According to the CEO of the Cardano Foundation, privacy is not the big issue with CBDCs, and we all need to be a bit more ambitious when thinking about their potential.
Central bank digital currencies (CBDCs) have been the new hot topic in crypto, banking, and fintech in recent years. However, they have not been without controversy, particularly among the crypto community.
Originally, cryptocurrencies were developed as a decentralized alternative to eliminate intermediaries, improve transparency, and encourage accountability. Unsurprisingly, many people are concerned that governments will adopt comparable technology, which could increase surveillance and centralize financial power.
BeInCrypto spoke with Frederik Gregaard, CEO of the Cardano Foundation, the day after his appearance on Wednesday before the All-Party Parliamentary Group on Crypto and Digital Assets, where he was invited to discuss CBDCs. The group, which is a voluntary association of parliamentarians, examines the work of the UK government and regulators.
a bold agenda
However, his main focus was the upcoming UK CBDC, or “digital pound.” The project has also been known as “Britcoin”. The UK government has not yet committed to its implementation. Gregaard wanted to emphasize that the current conversation on CBDCs needed to be broader and more ambitious.
“Yeah, I was teasing them quite dramatically and saying this is not a tech issue,” he told BeInCrypto. “This is a question of what the UK wants.”
On the official Bank of England website, the benefits of the digital pound seem almost indistinguishable from those offered by mobile banking and contactless payments. The UK is already one of the world leaders in digital payments. Cash is rarely used, and contactless technology has been the norm in retail transactions since at least the mid-2010s. Barclays made contactless the default for new debit cards in the UK in 2014. HSBC, Natwest and Lloyds Bank followed suit in 2015.
“The pound is already digital, so I don’t understand the discussion,” he said. “I’ve been here 24 hours and I’ve only been using my phone. I have not taken out a credit card. I haven’t been withdrawing cash at all. So you’re pretty digital already, you know?
“Honestly speaking, I think it’s basically a waste of time to go down that rabbit hole.”
Privacy is not the problem with CBDCs
“I think a CBDC has a different scope than what you are talking about now with respect to privacy. Privacy is not the problem. We can easily solve that cryptographically speaking. The real issue here is, can you make something that actually gets adopted? And not just because of the population here, but because of all the counterparts you have around the world?
In its consultation paper, published last month, to “support confidence”, the UK government said the digital pound would be subject to “rigorous privacy and data protection standards”. The digital pound would be “at least as private as current forms of digital money.”
Payment interface providers would verify users but anonymize personal data before sharing it with the central bank. The government and central bank would not have access to users’ personal data, except for law enforcement agencies, in limited circumstances, such as with other digital payments and bank accounts.
“Let’s be very clear about what we’re comparing,” Gregaard said. “Look at the data that is being collected right now on our smartphones. And when we use our debit cards, and when the telecom providers and all the CCTV cameras triangulate us…” Gregaard gestured around with a concerned look, alluding to the fact that London is one of the most closely watched cities on the planet.
“Me as a Swiss, you know… this is very, very strange for me. So I think what we need to talk about is what we’re comparing. Good?”
“I think something incredible could be done on a blockchain, which is more towards bearer cash or a bearer asset, and preserving privacy. Or at least give you, as a user, the ability to control your privacy, which you don’t have today. And that’s where I’m coming from when I say that privacy is not an issue. We can design it in such a way that you can own a lot of those data points yourself.”
Throughout the conversation, Gregaard stressed the importance of thinking big, particularly in a regulatory sense. While he acknowledges the macroeconomic turmoil of Brexit, Gregaard believes it has its advantages. “He [EU] the discussions in Brussels are so colored. It’s so hard to satisfy in so many different directions.”
The UK should not follow the EU or the US.
“[The UK] it has been the center of capital markets for a long, long time. You have a real opportunity to design something that really puts you in the landscape and then creates jobs and growth. So why not take it? Gregard asked.
Last month, BeInCrypto revealed that the UK was actively choosing not to take the lead in regulating cryptocurrencies. In Gregaard’s opinion, this is the wrong strategy.
“If you’re sitting and waiting in jurisdictions that aren’t very clear and very successful in what they’re doing, that’s bad. So if you’re really taking inspiration right now from the European Union and the US, I think your data points are the wrong ones. Where your data points should be is probably more towards Singapore or Switzerland,” Gregaard said.
“The United States and the European Union are very large markets. They may be able to change the entire agenda. But that’s not what they’re doing right now.”
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