Former CFTC Chair Giancarlo: There's a 'False Choice' Between CBDCs and Stablecoins Regarding Privacy

The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency. Good morning and welcome back to first mover. The House Financial Services Committee approved a bill this week that's intended to prevent a US central bank digital currency. Joining us now to discuss is former CFTC chairman and W and Gallagher, senior counsel Chris Giancarlo. Welcome back to the show, Chris. Good morning. It's good to be back. It's good to be back on the program. Hello, Lawrence. Good to see you. It's been a while. Hey, how are you? Good. Get some neighborly conversations going here. All right, Chris, we're talk. Shout out the window, Adam, we should have got you two in the same room. All right, let's, let's get down to, yeah, let's do it. I would love that. But Lawrence, you got to join Chris because that background is phenomenal. Yeah. Yeah, we'll do it. We'll do it in, in, in home studio uh broadcast. We'll do that. It'll be fun. I think we can do that. I think we could do, I'll walk over and someone's ringing. That's not me ringing at your door by the way, that's not me, someone's on the ring. All right, let's, let's talk about these CBD CS. We only have so much time. I would love to, to, um, you know, talk about your neighbor Lee, companionship. But here we go. Cardi B lives nearby too so we can bring her as, as well. But that's a different story. All right, Chris, let's talk about this. You're the co-founder of the Digital Dollar Project. This is a nonprofit that encourages public research of a potential US CBD C. What are your reaction to these recent developments in Congress? Yeah. So you know, the thrust of the legislation that was passed yesterday in the House Financial Services Committee despite its, you know, fairly aggressive title and some of the rhetoric around it really at core is a statement that any US Central Bank digital currency that could be deployed by the Federal Reserve needs to be approved by Congress and quite frankly, as an American citizen and as a believer in a, in a representative democracy, I think that's the right approach. Uh So before we even get into questions of uh uh of the substance of central bank digital currency as a constitutional matter, I think it's entirely right uh that the decision to deploy a digital forum of the US Dollar uh should be um uh really addressed by the people's representatives in Congress. So uh no problem with that at all. I think some of the rhetoric uh got a little um um Here is what I would say. I think both sides in this debate, as you know, not only was there a bill that was sensibly opposed to CBD C, there was also a bill by Stephen Lynch that actually authorized the fed to do work on such a big digital currency. And, and the on the opposition side, it's not just limited to Republicans, as you know, Robert Kennedy Jr has come out against CBD C. What those voices are concerned with is the issue of privacy, of individual privacy. And what I would call economic liberty, the ability to make lawful transactions free from surveillance. That is a very legitimate concern. It, it, it is a right concern. It's one that we at the Digital Dollar project have been focused on since the start three years ago, more than three years ago when, when we formed as a not for profit think tank and on the left hand side of the aisle and, and again, not entirely on the left hand side, um is a concern that the United States not be a laggard, but be a leader in the development of uh uh digital systems of currency. And they're right. Unfortunately, both sides seems to be talking past each other because at heart, if I can say this, the real issue and this is the issue that the digital dollar project has been focused on from the very beginning is how do we future proof the us dollar. How do we enhance and protect its reserve currency status in a future where value is increasingly moving onto decentralized systems of value and very centralized systems of value, some of which are going to be operated by governments like the European Union and the, and the, and the People's uh uh the, the People's Republic of China and others that are going to be centralized by private sector actors, stable coin operators and the like and how do we protect democratic values of economic integrity and economic, economic autonomy in these digital systems? And I think there's a false choice between stable coins and central bank digital currency when it comes to privacy. As if somehow once privacy is going to be better protected by private sector actors, then it will be by governments, you know, at least the United States government has a constitutional bill of rights. The fourth amendment of which protects privacy, the first amendment of which protects freedom of speech, private sector actors, private sector, deploys of central bank or of digital currency are not subject to those requirements. So if we're going to protect our, our democratic values in this digital future money, if we're going to future proof the dollar, then we need to take a more holistic approach and not get caught up in stale debates between left and right and between CV DC and stable coins. We need to think more broadly than that. So are you, you know, it's almost 2024. We got a few people running there for the c suite and the United States. Uh, are you talking to any of them? Uh, I, I mean, I know you, you, you might know one of them, at least two actually. Uh, are, are you on the phone with them talking about what this all means and trying to get them to understand the nuances there. I'm really not, I'm not going to take a position in the 2024 presidential race. We at the digital dollar project are strictly nonpartisan. I also do not personally have a favorite in this race amongst the candidates. It's it is, it's going to play out as it's going to play out. What what I am though very actively speaking to responsible members of this administration of potential future Republican administrations who are focused on are focused on the broader issues concerning how do we in the United States preserve the dollar this Lawrence and, and, and this program is certainly uh spending a lot of time addressing the new digital future of money. There's no question that value. The internet of value is going to move value off the way it's been recorded for the last 400 years on, on basically on the balance sheets of proprietary commercial institutions and move value increasingly on to distributed ledgers, some of which will be run by government, some will be run by private sectors, actors. And we need to think about how do we preserve the dollar, the dollar? That is, that is its reserve currency status that has done so much for the US economy. And I would argue so much for the global economy, the, the 30 year period of globalization that we've just been through would have never happened without the dollar as a stable unit of value and a means of transmitting value in many cases from the rich North to the, to the underdeveloped south. And so I would argue the dollar has been a net good. How do we preserve that in this new digital? And there's many responsible people on both sides of the aisle. Some that may take office in a new administration, some that may take office if the Biden administration is reelected. And it's those people that I'm in communication with to make this point, we need to get beyond scale debates and start really thinking more seriously about the importance of a dollar in a new digital future. Does the dollar is the dollar's position threatened though? Because of the past several years, both administrations, both the Trump and Biden administrations, the Congress is under them spending the way they did creating a massive debt. Uh What are we close to 40 trillion now? And to the point that um we, we, we might have gone over a cliff. Does that threaten overall the supremacy of the US dollar uh because of, of reckless spending? And and, and an appetite for more reckless spending in the future years. Absolutely. Lawrence, as I say in my book, Crypto, Dad, the Fight for the future of money, a government that wishes to be profligate with its currency will do it through any means possible. They'll do it through analog systems of money printing and they'll do it through digital systems of, of money minting or digital minting. And the technology um uh is almost irrelevant. Uh if governments do not protect the, the base value proposition of the currency. And as, as you kind of point out, um I think the figure is in the last four or five years. Um uh 40% of the money in circulation has been created in the last half decade. So, you know, we're, we're printing money and God forbid, there's a war that the United States is involved in more directly than say what's happening in Ukraine. Uh The printing presses will go into overdrive. Uh The United States will have to gear up its military and the way it will have to do so is by printing even more money. So it doesn't, almost doesn't matter whether we have a CBD C or not. If our government doesn't maintain the, the dollar is a core stable unit of value and allows inflation to take over. Uh as, as we are already seeing, uh then it doesn't matter whether we have a CBD C or remain an analog dollar in a, in a money printing world. Chris. Do you think we'll see any crypto related legislation passed in 2023? Um I think there's a chance in the House II, I thought the chance was better maybe 60 days ago before, you know, articles of impeachment or at least impeachment inquiry was started. Uh, now we've got the debt ceiling fight. I mean, these, these existential fights, um, these political and economic fights overshadow um lawmaking on important areas like um C legislation, we desperately need Congress to weigh in on uh to create a US regulatory framework for crypto as, as I think many of your listeners would agree with. But unfortunately, when we get into some of these big battles, um impeachment and, and, and debt ceiling fights, you know, and debt ceiling fight is, is, is, is less about shutting the government down its philosophical differences as to what should be this size and scope of the US government. So I'm not if that's the only form where, where that debate can take place. That's unfortunate structurally, but I'm not criticizing it, but it does, what I'm saying is it does overshadow the ability of Congress to address important issues. I would have thought bar those two things, we probably would have had crypto legislation in the House this year. Now, the Senate is a different story. Um I've said this before and I think I've said it on your program, the real divide in crypto is not right and left or Republican Democrat, the real divide in crypto is generational. There's a, there's a sep Genian generation in Washington that have been there a very long time when they first arrived. However, you know, they conducted passbook savings at their local bank. They, they, you know, they use checks to settle their, you know, this is a generation that can't get their, they grew up in a pre digitally networked world and really struggled to get their mind around it. And I'm not being critical. Every generation, you know, over time settles into an understanding of the world as it was and that's the world they'll take with them to the end. And I think we've got in Congress certainly on the Senate side, if you look at the support for the crypto legislation at the committee level, it was the younger Democrats that got on board, the younger republicans. And I think the same is the case. So I do think we need some degree of generational change in Washington before we get the sensible crypto legislation that we really need. I was more optimistic a few, a few two months ago than I am today. Mitch mcconnell is the same age as Mick Jagger just saying literally like a year apart in better shape. We musicians, you know, we stay jumping around the stage, keeps us, keeps us young and youthful. Chris, thanks very much for joining us this morning. I am waiting for you and Lawrence to invite me over. If we can get Cardi B involved, it'll be a good time. Get you, get your visa done. You know what a standing in coins TV. To come up to this library of mine, we're gonna, we're gonna do a live shoot here. I'll walk over. I love it. Let's, let's make it happen. Bring the equipment with you, Lawrence. I got it ready. Chris, thanks so much. Good to see everybody that was former CFTC, Chairman Willy Far and Gallagher, senior counsel, Chris Giancarlo.