President Trump Bans Central Bank Digital Currencies, the Crypto Market Rejoices

The newly appointed U.S President Donald Trump has been quite active in his first few days in office. Many were eager to see how he will handle cryptocurrency-related matters and his recently signed executive orders reveal that the next four years could be very interesting.

Freshly appointed U.S President Donald Trump has been keeping himself busy during his first few days in office. Many were curious to see how he will handle cryptocurrency-related matters, and his recent executive orders show that the next four years could be quite interesting. Among President Trump's recently signed executive orders is one that reverses the previous administration's central bank digital currency (CBDC) pursuits.

The initiative aimed to have the Federal Reserve push for the creation and deployment of a central bank digital currency as the legal digital version of the U.S dollar.

President Trump's recent executive order aims to ban central bank digital currencies entirely. This is part of his administration's new crypto-related pursuits.

One of the main reasons why stablecoins and cryptocurrencies exist was to avoid government overreach. As soon as governments realized the power of blockchains, they realized that they can use it as a tool for more control and surveillance.

Programmable currency such as CBDCs may allow governments to have too much control over how people spend money. They may also allow governments to violate personal privacy and easily confiscate people’s funds.

CBDCs would also give the government leeway to crack the whip against cryptocurrencies in a bid to enforce CBDC dominance. The aim being to attain strict monetary control.

Many analysts believe that CBDCs are not an ideal solution to the current monetary issues in the system. For example, governments can still continue to print money through CBDCs, thus meddling in monetary supply just as they have been.

A ban on CBDCs will allow the crypto market to continue thriving, thus providing a chance to fix the current monetary system. The crypto market is pleased with the ban because it will allow the protection of individual privacy and sovereignty.

A dystopian outcome?

Many have expressed concern that CBDCs would violate civil liberties. Critics previously warned that CBDCs would become the tools that governments use to turn tyrannical.

On top of privacy invasion, CBDCs could make it easy for a government to impose negative interest rates. This would be the equivalent of charging people for holding money. It could even allow governments to restrict how and where people spend money.

Based on the above information it is clear that governments would have too much centralized control over the masses. It would give rise to the kind of scenario where a government can simply turn off the financial taps of anyone that criticizes them.

Although the possibility of a dystopian outcome is high, CBDCs may offer some benefits. The idea of CBDCs was initially rooted in the need to improve the currently dated financial system.

CBDCs give central banks more control over monetary policy. Being able to digitally determine the level of money circulating in the economy would enable tighter fiscal policy control.

CBDCs would also make it easier for the government to deploy stimulus packages and enable much easier financial distribution. However, these benefits may not necessarily be enough to offset the risks of giving up core freedoms.