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Introducing a central bank digital currency (CBDC) would be “profoundly dangerous” to society as it would mean the government having visibility into every single transaction of its citizens, according to Texas Senator Ted Cruz.
“I am very concerned about the risk of a CBDC,” Cruz stated during the Bitcoin Policy Summit on Wednesday.
Drawing parallels between President Joe Biden’s executive order that directed the Federal Reserve to explore the launch of CBDC and China’s experiments with the digital yuan, Cruz said that the intention of using a CBDC is “to destroy all value of Bitcoin, to destroy anonymity, to destroy decentralization.”
CBDCs share some similarities with stablecoins in that they are linked to the value of a sovereign currency, such as the U.S. dollar. However, there is a crucial distinction between the two: CBDCs are issued and managed by national governments or central banks, while stablecoins are created by private entities on decentralized networks, such as Tether's USDT or Circle's USDC, the two largest stablecoins by market capitalization.
“The same people that want to see a CBDC, they hate Bitcoin, and they hate cash,” said the Texas lawmaker. “Let's be clear, they don't like cash for exactly the reason I like cash because it is not subjected to centralized control that is not subject to constant surveillance. And so I hope we see growing resistance to a CBDC.”
Cruz reveals personal investment in Bitcoin
Cruz also praised Bitcoin, which he said he is “incredibly excited and incredibly bullish on.”
“Bitcoin is clearly the alpha in the current crypto sphere, both in terms of coming first and also being clearly the most dominant," he said. "I think the analogy of digital gold is powerful and the insight that led to his creation is still extraordinary.”
Cruz also revealed that he is personally investing in the leading cryptocurrency, having a standing order every Monday.
“I own a little more than two bitcoins and I want a little bit more. I bought the dip, which I was quite happy with, but I'm also a long-term investor," said Cruz. "I'm fine with some volatility."
According to him, one of the attractions of Bitcoin is that it has a limited supply of 21 million coins, suggesting that it serves as a hedge against inflation—a particularly important feature “when you have irresponsible politicians in Washington that spend money like drunken sailors,” he said.
“Which is actually not fair to the sailors because at least they're spending their own money,” added Cruz.
Stopping the government
Last month, Cruz introduced legislation in March to prohibit the Fed or the federal government from creating a CBDC, stating at the time that the U.S. government had “no authority to unilaterally establish a central bank currency.”
“I don't want the government having control over your finances,” said Cruz during yesterday’s event, adding that one element of President Biden’s legislative initiative was a requirement that banks report every single transaction in excess of $600 to the federal government.
“That means your rent payment every month. If you own a home, that means your mortgage payment every month. If you own a car, most car payments now are north of $600. It is literally the government having visibility on virtually every transaction you're making. That's their stated goal,” said Cruz.
According to him, decisions like these should be made by Congress elected by the people, not by the “Federal Reserve governors that have no accountability to the American people.”