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Digital Dollars Take Center Stage in Hearing Before US Senate

In a hearing before the Senate Banking Committee today on Tuesday, central bank digital currencies took center stage before an audience of Senators looking to upgrade financial infrastructure and expand financial inclusion in the country.

The witnesses and the concerns

The banking committee welcomed Paxos CEO Charles Cascarilla, financial inclusion professor and researcher at Duke Nakita Cuttino, and former CFTC Chair and current champion of the Digital Dollar Project Chris Giancarlo as witnesses.

Cascarilla provided expertise on how existing stablecoins operate and the gaps in current finance that they fill. In his words, “Stablecoins address the antiquated plumbing of our financial system.”

“We need to address the frictions that exist with the payments system now,” Cuttino said. “Of course with innovation there comes reduced cost.” Given the focus of her research, Cuttino provided the greatest insight on the specific concerns of the unbanked:

“Any solution should have low transaction costs. In the early days for Bitcoins the transaction cost was extremely high — and remains extremely high.”

As an active lobbyist for a U.S. CBDC, Giancarlo promoted a digital dollar as a sweeping upgrade to an outdated system. “The world is asking what role America will play in the future of money. The choice is we either take a leadership role or accept that others will lead and enshrine their values in money,” Giancarlo said.

Committee leadership and party lines

As has been the case for many hearings on cryptocurrencies and blockchain technology, party lines produce distinct talking points.

Committee Chair Mike Crapo (R-ID) cautioned that “the U.S. must have clear rules of the road in place that protect businesses and consumers without stifling innovation,” echoing a broad desire to support businesses. Many republican committee members emphasized competition with China, which seems to be much further along with a digital yuan tha...

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