Florida has become the first US state to pass legislation banning the use of central bank digital currencies (CBDC).
Florida Governor and Republican presidential candidate Ron DeSantis announced the news via Twitter on Friday. In a tweet, he said the legislation would prevent central bank-issued digital currencies from being recognized by the state.
CBDC in the spotlight ahead of the 2024 elections
While the Florida bill applies to all CBDCs, DeSantis’ rhetoric targets the Biden administration’s efforts to establish a digital dollar.
“The legislation I signed today makes Florida the first state in the nation to protect individuals from government surveillance of their personal finances via CBDC,” he tweeted.
And DeSantis is not the only politician opposing centralized digital currencies.
In an emerging dividing line in American politics, Florida’s position against the CBDC is that the technology is a form of government surveillance. In this school of thought, popular among the libertarian wings of the Republican Party, CBDCs undermine the possibility of private transactions while giving too much power to central banks.
Moreover, Republicans’ resentment of what they see as Washington’s overbearing economic policies runs deeper than resistance to centralized digital currencies.
IN graphic published in March, DeSantis called on other Republican-led states to join his crusade against the CBDC. In particular, he called on members of the 20-state coalition against environmental and social governance (ESG) to adopt similar measures.
The alliance, announced in March, was formed to counter President Biden’s ESG agenda. Claiming such initiatives undermine the free market, DeSantis said they threaten the stability of the US economy.
Arguing against the ESG business framework, he called out “awake executives who put their political agenda ahead of their clients’ finances.”
While Florida Republicans may object to Democrat-led economic policies in terms of a wake-up war, across the financial sector, banks and other key players envision a CBDC-based payment system as part of the natural evolution of fiat money.
Meanwhile, authorities in Democratic-controlled states such as New York have launched their own digital dollar pilots.
For example, in November, the Federal Reserve Bank of New York announced its intention to launch a proof-of-concept project to explore the interoperability of wholesale CBDCs and commercial bank digital money.
CBDC Ban in Florida: A Boon for Bitcoin?
Intentionally or not, Florida’s efforts to slow down global CBDC adoption are playing into the hands of cryptocurrency evangelists and Bitcoin enthusiasts.
From the very beginning, decentralized cryptocurrencies have been postulated by some users as a means of protecting economic autonomy. In fact, recent efforts to implement CBDC payment systems are the opposite of Satoshi Nakamoto’s original vision for Bitcoin.
And even to this day, many cryptocurrency supporters still advocate excluding the intermediation of central and commercial banks.
As such, the emergence of CBDC can be seen as a mainstream recovery of a once groundbreaking technology. While often based on technological principles pioneered by cryptocurrencies such as Bitcoin, CBDCs run counter to their spirit of decentralization.
That is, they represent the absorption of digital currencies by centralized government control.
Innovation and the free market
In the minds of DeSantis and his allies, the privacy threat from the CBDC and their threat to FinTech innovation go hand in hand.
In addition to allowing government oversight of citizens’ finances, CBDCs also delegate responsibility for administering digital currencies. Instead of leaving the market free, under the CBDC system control is transferred to the state.
And according to the principles of economic libertarianism, such a transfer inevitably stifles innovation and robs the private sector of power.
The debate over CBDC and the free market is not limited to the US either.
In Canada, Conservative Party leader Pierre Poilievre said that if he became prime minister, he would stop the Bank of Canada’s attack on the digital currency.
Arguing that state-backed digital currencies are akin to nationalization, his campaign argues that digital currency innovation is best left to private companies.
A vocal supporter of cryptocurrencies, Poilievre told reporters last year that:
“Canada needs less financial control for politicians and bankers and more financial freedom for the people.”
He stressed that his faith includes “the freedom to own and use cryptocurrencies.”
Under the current administration, Canadian crypto policy has taken a tough stance against platforms that trade and sell digital assets.
In fact, on Friday, Binance announced that it was shutting down its services in the country. Blaming the unfavorable regulatory climate, the exchange said its Canadian business was no longer sustainable.
Now it will withdraw from the market until the situation improves.
In line with Trust Project guidelines, BeInCrypto is committed to impartial, transparent reporting. This informational article is intended to provide accurate and up-to-date information. However, readers are advised to independently verify the facts and consult a professional before making any decisions based on this content.