Senate Banking Committee Remains Open to Idea of Digital Dollar in Tuesday's Hearing

While not every lawmaker was on board with the idea of a central bank digital currency during a Senate Banking Committee hearing Tuesday, no one explicitly rejected it either.

Jul 1, 2020 at 12:00 a.m. UTC

Updated Sep 14, 2021 at 8:58 a.m. UTC

U.S. Senator Mike Crapo discussed stablecoins in his opening remarks during a hearing on digitizing money Tuesday. (Chief Mass Communication Specialist F. Julian Carroll/Wikimedia Commons)

Not every U.S. lawmaker is on board with the idea of a central bank digital currency (CBDC) or digital dollar, but no one explicitly rejected it during a hearing of the powerful Senate Banking Committee.

That’s probably the biggest takeaway from Tuesday’s hearing, where the panel heard from former regulator turned CBDC evangelist Chris Giancarlo, Paxos CEO Charles Cascarilla and Duke Law professor Nakita Cuttino as expert witnesses.

The lawmakers present asked questions about financial inclusion, including what potential regulations or laws might make digitization easier and more accessible to the unbanked.

“The U.S. needs a digital dollar,” said Sen. Tom Cotton (R-Ark.). “The U.S. dollar has to keep earning that place in the global payments system. It has to be better than bitcoin ... it has to be better than a digital yuan.”

Other highlights of the hearing:

Chairman Mike Crapo (R-Idaho) noted some traditional financial systems may be limited in how accessible they are, citing the need for pre-existing bank accounts. Fintech solutions such as stablecoins can provide an alternative, Crapo said, though there are concerns around the oversight of some of these coins, which unlike most cryptocurrencies are designed to hold their value relative to fiat.
Ranking Member Sherrod Brown (D-Ohio) warned that tech companies have made large promises about disrupting existing industries. He pointed to ride-sharing and social media services, saying they promised to “build a more just and equal country” but instead the companies essentially found ways to “pay themselves.”
While only eight senators asked questions out of 25 on the committee, every question was relevant to the topic of digitizing payments, which you can’t always count on (recall last year’s off-the-rails Facebook grillings).
Cuttino called for open access to real-time payments: “In the absence of public policy addressing open access payments and real-time payments, low-income and moderate-income Americans will continue to have limited resources needed, whether by traditional fringe services like payday loans or some novel fringe service.”
The current accounts-based payment architecture in use today is “slow and exclusionary,” Giancarlo said. While a token-based architecture is not a “panacea,” it can help provide broader access.
Cascarilla said a federal framework toward regulating crypto companies could be beneficial, though he noted that his company operates nationwide despite operating under the New York Department of Financial Services’ limited-purpose trust charter.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Nikhilesh De

Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.