Tom Emmer warned that the design of the CBDC must consider transparency to avoid the risk of financial privacy violations. The legislators believe the companies participating in the project should not have an unfair competitive advantage over competitors.
Tom Emmer, the representative for Minnesota in the US Congress, led an investigation into the development of a CBDC. He and eight other lawmakers wrote to Susan Collins, president, and CEO of the Federal Reserve Bank (Fed) of Boston.
The nine members of Congress expressed concern about the Hamilton Project, an initiative to develop a US CBDC. The Fed Bank of Boston is working with the Massachusetts Institute of Technology (MIT) digital currency initiative.
Emmer said Congress noted that some companies participating in the project aim to design a CBDC to sell to commercial banks. Therefore, he highlighted that any US digital dollar must be open, permissionless, and private.
The congressional representative warned that the design of the CBDC must consider the values of transparency. He explained that it would prevent the risk of financial privacy violations observed in China.
In addition, Emmer noted that the work of the Boston Fed alerts them to a lack of transparency regarding their partnership with the private sector. Some companies could enjoy an unfair advantage amid the lack of guarantee of privacy, sovereignty, and free market.
A CBDC Could Risk Privacy and Financial Freedom
In the letter, the nine members of Congress ask about the funding and commitment of the Hamilton Project to the private sector. Additionally, they seek to learn how the Boston Fed would address the risks of a CBDC to financial privacy and freedom.
The legislators consider it crucial that the companies participating in the Hamilton Project do not have an unfair competitive advantage over competitors. They also believe the federal government and the Fed banks should not pick winners or losers in the private markets.
Emmer introduced a bill in January to ban the Fed from issuing a CBDC directly to individuals. At the time, he stressed that the US central bank should not have the authority to offer retail bank accounts.
The Fed Bank of New York recently completed the first phase of the Cedar Project. They are collaborating with nine leading banks to explore the feasibility of wholesale digital asset transactions.
Meanwhile, Boozman Urges the CFTC to Regulate Cryptocurrencies
John Boozman, the representative for Arkansas in the US Senate, said the Commodity Futures Trading Commission (CFTC) is the primary regulator of the cryptocurrency spot market. He stressed that there must be regulation for exchanges trading commodities like wheat, oil, or Bitcoin to protect consumers.
The legislator noted that the CFTC has sought to protect consumers through actions against bad actors. Furthermore, he believes that this agency is the ideal one to regulate the spot market for digital commodities.
In August, Boozman and other senators introduced the Digital Commodity Consumer Protection Act (DCCPA). That legislation established that the CFTC would have exclusive jurisdiction over the digital commodity spot market.
This year, the US Congress has received two bills to make the derivatives regulator the primary regulator of the crypto market.
By Alexander Salazar