- January, the Fed published a long-awaited report on CBDC
- The regulator refused to confirm plans to issue a digital dollar, but everything points to it
- According to the agency, CBDC can compete with private stablecoins
- The Fed believes that this market needs more strict regulation
- Against the background of these news, the BTC exchange rate “sank” quite strongly
On Thursday, 20 January, the Fed (Federal Reserve System) published 40-page “white paper” on the topic of the digital dollar. Among other things, the document touches upon the risks of accelerated digitization of the economy and stablecoins. The Fed’s CBDC could be the solution to this problem.
At the same time, the authors of the report have repeatedly emphasized that it is not a direct confirmation of the imminent release of a digital dollar. The Fed describes the paper as “an invitation to dialogue.”
This document contains an analysis of digital assets, their impact on the economy, as well as the risks of its digitization. In particular, we are talking about increasing the threat of loss of data confidentiality and fraud.
The report has a clear call for Congress to implement stricter regulation of stablecoins. It also concludes that issuing a digital dollar could be a viable solution, as this asset is free from most of the shortcomings of private stablecoins.
“Digital currency is able to offer the public wide access to digital money, which is devoid of credit risks and liquidity. This tool can provide a solid foundation for innovation in the private sector and meet the demand for payment services, both now and in the future,” the report quotes the publication The Block.20450
The Fed believes that all types of digital assets need to be regulated to reduce risks, as well as limit their liquidity.
In addition, according to the agency, the issuance of a digital dollar will “open the door” to individual innovators with original ideas. Now small companies are actually deprived of the right to issue their own cryptocurrency, which simply will not be competitive.
Of course, the publication of this report does not guarantee that the regulator will still be engaged in the implementation of the CBDC project. But the message in the papers says that the agency has a clear understanding of the benefits of digital currencies and does not deny their impact on the global economy.
How did the cryptocurrency market react to the news?
At the time of writing, the bitcoin rate fell to 296 .4 USD per unit. Over the past day, the cost has decreased by 7%. In other markets, the situation is similar. ETH “fell in price” by 8%.
According to Coinmarketcap, since yesterday, 10 of January, cryptocurrency capital holders liquidated assets in the amount of 100 billion dollars. Experts attribute this to a sharp jump in the cost of government bonds for a period of years. In this regard, investors transfer capital to less risky assets. In addition, the Fed announced plans to raise interest rates and shrink the balance sheet.