As a reminder, CBDCs are similar to Stablecoins in that they are digital tokens pegged to the price of a sovereign currency similar to the US dollar. However, instead of being issued by private companies or even anonymous developers in decentralised networks, as is the case with full-fledged cryptocurrencies, CBDCs are issued and backed by governments or central banks.

Well, this, in theory, allows the authorities to not only monitor the actions of a certain citizen, but also, in theory, to limit his or her activity in the form of buying certain goods or services. Still, the current form of fiat in the form of cash allows people not to leave traces when making transactions. Well, the mass implementation of CBDC will mean the disappearance of this right, which does not seem to be the best idea for the privacy of ordinary people.

It's important to understand that the anonymity of cash doesn't mean that everyone who owns and enjoys this form of money is a criminal or anything like that. The same is true for users of cryptomixers along the lines of Tornado Cash, who simply do not want to leave a trail on the blockchain and the ability to trace their activities. Typically, such people value privacy and see it as their deserved right, which in principle it is.

So the prospect of a CBDC launch is understandably unsatisfying. Fortunately, officials understand this as well.

What’s the main drawback of CBDC

The congressman made his views known at an event organised by the Cato Institute. Emmer argued that for CBDC to have a serious chance of development, digital currencies must get the green light from the US Federal Reserve and it is up to Congress to approve them. However, the politician does not think that a government victory in this confrontation would be a good scenario. Here’s his rejoinder on that point.

As the federal government seeks to maintain and expand the financial controls to which it is accustomed, the idea of a central bank digital currency is gaining traction in the institutions of government. I am confident that American values will always defeat the power-hungry whims of unelected bureaucrats.

According to Decrypt’s sources, the politician’s fears stem from the belief that CBDC in the US would undermine the financial privacy of Americans – again, such technology would allow government agencies to track each citizen’s individual spending. This information could or would be used to “suppress politically unpopular activity”.

It’s simple here. CBDC is an easy way to capture all the financial transactions of each individual. If that individual becomes displeasing to the authorities in theory, their accounts will be blocked and their money may even be taken away. In other words, in the long run, CBDC is a serious tool of censorship, and it is almost instantaneous.

Over 90 countries, including the U.S., have already demonstrated their progress in developing the CBDC. The map below shows the current stage of development for different countries.

Emmer also believes that US policymakers should not look to China, which is consistently adopting its digital version of the yuan. Here’s the congressman’s quote on the subject.

Nothing could be more dangerous than following a contrived sense of urgency. This will lead to the development of a CBDC that is not open and accessible.

This week the central bank’s digital currency was integrated into the popular Chinese super app WeChat. China’s progress in this area just seems to be causing some congressmen to panic. In particular, last September, the US House Financial Services Committee held a hearing in which some officials said that America should create a CBDC for the sake of preserving the US dollar’s status as the world’s reserve currency.

This week, Fed Vice Chairman for Supervision Michael Barr also spoke about the CBDC’s prospects at an event organised by the Peterson Institute for International Economics. He said the Fed was aware of the privacy concerns that had been raised about the creation of the CBDC. He also added that a centralised digital currency in the US should have the same degree of “insulation” from government oversight as conventional bank deposits. Here’s the quote.

There are a number of questions people are raising around privacy. How much information will the central bank or other government agencies have?

Barr noted that while the Fed is “very focused on research and development” for CBDC, there is still no certainty that the technology will be used. However, the Federal Reserve Bank of San Francisco is actively recruiting senior developers whose expertise would come in handy specifically in the creation of CBDC. The expert added at the end that if CBDCs are launched in the US, steblecoins may become more popular with some people “because they are worried about privacy and distrust the government”.


We believe that such concerns about CBDC are justified. After all, central bank digital currencies give the government much more control over financial flows - and that's hardly a good idea in the long run. The only good thing about this situation is that the massive popularity of CBDC will make people value their privacy and at the same time pay attention to fully decentralized cryptocurrencies such as Bitcoin, ETH, SOL and other popular coins.