CBDCs are a digital form of a country’s currency, such as the American dollar, that’s backed and controlled by a nation’s central bank. A CBDC is government-controlled programmable money that could give the federal government not only significant transaction-level data down to the individual user, but also the ability to program the CBDC to prevent CBDC from being used to purchase items that the government considers politically unpopular activity.
I am not opposed to crypto/digital currency. However, unlike Rep. Barker who voted in favor of updating our uniform commercial codes to allow for a CBDC, I am categorically opposed to allowing CBDCs.
If you are concerned about businesses like your bank being hacked, imagine what could happen if your CBDC was hacked. If you don’t think the government isn’t already monitoring your activity, guess again. The U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) instructed banks to monitor Americans’ online transactions described with the terms “MAGA” and “Trump” as well as purchases of religious texts. This is not only a potential privacy violation, but appears to be the targeting of U.S. citizens based on their purchases which is not only a violation of the our right to freely exercise our religion, (1st Amendment of the U.S. Constitution), but constitutes a severe breach of privacy (4th Amendment) and improper targeting without due process (5th Amendment).
U.S. Rep. Jim Jordan, R-Ohio, chair of the House Subcommittee on the Weaponization of the Federal Government, claimed the subcommittee obtained documents showing that FinCEN “provided financial institutions with suggested search terms and Merchant Category Codes (MCCs) for identifying transactions on behalf of federal law enforcement.” Those materials allegedly included a “document recommending the use of generic terms like ‘TRUMP’ and ‘MAGA’ to ‘search Zelle payment messages.
These allegations are particularly concerning given past efforts to weaponize the financial system and payment activity against politically disfavored, lawful activity. Under the Obama administration’s ‘Operation Choke Point’ initiative, the Department of Justice (DOJ) coordinated with federal financial regulators to intimidate financial institutions into denying services to legitimate businesses that the administration was ideologically opposed to, including gun retailers. Unfortunately, the weaponization and misuse of Merchant Category Codes is not a new issue.
The allegations suggest that FinCEN recommended banks search Zelle payment messages for specific terms and transactions indicating legal firearm purchases. This is targeting of Americans based on their political views and raises concerns about the independence of federal financial regulators. These actions raise significant questions regarding the independence of federal financial regulators. FinCEN urged financial institutions to flag transactions at stores like Cabela’s, Dick’s Sporting Goods and Bass Pro Shops; especially when FinCEN warns financial institutions that the purchase of religious texts is an extremism indicator.
Transactional freedom is absolutely critical for freedom of speech to exist.
Digital currency advocates say it could improve payment efficiency and expand financial inclusion for populations with limited access to the financial system. Although that may be true, the pitfalls are much greater. CBDCs have the potential to allow new levels of government interference in people’s finances, provide new avenues for government corruption, and even potentially destabilize the economy, among other concerns.