AUSTIN, Texas — You know it’s going to be a fiery conversation when one of the panelists says “F**k the Fed” in his opening statement.
And no, it wasn’t a bitcoin bro saying it; it was Rohan Grey, a law professor at Willamette University and strident critic of the crypto industry, who shares its enmity for the legacy banking system but has very different ideas about how to replace it in the digital age.
Those differences were on full display in the panel discussion at Consensus 2022 on whether the U.S. Federal Reserve should issue a digital dollar or leave such innovation to the private sector. Dante Disparte, head of policy for stablecoin issuer Circle Internet Financial, called central bank digital currencies (CBDC) a “preposterous idea.” However, Grey warned private-sector efforts at creating a widely usable form of money would put the taxpayer on the hook if those efforts failed.
The Fed running its own digital currency is “the equivalent idea of the [Federal Aviation Administration] in the United States building jet engines and flying planes,” Disparte argued during a panel Wednesday at CoinDesk’s Consensus 2022 conference here, touting his company’s USDC stablecoin. “Circle’s not doing this as an academic abstraction. We’re doing it for real.”
But Gray countered that Circle is a private company that is shielded from liability. “If you go under, the public is on the hook for your losses,” he said.
Federal Reserve Vice Chair Lael Brainard recently said her agency is waiting for support from Congress and the Biden administration before the Fed will decide whether to launch a digital dollar. If the central bank ends up issuing that digital currency, it could take at least five years to put it in place. Central bank digital currency holdings and transactions would still be managed through private-sector accounts, Brainard said, and not through direct customer accounts at the Fed.
Disparate contended that the U.S. is under pressure to “out-China China,” which has embraced the idea of a CBDC. It would be issued by “a government that can’t build health care websites that work,” he added.
"This is not free market capitalism,” Grey said of private token efforts. “It's a new generation of crony capitalism.”
Caitlin Long, founder and CEO of crypto bank Custodia, made the point that the Fed has the last say in issuing dollars. She said she’s watching the decentralized financial (DeFi) space growing apart from the traditional U.S. financial system and there’s no way yet for money to move back and forth between them.
Long, whose Wyoming-based bank filed suit against the Fed this week for dragging its feet on the company’s application for a central bank “master account,” argued that the U.S. “should be embracing this new, better payment rail.”
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