CBDCs Should Protect Privacy, not be a Surveillance Tool: Former CFTC Chair

The former chair of the Commodities Futures Trading Commission (CFTC) thinks central bank digital currencies (CBDCs) should move from “surveillance coins” to “freedom coins” in the US.

Christopher Giancarlo wrote in The Hill on March 13 that the U.S. “must influence” CBDC development to defend “democratic values like freedom of speech and the right to privacy” via bitcoin protocols. The Digital Dollar Project, co-founded by Giancarlo, studies the effects of a U.S. CBDC. He and API fellow Jim Harper wrote a March 1 paper for the American Enterprise Institute on privacy.

He claimed the U.S. should support a “freedom coin”—a CBDC with maximum privacy. In the study, Giancarlo and Harper suggested that CBDCs may “reassess modern financial surveillance activities” and strengthen constitutional protections. The authors suggested “intelligent enforcement” of crime prevention using these technology.

First, the U.S. must review banking surveillance policies. The authors criticized one recent document from U.S. President Joe Biden’s administration: ”The OSTP document showed “unwillingness to advance beyond today’s constitutionally questionable financial surveillance system,” they said.

Giancarlo and Harper said the OSTP’s proposed AML and KYC standards allowed too much surveillance without probable cause. They stated that CBDCs may be employed in China if privacy isn’t assured. The People’s Bank of China’s visibility of all e-yuan transactions “would empower the Chinese government to link political conformity to individual prosperity and condemn political dissenters to poverty,” they said.

U.S. Senator Tom Emmer, a vocal opponent of a CBDC who sponsored the CBDC Anti-Surveillance Act in 2022, shares the writers’ concerns. Emmer worries about a CBDC that “tracks transaction level data down to the individual user” and can “block out politically unfavorable conduct.” U.S. House Blockchain Caucus co-chair Emmer.