Former President Donald Trump vowed he will never allow the United States to create a central bank digital currency, warning the technology poses the risk of “government tyranny.”
His promise came at a New Hampshire rally on Wednesday night, and comes after the most pro-bitcoin 2024 Republican presidential candidate, Vivek Ramaswamy, dropped out of the race and endorsed Trump.
“This would be a dangerous threat to freedom,” Trump said. “You know what they’re doing — such a currency would give a federal government, our federal government, the absolute control over your money. They could take your money, you wouldn’t even know it’s gone.”
A CBDC would be a digital version of the United States’s fiat currency, the U.S. dollar. Instead of using physical coins and bank notes, people would digitally send money to peers and institutions, much like a government-sponsored Venmo or PayPal.
The drawback of a CBDC, Trump explained, is the increased ability for a government to monitor, freeze, and seize assets of a private citizen.
CBDCs differ from traditional cryptocurrencies like bitcoin in that the latter was initially used by a group of high-tech libertarians often referred to as “cypherpunks” to evade the eyes of the government, whereas CBDCs are the antithesis of bitcoin and do not facilitate financial privacy or decentralization.
“Trump is absolutely right,” Sen. Ted Cruz (R-TX) told the Washington Examiner. “The federal government has no authority to unilaterally establish a central bank currency.”
“That’s why I introduced legislation in the Senate to prohibit the Federal Reserve from developing a direct-to-consumer central bank digital currency which could be used as a financial surveillance tool by the federal government,” he said.
“CBDCs are an attempt to use the underlying design of Bitcoin but with a centralized administration, therefore they are as dangerous as any central control mechanism” used by authoritarians, Donald McIntyre, senior editor of ETC Cooperative, told the Washington Examiner.
McIntyre juxtaposed traditional blockchains with CBDC, saying that “blockchains such as Bitcoin and Ethereum Classic are truly decentralized, permissionless, and censorship resistant, and have no central administration or control, therefore they guarantee our basic rights without the possibility of governments or corporations intervening in our private affairs.”
He expressed concern that central banks around the world may use “these same technologies to actually monitor each transaction we do and intervene” if a citizen is engaging in activity or speech that goes against the government’s agenda. China, for example, could pair its social credit score system with CBDC technology and come down on anyone critical of the regime.
A number of prominent lawmakers on both sides of the aisle have come out against the creation of CBDCs.
Cruz warned, “A CBDC would allow the government to spy on us. Congress needs to [stop] the Fed from developing a CBDC now!”
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“My principal concern with the domestic use case [of a CBDC] is the blurring of the line between monetary and fiscal policy,” Rep. Jake Auchincloss (D-MA) said.
“A digital U.S. currency would be one of the most dangerous developments in history. When government can simply flip a switch to block all your transactions, it controls your entire life. We need a wall of separation between money and state,” former libertarian Rep. Justin Amash said.
