US Congress Questions Impact Of CBDC’s Emergence On Crypto. Stephen Lynch expressed concern about the impact of the issuance of the Central Bank Digital Currency (CBDC) for stablecoin crypto types that are currently circulating.
“I worry about a lot of stablecoins and other cryptocurrencies. Are they zero when we create a CBDC that has the full trust and praise of the United States behind it,” said Lynch, quoted from Decrypt, Thursday (9/3/2023).
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The Fed has previously explored the concept of issuing digital dollars for years, publishing research since 2016. CBDCs are similar to digital tokens in use today such as stablecoins which are pegged to fiat currencies, but are administered by individual governments rather than issued by private companies in decentralized network.
The chairman, The Jerome Powell, indicated it was not clear to him why any cryptocurrency that doesn’t “ride on the credibility of the dollar” like Bitcoin or Ethereum has any value at all, regardless of the CBDC’s release.
He refrained from commenting on how they might be affected by the CBDC as a result.
“I’ve never understood the valuation, it has no intrinsic value, but nonetheless, it’s trading at positive numbers,” Powell said.
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He also revealed it was difficult to assess how stablecoins would be affected, citing a lack of regulation in the US that made the reserves of some stablecoins opaque.
US Congress Questions Impact Of CBDC’s Emergence On Crypto. Stablecoins like Tether have faced punishment in the past in the US for making false statements about their token’s endorsement. Last month, Paxos said it was preparing for a potential lawsuit from the Securities and Exchange Commission over the Binance-branded BUSD stablecoin.
