A CBDC is a digital form of central bank money that is widely available to the general public. New payments systems create externalities that impact the daily lives of citizens, and can possibly jeopardize the national security objectives of the country.
“Throw in the fact that people really don’t like using cash — the preferences of the public are pushing governments in this direction as well,” Yermack said. Proponents insist the US is falling behind in financial innovation because it is not moving ahead with a CBDC. Opponents cite disruption to the existing financial system, invasion of privacy, and the potential for government surveillance of citizens as significant concerns.
The Bahamas’ Sand Dollar is considered among the world’s most successful digital currencies. Although a U.S. digital currency would not necessarily change much in terms of everyday experiences like buying goods and services, economists say it could transform central and commercial banking, as well as government sanctions, banking accessibility and taxes. Many governments have taken a hands-off approach to crypto, but its rapid ascent and evolution, coupled with the rise of DeFi, has forced regulators to begin crafting rules for the emerging sector. Regulations vary widely around the world, with some governments embracing cryptocurrencies and others banning them outright. The challenge for regulators, experts say, is to develop rules that limit traditional financial risks without stifling innovation. In recent years, cybercriminals have increasingly carried out ransomware attacks, by which they infiltrate and shut down computer networks and then demand payment to restore them, often in cryptocurrency.
Designating cryptocurrency as a national currency remains a complex and controversial issue. While the U.S. has not yet taken this step, Trump’s executive order represents the most significant policy shift in U.S. crypto history. As more nations explore crypto adoption, the U.S. must decide whether to lead or risk falling behind in the rapidly evolving digital financial landscape. Banks have predatory interest rates, especially as they roll out credit card promotions to a population with low financial literacy. From farmers to landlords to taco stand owners, citizens don’t necessarily see “inclusion” in the formal banking sector as a positive. The United States is actively exploring the potential of a digital dollar, although it has no confirmed CBDC launch date.
Most likely, the United States will get some new regulations around cryptocurrencies and stablecoins next year (probably not as strict as these reports would like) and some encouragement for the Federal Reserve’s work on a digital dollar. Congress doesn’t have to decide quite yet whether the Fed can give digital dollars out to Americans, but that decision will come in the near future. There are going to be many education efforts from agencies in keeping with the consumer protection goals of the administration, so that consumers can be aware of the risks of their purchases and sales. For the average crypto user, there is little immediate impact from these reports, and that’s because even though the reports identify potential policy options for crypto and stablecoin regulation, they do not actually change the regulation status quo domestically. The reports talk at length about how to enhance enforcement capabilities of the agencies, but what the crypto industry needs is clarification regarding which agency is going to be the right forum for their issues—and the reports don’t provide much there. Given that another big news item of the year was the collapse of the stablecoin terraUST and how consumers who had invested heavily lost their savings overnight, a big focus of the reports was also on consumer- and investor-protection standards for digital assets.
