Yaya Fanoozi, a cryptocurrency researcher and former CIA analyst, believes that the relatively slow start of the development of a central bank digital currency (CBDC) by the US government could lead to it losing control of the global financial system. The former CIA analyst does not believe that the Chinese-led CBDC movement will replace the US dollar on the world stage, but argues that it could cause geopolitical problems. He explained that sanctioned states seek to transact with financial infrastructure that is not controlled or heavily influenced by the United States in order to more freely move funds across borders. Fanousi explained that government-issued CBDCs could be part of a financial infrastructure that would be accepted around the world. If the US has little influence on these new standards, it “affects US economic policy.” If the US continues to be “on the sidelines” and lag behind CBDC implementation, Fanusi believes that this could cause “problems” and unintended “geopolitical consequences” over time: “The strength of our sanctions power comes from the central role of the US in the global financial infrastructure. So that if the situation changes even slightly (read – the United States loses its role as the leading economy and becomes not only the largest debtor, but simply collapses under the burden of its financial obligations, which is what everything is going for now), this does not mean that China will take over or that the yuan will displace the dollar, but if a new viable rail appears, along which sanctioned entities can now transact, this is a problem.”
However, the US Federal Reserve recently made progress on its CBDC – the digital dollar project – by releasing the latest version of its white paper on January 18: “Today, we are proud to publish an update to the 2023 DDP whitepaper in which we revisit our “champion model” proposed in 2020, are advising the U.S. government and private sector, and look forward to the next phase of CBDC development,” Chris Giancarlo, head of the Digital Dollar Foundation, tweeted on January 18, 2023. It should be noted here that, however, the Federal Reserve did not US government approval to continue the CBDC project.
Fanusi stressed that China has capitalized on near-first-mover advantage by exploring CBDC since 2014 and piloting its digital yuan on January 4, 2022, which Fanusi said has so far processed “millions of transactions” through “millions of wallets.” Fanousi added that there are “many pilot projects” testing smart contracts to add programmability to CBDCs, and that China is helping other countries adopt similar standards. He added that there may be an unspoken “race” going on at the CBDC border as countries seek to gain a geopolitical advantage.
However, previous commentators on the China-U.S. CBDC race have said that China’s CBDC ambitions are solely about domestic dominance and not about trying to beat the US dollar. CBDCs running on government-controlled ledgers are reported to be in some cases more efficient and easier to use than decentralized public networks like Bitcoin and Ethereum. In addition, some opponents of CBDC believe that states are implementing blockchain-based CBDCs in order to maintain some financial control over their citizens.
Part of the opposition to CBDC in the US has recently come from Tom Emmer, a pro-cryptocurrency US congressman. He recently introduced the CBDC State Anti-Surveillance Act to protect the financial privacy of US citizens from the actions of the Federal Reserve:
“Today I introduced the CBDC State Anti-Spying Act to stop unelected bureaucrats in Washington DC from trying to rob Americans of their right to financial privacy,” Tom Emmer tweeted on February 22, 2023.
Economist Peter Schiff shared some dire warnings about where the US economy is heading and the implications of the Federal Reserve’s fight against inflation in an interview with Greg Hunter on the USAWatchdog show. Referring to the latest economic data, including the personal consumption spending price index, which rose 0.6% in January, Schiff said: “Months of declining inflation are reflected in the review. And now we will see an acceleration of inflation as measured by these government indexes.” Claiming that the Fed’s fight against inflation was completely ineffective, the economist opined: “If the Fed is serious about fighting inflation, which I don’t believe, but if it were serious, it would have to fight a lot harder than before. The stakes need to be raised much more than anyone thinks.”
However, Schiff said that higher interest rates alone will not be enough. “We also need to see a significant reduction in consumer lending. We need to see lending standards rise so that consumers can’t keep spending,” he described. “People are spending money. They’re getting more credit card debt. It’s inflationary… We need consumers to stop spending.” The economist emphasized that people should work, produce and save, not spend. What’s more, Schiff specifically stressed that the federal government needed to get the spending problem under control. “We need massive government spending cuts. The government can’t just give people money to spend because that’s what pushes prices up. And eventually they will force the Fed back into quantitative easing.”
Schiff predicted that eventually the Fed is going to give up on inflation, adding: “Because the Fed will be fighting what it fears even more, which is a complete economic collapse, another financial crisis or a sovereign debt crisis.” He also warned that the Fed could even force the US government to consider legal cuts in Social Security and Medicare, “as opposed to just illegal cuts, creating inflation.” The economist has previously warned that the Fed’s actions could trigger a financial crisis and a much worse recession than the central bank admits. He also recently predicted that inflation is about to get much worse and the US dollar to collapse.
The regulatory environment for cryptocurrencies in the US could also be another challenge for companies like Visa and Mastercard. The US Securities and Exchange Commission has been attacking the sector since the beginning of the year. And according to Reuters, Mastercard and Visa are postponing their plans to integrate cryptocurrencies due to several tumultuous events that rocked the cryptocurrency space in the past year. “The recent high-profile disruptions in the crypto sector are an important reminder that we have a long way to go before crypto becomes part of mainstream payments and financial services,” a Visa spokesman was quoted by Reuters as saying that the company remains interested in the crypto space. Both payment companies have previously announced plans to integrate cryptocurrencies into their network. Visa has proposed a plan to use StarkNet for automatic recurring payments at the end of 2022. But last year’s collapse of the Terra ecosystem and the bankruptcy of FTX seem to have dampened the enthusiasm of both firms. Visa terminated its crypto-debit card partnership with FTX following the collapse of the exchange. The original plan called for FTX to use Visa crypto debit cards in over 40 countries around the world. Visa and Mastercard suspending their crypto plans are the latest in a growing trend of major companies limiting their crypto options. Several banks in the US have begun to withdraw services for crypto businesses. Even major accounting firms have so far chosen not to check the ledgers of cryptocurrency exchanges since the FTX crash.
Bitcoin is down 1.45% in the last 24 hours to $23,172, having lost 5.23% in the last seven days, according to data from CoinMarketCap. Ether fell 1.69% to $1,606 for a weekly loss of 3.15%. Despite the recent decline, Bitcoin is up 39% in the year to date, while Ether is up 34% in the same period.
Polkadot fell 3.59% to $6.35, resulting in a loss of 12.33% for the past week. However, data from PolkaInsiders showed that the number of players on the network grew in February, and Polkadot will showcase its latest developments at the ETHDenver conference on March 2-5. The token is up 45% since the beginning of the year. Shiba Inu fell 3.88%, dropping out of the top 10 non-stablecoin cryptocurrencies by market cap. He lost 7.96% in a week. Blockchain analytics firm Arkham reported on Tuesday that bankrupt crypto platform Voyager Digital owns about $77 million in Shiba Inu and is rapidly selling those assets along with others. This adds to the downward pressure on the meme token after the wallet transferred 182 billion Shiba Inu tokens to crypto exchanges on Monday, which usually precedes a sale. Litecoin, which replaced Shiba Inu in the top ten list of volatile tokens, fell 0.15% to $94.00 and maintained a weekly gain of 0.20%. Last week, the Litecoin Foundation announced a partnership with Metalpha Technology Holding Ltd to improve the security and energy efficiency of Litecoin mining.
The total capitalization of the crypto market has decreased by 1.38% over the past 24 hours to $1.05 trillion. And the total trading volume over the past 24 hours fell by 9.82% to $41.69 billion.
US stocks closed lower on Tuesday after a brief recovery on Monday as investors shifted their positions after a series of economic data in the second half of February showed that higher interest rates would last longer than some expected. The Dow Jones Industrial Average fell 0.71%, the S&P 500 fell 0.30% and the Nasdaq Composite fell 0.10%. The U.S. personal consumption spending price index released last week rose 4.7% year-on-year in January and 0.6% month-on-month excluding food and energy prices, beating expectations and pointing to a possible further rise in interest rates. rates. US interest rates are now between 4.5% and 4.75%, the highest since October 2007. Analysts at the ASTL investment project expect a 76.0% chance that the Fed will raise rates by another 25 basis points this month. They also forecast a 24.0% chance of a 50 basis point upturn, up 23.3% from what was reported on Tuesday.
In light of the above, investors are advised to take some time to think before making any investment. One of the legitimate forms of investment is, for example, the ASTL investment project, which allows investors to have the opportunity to directly invest fiat and cryptocurrency assets in a stable passive income that obviously exceeds inflationary expectations and is not subject to any sanctions, blocking and confiscation. The ASTL project is a simple and elegant solution for potential investors – an investment in the development of the real sector of a diversified portfolio of cryptocurrencies, with a fairly high ROI (up to 12% annually) with payments in stablecoin (USDT). Details can be found at https://astl.io.
