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ccording to a recent op-ed in The Hill, Christopher Giancarlo, former chair of the Commodity Futures Trading Commission and known as "Crypto Dad" for his pro-crypto stance, suggests that the United States should lead the development of Central Bank Digital Currencies (CBDCs) away from being used as "surveillance coins" and instead prioritize creating "freedom coins."

He argues that CBDCs should protect democratic values such as freedom of speech and privacy rights, using technology already in use by some cryptocurrency protocols and that the U.S. must play a leading role in influencing CBDC development towards this end.

In a report co-authored for the American Enterprise Institute (API) on March 1, Giancarlo, the co-founder of the Digital Dollar Project, discussed the privacy considerations of a U.S. CBDC. Along with API fellow Jim Harper, Giancarlo argued for a CBDC that ensures a high level of privacy, which they referred to as a "freedom coin."

They believe that CBDCs presents an opportunity to reevaluate current financial surveillance practices and could potentially strengthen constitutional protections. To achieve this, CBDCs could incorporate cryptographic technologies like zero-knowledge proofs, homomorphic encryption, and multiparty computation, which allow parties to prove encrypted propositions without revealing underlying information.

The utilization of these technologies could facilitate intelligent enforcement of measures to prevent criminal activities. However, before implementing them, the United States would need to review its current policies for financial surveillance.

They expressed particular concern regarding a recent report issued by the White House Office of Science and Technology Policy (OSTP) on the technical assessment of a U.S. Central Bank Digital Currency System. They maintained that the report demonstrated that financial surveillance in the West bears a greater resemblance to that of China than is commonly acknowledged.

According to Giancarlo and Harper, the OSTP report displayed a reluctance to move beyond the current financial surveillance system, which they deemed constitutionally questionable. They cited Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations as problematic, contending that these measures permitted excessive surveillance without sufficient justification.

If a CBDC fails to ensure privacy, there is a possibility that it may be exploited as it is in China. They observed that the e-yuan, by allowing the People's Bank of China to access all transactions, enables the Chinese government to associate political conformity with individual prosperity and marginalize political dissenters.

The viewpoint echoes the concerns articulated by U.S. Senator Tom Emmer, a vocal opponent of a U.S. CBDC, who proposed the CBDC Anti-Surveillance Act in 2022. Emmer apprehends that a CBDC that tracks transactions at an individual level and has the potential to suppress politically unpopular conduct could be developed. He is also a co-chair of the U.S. Congressional Blockchain Caucus.

Source:
https://cointelegraph.com/news/cbdcs-should-protect-privacy-not-be-a-surveillance-tool-former-cftc-chair

Posted 
Mar 14, 2023
 in 
Crypto News
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