Strong move by US Representative Tom Emmer and a potential threat of another crypto ban in Asia: a recap of last week’s top crypto policy stories is at this.
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Last week saw an unlikely first move in the opening narrative battle around a potential US central bank digital currency: Rep. The idea is to legally limit the Federal Reserve’s ability to issue retail CBDCs and take on the role of a retail bank. This could be of great consequence as we have yet to see a similarly clear manifestation of an opposing stance. In fact, it’s not even clear whether other US lawmakers take a strong stance on the matter, perhaps condemning privately issued stablecoins as a digital alternative to dollar. By treating the Fed’s potential CBDC as a privacy threat first, Emmer could tilt the conversation in a friendly direction to the less centralized designs of digital currencies.
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US Representative vs. US CBDC
The tension between decentralized digital currency and state-issued CBDCs is at the heart of the ongoing global shift to digital payments rails. Last week marked the first time a sitting US Congress member took an official stance against potential retail CBDC moves by the Federal Reserve.
The Sovereign Digital Fiat is certainly more convenient than its analog predecessor, but the privacy costs of such convenience can be enormous. If all money were CBDCs, the government’s ability to monitor finances would become virtually unlimited, denying everyone the anonymity that cash transactions once had. Representative Emmer cited these privacy concerns as the reason for introducing a bill that would prohibit the Fed from issuing direct-to-consumer CBDCs and operating as a retail bank.
While it may take a long time before Emmer’s initiative reaches the House of Commons, the mere articulation of such position by a member of Congress can have a significant impact on the policy discussion around the world. around a potential CBDC. This is especially true as a number of top Fed officials have stated their willingness to delay the matter before Congress.
Another Scary Ban, Another El Salvador
Elsewhere in the world, signals that various regulators have sent over the past week point to the possibility of banning crypto exchanges in Pakistan to consideration of scaling back the Bitcoin bidding move under legal form of El Salvador in Tonga. Pakistan’s move towards a blanket ban follows a familiar scenario as the country’s central bank actively pledges to ban cryptocurrency exchanges and punish crypto exchanges. The task of determining the legal status of cryptocurrencies rested with the High Court of Sindh Province, but the judges declined to make a final call and referred the matter to specialized government ministries.
On the opposite end of the regulatory spectrum, the island nation of Tonga may soon be embarking on the path of Bitcoin adoption. An announcement by Lord Fusitu’a, a former Tongan member of parliament and chairman of several inter-regional parliamentary groups, suggests that the country could legally bid for Bitcoin as early as late 2022. Given that Tongans rely heavily on remittances, replicating El Salvador’s move almost the same seems reasonable.
IMF sees collapse of crypto hedge role
Among the many risk factors that analysts have attributed to digital assets over the years, financial stability risks stemming from the growing correlation of cryptocurrencies with the emerging equity markets. as a novelty. However, this is what a team of International Monetary Fund researchers concluded when examining Bitcoin’s dynamics with the S&P 500 index correlation. The authors argue that the connection is increasing. between the two assets loses the hedge function of cryptocurrencies, as it no longer serves to diversify investors’ risk. The conclusions of the IMF analysts make a logical point that a coordinated, global approach is needed to regulate cryptocurrencies.