The U.S. Senate Banking Committee is back to discussing bitcoin, stable coins, and a potential digital dollar.
Is a Digital Dollar Heading Back to the Drawing Board?
The idea of a digital dollar first made its way into Senators’ minds when the $2.2 trillion stimulus package was introduced in late March. Many regulators and lawmakers thought a digital dollar that could potentially be deposited straight into peoples’ bank accounts would be a better way of handling distributions over paper checks, as these would arrive by mail and could potentially lead to further COVID contamination.
The digital dollar did not come to reality then, but perhaps the future has some sort of hidden pathway it’s yet to reveal. Chairman of the committee Mike Crapo – a Republican Senator from the state of Utah – says that the spread of the coronavirus has caused many users in America to turn to completely digital means very quickly, which has caused the lawmaking system to potentially revamp itself and reexamine how it does business.
This involves the introduction of even more digital systems as a way of providing American citizens with what they need to survive throughout this entire crisis, and that may include stable coins. Crapo says that he and the entire committee are looking to learn all they can about the abilities of stable coins and related blockchain applications, and that the U.S. government is now looing into creating its own central bank digital currency (CBDC).
In an opening statement to his fellow panelists, Crapo explained:
Stable coins, which may be issued by a central entity, deliver price stability by having their value pegged to another asset, like commercial bank deposits or government-issued bonds… And as I said in our last digital currency hearing, it seems to me that these and similar innovations are inevitable, beneficial, and the U.S. should lead in their development.
Democrat Senator Sherrod Brown also made his opinions clear in the hearing, though Brown took an opposite approach to crypto. While Crapo praised stable currencies and other blockchain entities, Brown referred to assets like bitcoin and Ethereum in a negative light, claiming that they were simply assets designed for use by “wealthy investors.”
We heard all kinds of promises about how cryptocurrencies like bitcoin and Ethereum would fundamentally change our relationship with the banking system. Workers would be able to efficiently – and cheaply – transfer money, make payments online, or buy groceries, all without a bank account, but that’s not what happened. Bitcoin was primarily used by wealthy investors.
Not Everything Works
Brown also criticized companies that delved in BTC, claiming:
These companies promised their algorithms would guarantee ‘innovative’ products and services to people locked out of the financial system. That’s simply not true. The algorithms use biased data, and we end up with more discrimination against the very people they say their products will help.