John Reed Stark, the former director of the Internet Enforcement Office of the U.S. Securities and Exchange Commission (SEC) and a lawyer, posted a message on his personal Twitter on the 4th criticizing the central bank digital currency (CBDC), believing that it will bring negative consequences to the global financial system. Many unnecessary risks, accusing some politicians of promoting the benefits of cryptocurrency but ignoring its risks in the name of innovation, and questioning whether cryptocurrency is really "innovative".

John Reed Stark expressed his distrust of CBDC and the lack of regulation and protection of cryptocurrencies. Photo Credit: John Reed Stark

John Reed Stark points out that CBDC still has many risks

"First of all, just like cryptocurrencies and stablecoins, you must first answer what problem CBDC can solve. Why do we need CDBC? There is no answer to this question." John said that there are many digital currencies that are trustworthy and work well. , is also subject to government supervision and audit, and also praises the two regulatory agencies of the U.S. Federal Deposit Insurance Corporation (FDIC) and Securities Investor Protection Corporation (SIPC). This seems to be consistent with current SEC Chairman Gary Gensler’s comment on June 7 that “the United States is no longer More digital currencies are needed because the United States already has a digital currency called the U.S. dollar" has a similar view.

When questioning CBDC, John stated that in addition to adding risks to the global financial system, CBDC will also lead to a "Pandora's box" of financial privacy issues, conflicts and network security, and quoted a 2021 American University Washington Law The academy’s 18-page report is titled The Uses and Risks of Stablecoins to support his statement.

In terms of regulation and user protection, John compared cryptocurrency companies with the traditional financial system. He responded that the former lacked a series of protection mechanisms (such as insurance, supervision, consumer protection, auditing, licenses, network security regulations, trustees, customers, etc.) Separation of assets from company assets, insider trading and market manipulation) are vulnerable to fraud by intentional parties. On the contrary, banks, brokerage firms, and credit card companies can provide timely compensation and follow up when fraud, errors and omissions occur, because these institutions are subject to complex regulatory and consumer protection constraints (mandatory audits, inspections and records, net capital disclosure , license), etc.

"This is like building a bridge to no man's land in the middle of the desert, using it as a modernization project, and then claiming that the project is the panacea for a successful society. Regardless of Senator Ted Cruz's On what basis, he is right about the legislation banning central bank digital currency (CBDC), it is a bad idea that needs to be stopped immediately,” John added at the end of his Twitter post.

This article Former SEC Official: CBDC May Be the Most Ridiculous Idea in the History of Monetary Policy appeared first on Blockchain.