As Europe charges ahead on the path to a central bank digital currency, political opposition to a digital dollar is only growing in the U.S. Though a potential U.S. CBDC remains merely a subject of government study, mainstream Republicans, Silicon Valley libertarians and anti-establishment leftists have all converged in their opposition to the idea, citing concerns over privacy and government control. These domestic political obstacles leave a lane open for other monetary authorities to influence the design of digital money systems. The European Central Bank, for example, is expected to propose a digital euro design in October, a step that would help establish it as a global leader in the creation of digital sovereign currencies. “It gives even more weight to the European version, which we’ll see this fall,” said Josh Lipsky, senior director of the Atlantic Council’s GeoEconomics Center. “This is now the first major Western central bank with a model, and for other countries looking to solve technical issues like offline payments, it can become a real standard setter.” ECB Executive Board member Fabio Panetta recently said in an interview with French newspaper Les Echos that the European Commission is expected to present its proposal for digital euro legislation sometime this month. Meanwhile, opposition in the U.S. has reignited in recent days after the Securities and Exchange Commission sued the world’s two largest crypto exchanges over alleged securities law violations. Amid the crackdown, SEC Chairman Gary Gensler told CNBC last week, “We don’t need more digital currency,” because the dollar and other sovereign currencies already exist. Sen. Bill Hagerty, a Tennessee Republican, seized on the comments, echoing a popular line among crypto executives that this year’s crackdown on crypto is intended to ease any future rollout of a digital dollar. “The Biden Admin wants to kill market innovation to pave the way for a CBDC, which would give the federal gov. unprecedented insight into your life. I will fight to make sure this doesn’t happen,” Hagerty tweeted Wednesday. The issue has seeped into U.S. political discourse to the extent that Florida Gov. Ron DeSantis, a Republican, reiterated his opposition to CBDCs at his presidential campaign launch event with Elon Musk on Twitter Spaces last month. The issue is among those that have endeared DeSantis — who signed a bill last month restricting the use of CBDCs in Florida — to a group of libertarian Silicon Valley investors, led by former PayPal executive David Sacks, who are supportive of cryptocurrencies. Opposition to CBDCs has also gained traction on the anti-establishment left. Former Rep. Tulsi Gabbard — a critic of U.S. foreign policy who left the Democratic Party last year — condemned them during a keynote address at the Bitcoin Miami conference last month. And Robert F. Kennedy Jr., who is challenging President Joe Biden from the left in the Democratic presidential primary, has attracted interest from several tech moguls with a broad anti-establishment message that includes condemnation of CBDCs. Most recently, Block CEO Jack Dorsey, who has reoriented his firm around a Bitcoin-centric vision of payments in recent months, has come out in support of Kennedy. In an interview conducted over the NOSTR social network, a Twitter alternative, Dorsey cited Kennedy’s opposition to the military-industrial complex as a primary motivator of his support. Dorsey also said he agrees with the candidate’s CBDC critique. “We have an open standard for money transmission and currency in Bitcoin,” Dorsey said. “We don’t need another.” Asked about his plans for supporting Kennedy, the Block CEO told POLITICO he is “not sure what is needed,” but said he is set to talk with the campaign this week. Opposition to centralized control of money is deep-seated in American political history — dating back to fights over central banking that split the country’s founders — and one that can confound observers. John Kiff, who worked for 25 years at the Bank of Canada, and now publishes a newsletter tracking global CBDC development, described the U.S. political firestorm as “a bunch of bozos trading bullshit.” While populist fears that a digital dollar could be used to enhance government power sound to many like the stuff of an Alex Jones “Info Wars” episode, Steven Lubka, head of private clients and family offices at Swan Bitcoin, an investment firm focused on the original digital asset, said that some sophisticated investors voice the same concerns in private. They include fears that a CBDC will be used to implement a Chinese-style social credit system, punish donors to politically disfavored causes, or impose quotas on meat consumption. “I talk to a lot of very educated, very wealthy, very successful people that have those concerns,” said Lubka. Lubka estimated that CBDC fears — which he first began hearing from his overwhelmingly American client base about 18 months ago — are now a major factor motivating the Bitcoin investing of about 5 percent of his clients. A poll released last month by the libertarian Cato Institute found that 34 percent of Americans oppose a Federal Reserve CBDC, 16 percent support it, and 49 percent “don’t know.” Republicans, the poll found, were more likely to be familiar with the concept and to oppose it, than Democrats. The poll found that as Republicans learn more about CBDCs, they become more likely to oppose it, while Democrats become more supportive of CBDCs the more they learn. In addition to popular opposition, progress on a digital dollar has been weighed down by other bureaucratic and political complications, including the concerns of commercial bankers.
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