Bitcoin News and Finance Former SEC Official Calls CBDC the Most Absurd Financial Idea Citing Unnecessary Risks Privacy Cybersecurity Concerns Skip to main content

Former SEC Official Calls CBDC the Most Absurd Financial Idea Citing Unnecessary Risks Privacy Cybersecurity Concerns

The U.S. Securities and Exchange Commission’s (SEC) former head of internet enforcement has called the creation of a central bank digital currency (CBDC) “the most absurd financial idea in the history of monetary policy.” He warned that a central bank digital currency not only creates “a multitude of unnecessary risks relating to global financial systemic stability,” but it also “opens up a Pandora’s box of global financial privacy problems, conflicts, and cybersecurity concerns.”

Stark Slams CBDC Creation

Former U.S. Securities and Exchange Commission (SEC) official John Reed Stark criticized cryptocurrencies, stablecoins, and central bank digital currencies (CBDCs) in a lengthy tweet on Tuesday. Stark is currently president of cybersecurity firm John Reed Stark Consulting. He founded and served as chief of the SEC Office of Internet Enforcement for 11 years. He was also an SEC enforcement attorney for 15 years.

The longterm crypto skeptic wrote:

The creation of a CBDC is perhaps the most absurd financial idea in the history of monetary policy.

He argued: “First off, just like crypto and stablecoins, you must begin by answering the question of what problem does a CBDC actually solve. Why do we need a CBDC? There is no answer to that question.”

The former SEC official opined: “There already exists a litany of digital currencies that work incredibly well and are also trusted because they are regulated, audited and overseen by democratic government authorities and run by regulated, FDIC or SIPC-insured, U.S. registered financial institutions.”

He then criticized politicians and lawmakers who have voiced their support for crypto innovations, stating: “What is so incredibly disturbing is that under the auspices of ‘innovation,’ some politicians will preach the gospel of crypto while not only completely, ignoring crypto’s dire externalities, but also failing to understand that crypto is not innovative at all.”

Stark proceeded to caution about the risks of a central bank digital currency. “The risks of a CBDC remain myriad and raise a variety of important policy questions, including how a CIBC might affect financial sector market structure, the cost and availability of credit, the safety and stability of the financial system and the efficacy of monetary policy,” he detailed.

Concurring with Professor Hilary Allen of the American University Washington College of Law (AUWCL), who testified about stablecoins and CBDCs before the U.S. Senate Committee on Banking, Housing, and Urban Affairs in December last year, Stark stressed:

Not only does a CBDC create a multitude of unnecessary risks relating to global financial systemic stability, but a CBDC also opens up a Pandora’s box of global financial privacy problems, conflicts and cybersecurity concerns.

He concluded: “The bottom line: The mammoth costs and challenges of creating a CBDC could not possibly be worth the risks and costs associated with actually having a CBDC.”

The former SEC internet enforcement chief agreed with U.S. Senator Ted Cruz (R-TX) who launched a bill in March “to prohibit the Federal Reserve from developing a direct-to-consumer” central bank digital currency. “Whatever his rationale, Senator Ted Cruz gets it right with his CBDC prohibitive legislation — it’s a bad idea that needs to be stopped dead in its tracks,” Stark emphasized.

Several other lawmakers have introduced CBDC-related bills. In February, U.S. Congressman Tom Emmer (R-MN) introduced the Central Bank Digital Currency Anti-Surveillance State Act “to halt efforts of unelected bureaucrats” from “stripping Americans of their right to financial privacy.” U.S. Congressman Alex Mooney (R-WV) announced in May that he has introduced the Digital Dollar Pilot Prevention Act that prohibits the Federal Reserve from establishing, carrying out, or approving a program intended to test the practicability of issuing a CBDC. Several states have also resisted CBDCs. Florida Governor Ron DeSantis, for example, signed legislation in May that bans the use of a central bank digital currency in his state.

Do you agree with John Reed Stark about central bank digital currencies? Let us know in the comments section below.

Comments

Popular posts from this blog

Custodial Lightning Network Service Attack Discovered by LN ‘Newbie’ — Hacker Strikes 6 LN Custodians

On September 18, a Redditor posted to the r/bitcoin forum and explained how he discovered a way to “attack [the] lightning Network’s custodial services.” The Reddit account dubbed “Reckless Satoshi” wanted to figure out if a “discrepancy between real routing fees and service’s transaction fee can be exploited for a profit.” The researcher disclosed that he wanted to see how large the damage could be and said “it is bad.” 6 Lightning Network Custodial Services Attacked, Researcher Discloses Findings to Offenders Prior to Public Disclosure A Redditor called Reckless Satoshi published a disclosure post on r/bitcoin this past Saturday and disclosed how he had found a vulnerability with routing fees and some of the Lightning Network’s custodial services. The research attack was done in good faith and after it was complete he disclosed the bugs to the offending services before publishing his findings. Reckless Satoshi used the Lightning Network (LN) attack on six different services incl...

Axie Infinity Down 40% Since Last Week’s Price High, Protocol Revenue Outshines Competitors

Last week, the game token leveraged within the Axie Infinity gaming universe skyrocketed to all-time highs, while other crypto markets remained extremely lackluster. During the last seven days, Axie Infinity’s platform token has dropped significantly in value shedding more than 12%. Meanwhile, the game platform’s smooth love potion token has slid over 8% over the last 24 hours. Axie Infinity Down More Than 40% Since All-Time High Not too long ago, the axie infinity (AXS) token was a topical conversation because it reached an all-time high on July 15. At the time, AXS managed to capture $28.93 per unit and since then it has shed 12.8% during the last seven days. The axie infinity (AXS) token is used within the blockchain-based game that involves battles between token-based creatures called “Axies.” AXS is used for the game’s governance system as well as other actions within the game. At the time of writing axie infinity (AXS) is exchanging hands for $16.70 per coin. AXS/USD on Ju...

Play-to-Earn Game From Polker (PKR) Exchange Listing – Endorsed by Akon

The Play-to-Earn NFT based Polker.Game ‘s native token $PKR has been officially listed on the popular centralized exchange BitMart. Polker.game has been in the spotlight recently as Akon, the American R&B superstar and record producer gave his official endorsement of polker stating that the “game is revolutionary” and that Polker is “hands down.. the best play to earn, NFT game in the space.”. With the BitMart listing and celebrity endorsement from Akon, Polker is perfectly positioned to become a major player in the Play-to-Earn league. Watch Akon’s Video Here What is Play-to-Earn? Although not a new concept, play-to-earn has become a trending term due to the popularity of the NFT game AXIE infinity. In the past, previous play-to-earn games have also achieved success – however, thanks to the huge amount of development in the blockchain space in recent years the gaming experience is now massively improved. Play-to-Earn games are essentially free to play and open to anyone and...

China to Crack Down on Copyright Infringement Through NFTs

Authorities in China are going after creators of digital collectibles based on other people’s works of art, the use of which was not authorized. The government offensive is part of a campaign to combat online copyright infringement and piracy with the participation of several departments. Regulators in China Move to Strengthen Copyright Supervision of Online Platforms The National Copyright Administration of China (NCAC) has recently launched a campaign against copyright infringement and piracy on the internet, together with the Ministry of Industry and Information Technology, the Ministry of Public Security, and the State Internet Information Office of the People’s Republic. A major objective of the initiative is to improve copyright supervision of online businesses by investigating cases involving the sale and distribution of infringing products on short video, live broadcast and e-commerce platforms, and promptly dealing with infringing content, the agency announced in a press r...
Blogarama - Blog Directory