The concept of a “digital dollar” will as soon as once more rear its head earlier than the U.S. Congress on Tuesday.
The U.S. Senate Committee on Banking, Housing and City Affairs will maintain a listening to on “The Digitization of Money and Payments,” and whereas few particulars have been launched, the witnesses – former Commodity Futures Buying and selling Fee (CFTC) Chair J. Christopher Giancarlo, Paxos co-founder and CEO Charles Cascarilla and Duke College Visiting Professor of Legislation Nakita Cuttino – recommend the main focus may heart partly round central bank digital currencies and stablecoins.
The listening to may tread comparable floor to a current one hosted by a subcommittee with the Home Monetary Providers Committee, which addressed questions of monetary inclusion and the way greatest to ship aid funds to U.S. residents shortly and effectively. Witnesses on the time known as for tried-and-proven alternate options to constructing a novel tokenized system.
Cuttino, in pre-written opening remarks, stated whereas some U.S. residents would possibly flip to digital banking and fee programs, “low-income Americans disproportionately prefer to transact with bank tellers.”
Digital programs include their very own drawbacks: almost 1-in-5 Individuals don’t have smartphones, limiting their entry to digital banking providers, whereas almost 10 p.c don’t have various web entry of their houses. Cuttino additionally raised questions concerning the enterprise models for central bank digital currencies and stablecoins.
“If services are ‘free’, what alternative tradeoffs are consumers making (e.g., consumer data)? Is consumer data being used to exploit behavioral weaknesses to their detriment? Additionally, are consumer conditions improved by a shift to the novel solution? Ultimately, fintech solutions should not merely move the most Americans from the fringe financial marketplace to a fringe digital economy,” Cuttino says.
“Consumers and institutions alike are held back by the inability to have timely access to their own funds because of settlement delays in bank transfers, international wires and other activities that can take over five days to settle,” he says. “This makes it difficult to manage other payments with any kind of predictability. On an economy-wide scale, this creates a complex daisy chain of loan obligations and unnecessary intermediaries.”
This structure have to be up to date for the 21st century, he says, echoing a typical chorus from former CFTC Chair Giancarlo, who has equally advocated for future-proofing the greenback.
“The Digital Dollar Project believes the opportunity is at hand not just to imagine such an ecosystem, but to actually build it with such services for low-income and underbanked communities as priorities from the start,” he says in his pre-written testimony.
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