BitOoda Regulatory Analysis, 11/2/20: CBDC Roundup
With the recent acceleration of digital asset regulatory initiatives across U.S. government agencies, it has been several weeks since we brought our readers up to speed on the latest developments with Central Bank Digital Currencies (CBDCs). We continue to see CBDCs as a critical expansion of the digital asset ecosystem that will spur broader adoption, the development of new products and services, and opportunities for public-private partnerships. This assessment is why we continue to closely follow global CBDC developments, particularly the continuing discussion around the development of a Digital Dollar.
Key topics we have been watching around the world over the past few weeks include:
· China continued to surge toward the launch of the digital renminbi, including proposing a new banking law that would outlaw any yuan-pegged token except for the official national virtual currency, while Huawei rolled out a new line of smart devices that feature a built-in wallet to store the digital yuan.
· The Bahamas officially launched its “sand dollar,” the first CBDC to have been fully deployed.
· Japan’s LINE Corporation launched a blockchain platform designed to allow central banks to develop and manage CBDCs, while Mastercard also released a platform to help banks “assess and explore” national digital currencies.
· On the international front, the G20 and the Financial Stability Board (FSB) announced they will work with the IMF, World Bank, and Bank of International Settlements (BIS) on a regulatory framework for CBDC design, technology, and development. Separately, the Swiss National Bank stated that it plans to work with BIS to test a CBDC by the end of 2020.
As usual in the world of digital assets, the policy position of the U.S. government is unclear, with Fed chair Jerome Powell and his staff acknowledging that a CBDC might improve the payment system in the U.S., but stating that it is “more important for the United States to get it right than it is to be first.” As we have previously noted — and as was opined by CoinDesk and Forbes following Mr. Powell’s recent statements — we assess that Beijing’s strong focus on its digital currency program is intended to challenge the U.S. dollar for monetary supremacy and establish a position of primacy in the global digital economy. The macro-level risks of being left behind by delaying the Digital Dollar far outweigh the short-term challenges noted by Mr. Powell and other conservative policymakers.
We applaud industry experts and thought leaders, such as the Digital Dollar Project (DDP), who are driving the discussion forward with U.S. regulators and decisionmakers. For example, the DDP published a report analyzing nine pilot programs to demonstrate the potential economic benefits of a U.S. CBDC for different stakeholders. This type of forward-thinking and scenario-based research addresses the technological, regulatory, and policy elements of CBDCs in a way that tees up an effective discussion on risks and benefits.
As we at BitOoda continue to drive the institutionalization of the space through the development of innovative, sophisticated, and compliant products and services, we urge the digital asset community to advocate for the broadening of U.S. global digital asset leadership through the more intentional pursuit of the Digital Dollar, which we feel will solidify the mainstream digitization of the financial system and help align government and industry across the digital asset ecosystem.