March 21, 2023

U.S. Congressman Expresses Concern Over Potential Impact of Central Bank Digital Currency

U.S. Congressman Stephen Lynch (D-MA) has expressed concern over the potential impact of a central bank digital currency (CBDC) on other digital assets. Speaking at a House Financial Services Committee hearing, Lynch asked Federal Reserve Chairman Jerome Powell to consider the possibility of a tokenized version of the U.S. dollar wiping out other digital assets.

Lynch’s comments come as the Fed continues to explore the concept of issuing a digital dollar, with research dating back to 2016. CBDCs are similar to stablecoins, which track the price of a fiat currency, but are managed by their respective central banks.

“I’m worried about a lot of these stablecoins and other cryptocurrencies,” Lynch said. “Do they go to zero when we come up with a CBDC that has the full faith and credit of the United States behind it?”

Powell acknowledged the potential impact of a CBDC on other digital assets, but stressed that the Fed’s focus is on ensuring the safety and efficiency of the U.S. payment system.

“We have not made a decision to issue a CBDC, but we are conducting research in this area,” Powell said. “Our focus is on ensuring that our payment system remains safe, efficient, and accessible to all Americans.”

The potential impact of a CBDC on other digital assets has been a topic of debate in the cryptocurrency community. Some argue that a CBDC could lead to the demise of other digital assets, while others believe that CBDCs and other digital assets can coexist.

As the Fed continues to explore the concept of a digital dollar, it remains to be seen how it will impact the broader cryptocurrency market.

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