CFTC Tech Advisory Meeting Features Possible Fed-backed CBDC Scenarios

Recent months have seen stablecoins like the USDT gain popularity as stakeholders in the crypto market seek to preserve value while doing other activities such as yield farming.

The CFTC Technical Advisory Committee (TAC) discussed a Fed-backed digital currency in the latest remote meeting which it held last week. This comes as more jurisdictions move to consider CBDC's following China's progress in this space and the COVID-19 pandemic that has since raised the need for digital money.

One of the keynote speakers, Georgetown Law Professor, Chris Brummer, presented some scenarios under which the U.S Fed could issue a CBDC, comparing the solution to that being advocated by stablecoins. Brummer was keen to highlight that not all CBDC's are created equal hence multiple scenarios for a dollar-backed CBDC.

Dollar-backed CBDC Design Suggestions

In his presentation, Brummer further detailed six CBDC approaches that the Fed could take in developing a digital dollar. Most notably was the decision of whether to create an account or token backed ecosystem. The former is pretty similar to today's bank accounts, only that into. A token ecosystem, on the other hand, will be less strict since no identification would be required to operate in the network.

Another suggestion was whether to have the CBDC on both retail and wholesale markets or only on the latter. Wholesale markets encompass commercial banks and other large financial institutions, while a retail market refers to the general public.

Brummer noted that this was another angle the Fed should consider before transforming the CBDC niche idea into a reality. He further summarized that the future of CBDC's could only be dictated by the issuing authority since some central banks could decide to use commercial banks or issue the currency directly.

Greater Value Than Stablecoins

Recent months have seen stablecoins like the USDT gain popularity as stakeholders in the crypto market seek to preserve value while doing other activities such as yield farming. Brummer now says that CBDC's set out to achieve a similar goal and could have the upper hand since trusted monetary authorities back them. Brummer said,

“Central bank currencies can be seen as trying to provide more certainty and safety, if one will, behind the utility that a traditional stablecoin aspires to achieve.”

While the underlying value compared to stablecoins is clear, Brummer, however, warned that adopting CBDC's could destabilize the whole financial ecosystem as well. This is because central authorities might overlap the role of financial institutions in onboarding and serving clients, should they choose to roll out something like an account-based CBDC run by the Fed.

Get Free Email Updates!

*Action* Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

I will never give away, trade or sell your email address. You can unsubscribe at any time.

Edwin Munyui
Edwin Munyui
Edwin is a FinTech enthusiast with a particular interest in blockchain technology and cryptocurrencies. He has worked as an author in the blockchain space since 2017 and enjoys creating content that both crypto veterans and newbies can understand. His simple writing style and financial market knowledge have made him a reputable fundamental and technical analyst with the ability to handle any topic around blockchain and crypto over the years.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

LEAVE A REPLY

Please enter your comment!
Please enter your name here

3,486FansLike
2,795FollowersFollow
4,268FollowersFollow

Live Bitcoin Price & Latest BTC Charts

Today's Latest Crypto News

KuCoin Hack Update: 11 Crypto Projects Freeze the Stolen Tokens

Over the weekend, KuCoin lost about $275 million in BTC, XRP, BSV, XLM, TRX, stablecoins, ETH, and other ERC-20 tokens in a security breach....

Bitcoin Re-Entering the ‘Intense Historical Trading' Area Following a Strong Uptrend

Bitcoin is back at near $11,000. The leading digital currency has been making its way upwards since the mid of last week. Today, to mark...

Alameda Research and Three Arrows Capital Outdoing Each Other to Mint Record WBTC

On Friday, FTX CEO Sam Bankman-Fried’s Almeda Research minted the biggest wrapped Bitcoin (WBTC) ever, as per WBTC Network. 2317 BTC was minted on Sept....

“Nothing Compares to My Bitcoin Bet,” Says Social Capital CEO Chamath Palihapitiya

Bitcoin was the best performing asset of the last decade, and in 2020, it remains a winner again. Compared to the S&P 500 hitting a...

The XRP Ledger Foundation Launches To Accelerate XRPL Adoption And Development

The XRP Ledger Foundation, a non-profit, announced its official launch on September 24. The Ledger Foundation would be responsible for supporting the development as...

BitcoinExchangeGuide is a hyper-active daily crypto news portal with care in cultivating the cryptocurrency culture with community contributors who help rewrite the bold future of blockchain finance. Subscribe on Google News, see the mission, authors, editorial links policy, investment disclaimer, privacy policy. Got News? Contact us, we are human too. Note: nothing here is financial advice, do your own research thoroughly.

Start Using Crypto Today