US Senators Debate Digital Dollar As China Prepares to Launch Virtual Yuan

US legislators are taking a close look at the pros and cons of a digital dollar.

In a hearing before the Senate Banking Committee held on Tuesday, Senator Tom Cotton (R-Ark.) explained why he believes the United States has to have its own virtual currency.

“The US needs a digital dollar… The US dollar has to keep earning that place in the global payments system. It has to be better than Bitcoin… It has to be better than a digital yuan.”

Committee Chair Mike Crapo (R-ID) also acknowledged the importance of financial innovation, but cites a need for regulatory oversight.

As some lawmakers push for the digital dollar amid concerns China is aggressively working on its digital yuan, Ranking Member Sherrod Brown (D-OH) is focused on the implementation of a virtual currency, saying he believes tech companies can’t be trusted to build or maintain the technology.

“It’s hard to think of any revolutionary products or services that have actually helped the people [that tech firms] say they will.”

A number of witnesses who were invited to the hearing vouched for a US-backed virtual currency. According to Duke University financial inclusion professor Nakita Cuttino, America needs to be at the forefront in the future of money. Paxos CEO Charles Cascarilla and former Commodity Futures Trading Commission Chair Chris Giancarlo also think that a digital dollar will help address an outdated financial system.

Says Giancarlo,

“Darwin said the most adaptable survive. And I think that is true when we transition to a new architecture. To adapt to it, will help bring benefits to the society at large.”

Meanwhile, the American Bankers Association has come out against a virtual dollar, saying it could transform the Federal Reserve into “the nation’s near-monopoly provider of currency, bank accounts, and payment services.”

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