US Democrats Push for CBDC Amid Crypto Criticism

US Democratic lawmakers, including Representative Stephen Lynch, have strongly criticized cryptocurrencies, labeling them as a "scam" and advocating for the development of a central bank digital currency (CBDC). Lynch, a member of the House Financial Services Committee, asserted that there is no legitimate use case for cryptocurrency, except for facilitating illegal activities such as ransomware heists that have targeted US businesses. He described crypto as a highly risky and volatile product that has no place in a well-regulated financial system.

Lynch's remarks were part of a broader push by Democratic lawmakers to promote CBDCs. Representative Maxine Waters, who also attended the press conference, criticized the CBDC Anti-Surveillance State Act, a bill that aims to prohibit the creation of a government-controlled digital dollar. Waters argued that this bill, along with the GENIUS stablecoin bill, poses a threat to national security. The lawmakers' stance on CBDCs contrasts with the position of the current US administration, which has shown resistance to the idea. In January, US President Donald Trump signed an executive order banning CBDCs.

The debate over CBDCs extends beyond the US. Other countries are exploring the digitization of their fiat currencies, driven by the need to remain competitive in the digital age while maintaining sovereign control over their currencies. For instance, the Reserve Bank of India announced plans to expand its CBDC test trials to focus on novel use cases for its digital rupee. Similarly, Australia’s central bank has indicated plans to test wholesale CBDCs in a closed experiment with select institutions. However, not all central banks are on board with the idea. Bank of England Governor Andrew Bailey recently argued that issuing a CBDC could destabilize the banking system and suggested that the Bank of England should focus on tokenizing deposits instead.

The push for CBDCs by US Democratic lawmakers reflects a growing concern about the risks associated with cryptocurrencies. Lynch's assertion that crypto has no legitimate use case, except for illegal activities, underscores the skepticism surrounding the technology. The lawmakers' call for a CBDC is part of a broader effort to promote a more regulated and secure digital currency system. However, the path forward for CBDCs remains uncertain, as countries continue to grapple with the implications of digitizing their currencies.