By Des W Woodruff (aka d-seven)
As a seasoned stock trader (of 25 years) and enthusiastic supporter of cryptocurrencies, I’ve been closely observing the evolving landscape of digital currencies and their impact on the global financial ecosystem. The world is advancing in technology.
Central banks worldwide are increasingly realizing the need to innovate by developing their own digital currencies. This strategic move aims to maintain their competitiveness while also safeguarding their national currencies’ status within the international monetary sphere.
A growing number of countries, including Japan, the European Union, and China, are already forging ahead with their CBDC projects.
The significance of innovation in this context is paramount. Embracing cutting-edge technology and evolving with the times is crucial for central banks to stay relevant and adapt to the shifting demands of consumers and businesses alike. By spearheading the development of digital currencies, central banks can create a more efficient, secure, and accessible financial infrastructure that caters to the needs of a progressively digital society. BUT this innovation comes at a cost. A USD digital currency will make our big government—even bigger and with much more control. (Another subject for a different time).
Fostering innovation in the realm of digital currencies can spur economic growth by enabling seamless cross-border transactions, reducing transaction costs, and promoting financial inclusion for unbanked and under-banked populations. Ultimately, central banks that champion innovation and adapt to the rapidly changing landscape of digital currencies will be better positioned to maintain their competitiveness and uphold the global standing of their respective currencies.
If you haven’t heard about the so-called “Operation Choke Point 2.0,” yet, you likely will soon. Choke Point 2.0 has caught my attention, as it seems to be a coordinated effort by the U.S. government to restrict access to essential financial services for cryptocurrency companies. This move raises concerns that the U.S. administration might be responsible for the recent collapse of crypto-friendly banks such as Silicon Valley Bank, Signature Bank, and Silvergate Bank. By impeding the growth and development of the cryptocurrency sector, the government’s actions may ultimately be counterproductive to their own objectives. The jury is out on this one.
A primary concern here is the need to maintain the competitiveness of the U.S. dollar and preserve its status as the world’s reserve currency. The preservation of the USD is critical for the U.S. and all living within its borders. In a rapidly evolving global financial landscape, it is essential for the United States to embrace the digital revolution and adopt a digital dollar to remain competitive. And we better do this right, or the repercussions could be dire. The America losing the world reserve status would be devastating.
On this note, it’s technically within the U.S.’s interest to stifle any growth and adoption of digital currencies outside of the digital USD. All crypto are now deemed competitors and the U.S. will fight hard to maintain its global monetary status.
Furthermore, the government’s aggressive actions may discourage innovation in the financial sector, which is crucial for the growth and progress of the U.S. economy. By hindering the development of digital currencies, the U.S. administration may inadvertently push businesses and investors toward other jurisdictions that are more welcoming to the growing cryptocurrency industry. Such an exodus would negatively impact the domestic economy, as the country loses valuable talent, expertise, and investment.
Concerns surrounding Operation “Choke Point 2.0” are not unfounded, as the government’s actions in restricting access to financial services for cryptocurrency companies may ultimately undermine their goals of ensuring the USD’s competitiveness and preserving its world reserve status. As I stated, it is critical for the U.S. to recognize the importance of innovation and adopt a more progressive stance toward digital currencies to maintain its position as a global economic leader.
As a proponent of cryptocurrency, I believe the U.S. risks it’s global monetary status (either today or tomorrow) if a competing country, like China, establishes a digital currency that other countries recognize and trust before the USD becomes properly digitized. I do not want to see America lose its world reserve status. And for this reason, I can’t blame my government for trying to choke out its competitors. Bitcoin and Ethereum are indeed competitors, and formidable competitors at that.
In the long run, fostering innovation and collaboration with the cryptocurrency sector could prove beneficial for the U.S. economy and help preserve the USD’s global prominence. By demonstrating a willingness to adapt to the rapidly changing financial landscape, the U.S. could ensure that it remains at the forefront of digital finance and secures its position as a global economic leader.
Des W Woodruff
Des Woodruff (aka d-seven)