US President Joe Biden will reportedly appoint Lael Brainard (Federal Reserve Vice Chair) as his top economic adviser.
The latter is a critic of cryptocurrencies and argues that they could undermine the financial stability of the United States. On the other hand, she is an advocate of a digital dollar that would be highly centralized and monitored by the authorities.
Anti-Crypto Position
According to a Bloomberg coverage, President Biden will soon appoint Lael Brainard as his chief financial adviser. She previously worked in the White House, serving as Deputy Director of the National Economic Council (NEC) under President Bill Clinton. Brainard was also nominated as Fed Governor in 2014 by Barack Obama.
The Democrat is known as an opponent of cryptocurrencies, opine that banks’ involvement in the asset class could lead to monetary chaos. She believes that a potential digital asset market crash could resonate with the financial sector.
Brainard raised concerns about decentralized finance (DeFi), saying that the new technology could be a catalyst for potential illicit activities:
“Permissionless sharing of assets and tools that obscure the origin of funds not only facilitates evasion, but also increases the risk of theft, hacking, and ransom attacks.”
Pro-CBDC
At the same time, Biden’s soon-to-be economic adviser is fond of creating a digital dollar. She Announced that the central bank of the United States was working on a financial product of this type almost three years ago:
“We are conducting research and experiments related to distributed ledger technologies and their potential use case for digital currencies, including the potential of a CBDC. We are collaborating with other central banks as we advance our understanding of central bank digital currencies.”
Brainard doubled his vision several months ago, claiming a digitized version of the greenback could provide greater consumer protection and monetary stability:
“It is important that the United States play a leadership role in developing standards governing international digital financial transactions involving CBDCs in accordance with privacy, accessibility, interoperability, and security standards.”
His move to the White House opens a job at the Federal Reserve, which has launched a campaign to fight inflation by raising interest rates. Some crypto participants believe that the market could enter a bullish mode once the central bank changes its strategy.
Federal Reserve Chairman Jerome Powell recently fixed that inflation should come down to 2% before rate hikes cease. He also predicted that the goal will not be reached this year.
Crypto has typically headed south after every interest rate hike announcement, which means it could suffer more due to the Federal Reserve’s plans.
US Targets Crypto Firms
Brainard’s appointment coincides with the US SEC’s intention to impose additional regulatory scrutiny on the digital asset sector.
The watchdog accused Kraken of offering securities as engagement services to US consumers. Soon after, the platform ceased its product and paid $30 million in repayment, civil penalties, and pre-judgment interest.
The next victim was the issuer of the stablecoin: Paxos. The New York State Department of Financial Services urged the company to stop issuing new Binance stablecoins (BUSD), while the SEC labeled them as unregistered securities. Paxos followed the request and Announced will no longer mint such tokens as of February 21.
Featured image courtesy of FT
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