Trump's Anti-Bitcoin Stance Pays Off with CBDC Ban
OPINION
By Stefan Rust, Truflation CEO
Recently, Trump sounded off against central bank digital currency (CBDC). Lesser known is his consistent antipathy toward crypto generally. And while that stance was problematic to digital asset natives, to say the least, Trump's anti-Bitcoin beginnings appear to have paid off in cautioning against a grave threat: the rise of CBDCs.
Precedent
Summer of 2019 found then-President Donald Trump removing all doubt regarding Bitcoin and digital assets more broadly.
"I am not a fan of Bitcoin and other Cryptocurrencies," he seemingly tweeted out of nowhere, "which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity...."
At the time bipartisan angst was growing over Facebook and its now-defunct stablecoin thingy, Libra, and lawmakers were routinely dragging crypto hotshots before hearings and cameras for dunking sessions. Combined with rogue regimes such as Venezuela openly launching their own cryptos to flout sanctions, and the fix was in. Bitcoin specifically and crypto generally became collateral damage in the process.
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Go After Bitcoin
In an administration postmortem memoir, The Room Where It Happened, former Trump national security advisor John Bolton retold an exchange between the president and Treasury Secretary Steven Mnuchin.
A full year prior to his anti-Bitcoin tweet, Trump demanded Mnuchin "clamp down on the trading and selling of the internet currency Bitcoin," The Washington Examiner reported, urging he "Go after Bitcoin."
Rise of the CBDC
Stars aligned as both US political parties officially spread FUD about crypto, culminating into a kind of hedge: central bankers understood digital assets were growing in popularity, and figured The Fed should get ahead of the trend by creating a government version.
Central bank digital currency (CBDC) is the popularization of the concept, with, presumably, banking intermediaries hopped over – just you and a wallet and The Fed.
Oh, Canada
In fairness, the USD is effectively already a digital dollar. Fewer and fewer Yanks are using cash nowadays. But a CBDC would forever altar the relationship between government and citizens. Whatever degree of daylight of relative financial privacy in-between politicians and bureaucrats and ordinary people, could vanish.
A couple of years ago, for example, disgruntled Canadian truckers took their protest directly to Ottawa, parking and blocking the city for nearly a month.
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In response, the Trudeau administration froze more than 200 bank accounts linked to convoy organizers, worth $7.8 million, citing emergency measures under the 1988 Emergencies Act – never before been used, giving the government authority to restrict movement and freeze financial accounts, including personal bank accounts.
No more academic prediction or conspiracy theor, financial censorship is really, really real.
The Trojan Horse of FedNow
CBDCs, then, would eliminate that pesky step of having to get banks' cooperation in censoring dissidents or those who run afoul of government opinion.
Though not a CBDC, FedNow (launched in summer of last year) is very definitely a first step, a toe dip by the US central bank. It's an instant payment service developed by the Federal Reserve for depository institutions in the United States, allowing individuals and businesses to send and receive money.
And so many analysts believe CBDCs are coming.
Very Dangerous
This means more politicians are being forced to take a stance on the issue. In fact, the leading Republican nominee for President of the United States has come out in full-throated opposition.
Trump explained in a recent Fox New interview how a “digital dollar” would be “very dangerous,” claiming it could create a situation where money suddenly disappears from people’s bank accounts. He vowed to block the Federal Reserve from formally issuing a CBDC.
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The statements echo a similar claim Trump made in New Hampshire last month, where he told a crowd he would “never allow the creation of a central bank digital currency,” calling it a “dangerous threat to freedom.”
Wipe Out
These follow a New Hampshire speech, where he likened the creation of a central bank digital currency to a form of “government tyranny,” warning it would give the federal government the ability to “take your money.” He also credited his former opponent, biotech entrepreneur Vivek Ramaswamy, for warning him of the dangers of a Central Bank Digital Currency.
Ramaswamy has said a CBDC would create “a mechanism for the government to be able to wipe out your bank account, wipe out your dollars if you say or do something the government disapproves of” calling it “a threat to liberty in this country.”
Eleven countries have established a central bank currency, citing plummeting cash usage, increased accessibility, lower infrastructure costs and improved security. More than 100 countries are currently exploring the option.
I Agree With Trump and Milei
I agree with Trump’s stance that CBDCs encroach on the financial freedoms of the average citizen. CBDCs put still more power in the hands of the governments and the elites, giving them the power to shut down access to financial services. And we’re already seeing a great deal of backlash against this, with the anti-establishment movement still growing across the globe.
Look at Javier Milei, the newly elected anti-establishment president of Argentina. He is a proponent of cryptocurrencies, and recently said he would allow provinces in Argentina to launch their own local currencies. During the World Economic Forum in Davos, he warned “the western world is in danger” and now follows a vision that “inexorably leads to socialism.”
Freedom of Choice – An Optimistic View
CBDCs feed into this narrative of governmental control, but cryptocurrency represents the opposite of that. It represents freedom of choice, financial freedom. Cryptocurrency is about shaping the narrative. However, I don’t believe halting CBDCs will be beneficial to anyone but the big stablecoin players – Circle and Tether.
When CBDCs are eventually launched, though, this will, in fact, open up opportunities for decentralized stablecoins as those who want to hold onto their freedoms look outside of the government-controlled institutions. We will see a whole raft of new stablecoin products come to market. In particular, flatcoins – inflation-pegged stablecoins that allow people to protect their purchasing power – will have their time in the sun. This is where true freedom lies, allowing investors access to financial freedom.
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