Former CFTC Chair Giancarlo on Russian Sanctions, CBDCs and Dollar Hegemony

If the U.S. doesn’t move on a digital dollar, it can lose its technological and financial edge, “Crypto Dad” told CoinDesk TV.

AccessTimeIconFeb 25, 2022 at 10:55 p.m. UTC
Updated Feb 25, 2022 at 11:04 p.m. UTC

Fran is a TV Writer and Reporter. He has written for CNBC Make It and Inc. He owns no crypto holdings.

Former Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo, is worried central bank digital currencies (CBDC) in the hands of adversaries can bust U.S. sanctions. That’s why the U.S. should accelerate creating its own “digital dollar,” he said on CoinDesk TV’s “First Mover” program on Friday.

Giancarlo, a co-founder of the Digital Dollar Foundation and senior counsel at Willkie Farr & Gallagher’s Digital Works unit, advocates for a CBDC to further U.S. interests and hegemony.

“CBDCs are absolutely being seen as a form of statecraft by countries that have been subjected to Western sanctions in the past and wish to have a way to avoid that in the future,” he said.

His comments come amid a period of increasing geopolitical tension – including Russia’s invasion of Ukraine and the subsequent financial sanctions imposed on the country by the West – and the rise of apolitical financial networks.

Nascent tools such as CBDCs and cryptocurrencies can theoretically bypass the dollar-denominated global economy, thereby thwarting U.S. influence abroad. China is far along on a pilot for its digital yuan, while Russia’s central bank only recently announced it has begun studying a CBDC to create a digital ruble.

Both nations have severely clamped down on domestic crypto use.

Giancarlo, nicknamed “Crypto Dad” by many, began his CBDC advocacy in 2020 through the Digital Dollar Project, which launched a pilot program for the greenback last year. In a Wall Street Journal op-ed, he argued that if the U.S. could send a man to the moon, the country could send the dollar into cyberspace.

Developing a CBDC in the U.S., however, will likely take years. A long-awaited Federal Reserve white paper on the subject, published in January, was seen as a “first step” towards an official digital dollar, but did not commit to a timetable.

Although Giancarlo claims a U.S. CBDC would, as he previously wrote, “extend the central role of the U.S. dollar in global finance and allow it to compete confidently in the new digital era,” he is not “for or against” sanctioning Russia. “I'll leave the geopolitical response to the people that are in charge of it,” he said.

He is concerned, however, that the extensive use of sanctions could be “the last hoorah” for that political weapon, and drive foreign states and companies to circumvent U.S. law.

“I think [sanctions] could drive and accelerate work by China and Russia to develop CBDCs and move portions of the globe off the dollar based system that we have today,” he said.

That could be concerning, he said. If the U.S. fails to accelerate developing a CBDC, its rivals, particularly China, could end up dominating the underlying technology used by others.

“In the same way they've done with 5G technology, they can be a major exporter of CBDC infrastructure,” Giancarlo said. “It's going to be CBDC-in-a-box provided to you by the People's Bank of China.”

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.

CoinDesk - Unknown

Fran is a TV Writer and Reporter. He has written for CNBC Make It and Inc. He owns no crypto holdings.

CoinDesk - Unknown

Fran is a TV Writer and Reporter. He has written for CNBC Make It and Inc. He owns no crypto holdings.

Trending

1
CoinDesk - Unknown
El Salvador Purchases 80 Additional Bitcoin at $19K, President Bukele Says

The last purchase by the Central American country had been in May.

CoinDesk - Unknown
2
CoinDesk - Unknown
VanEck Files New Application for Spot Bitcoin ETF

The application comes about eight months after the SEC rejected the investment firm’s last application.

CoinDesk - Unknown
3
CoinDesk - Unknown
First Mover Asia: Speculating on Tokenized Carbon Offsets Won't Help Climate Crisis, Says Consultant; BTC Falls Under $19K Amid Wider Crypto Woes

A significant number of carbon credits are from projects 8-10 years old; Ether and other major altcoins plummet.

CoinDesk - Unknown
4
CoinDesk - Unknown
Crypto Lender Celsius Network Exploring Options to ‘Preserve and Protect’ Assets

Celsius Network is consulting with experts to try to reduce the fallout from its mid-June swoon.

CoinDesk - Unknown