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Digital Dollar Project Warns on US Cautious Approach to CBDCs
The DDP's white paper called the U.S, approach to CBDCs an "unsustainable position."
By Amitoj Singh
Updated Jan 18, 2023, 5:57 p.m. Published Jan 18, 2023, 4:24 p.m.
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The United States may have conceded a head start to other nations in "setting global standards for the future of money" regarding central bank digital currencies (CBDC), but in the future the country "should lead the development of an international regulatory framework around digital currencies," the Digital Dollar Project (DDP) said on Wednesday.
In its updated white paper, the DDP, a nonprofit organization advocating for a U.S. CBDC, said the U.S. should set that regulatory framework "independent of a decision to deploy a U.S. CBDC."
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More than 100 jurisdictions around the world are researching or developing a CBDC but the U.S. remains cautious on the merits of a CBDC.
"In the coming CBDC future, the U.S. should actively lead global discussions on governance, interoperability, security, privacy and scalability standards rather than reacting to foreign CBDC decisions," the DDP wrote.
The DPP laid out a series of warnings about the United States' cautious approach, calling it "a conspicuous absence" and an "unsustainable position."
Such a "defensive posture" by the U.S. threatens to impact its domestic economy if foreign nations issue their own CBDCs that become widely adopted as the de facto standards for international wholesale and retail payments, the paper warned.
Additionally, the CBDCs of other nations could be used to avoid financial sanctions making it imperative that the U.S. find ways to maintain the dominant use of the dollar in the digital global payment systems.
If the United States-led global financial infrastructure is perceived as "too slow and expensive in comparison to foreign alternatives," a potential threat as other countries rapidly explore their version of central bank digital currencies, it's possible other nations will begin or continue the process of "de-dollarization," the DDP argued.
The Atlantic Council previously issued a similar warning.
The DDP's white paper referred to a 2022 study by the Hoover Institution that looked at global implications of China's CBDC, the e-CNY, including how China has established a first-mover advantage in not only the deployment but also the technical underpinnings of CBDCs.
China's CBDC enhances its ability to cement its international leadership in the space, the white paper noted. The e-CNY helps China's ability in setting "economic norms and technical standards that align with its authoritarian governance system, and increase its ability to undercut the traditional dominance of the U.S. dollar as a source of geo-economic and strategic influence."
CBDC expert and the CEO and co-founder of Fluent Finance, Bradley Allgood, said the U.S. has been setting leadership standards, referring to the Federal Reserve Bank of New York and its testing of the use of digital tokens representing digital dollars for wholesale transactions along with big banks.
"When you look at the Fed of New York and what they have been doing in their innovation offices, this has been setting the standard, with all of it leaning towards wholesale, tokenized deposits or tokenized liability network settlement between bank to bank," Allgood told CoinDesk.
Read More: Digital Dollar Project Plans to Explore CBDC Technical Solutions With New Sandbox
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WH advisor Patrick Witt: Davos 2026 was ‘turning point’ for global crypto normalization
White House crypto advisor Patrick Witt said stablecoins are the “gateway drug” for global finance and that Washington is racing to deliver regulatory clarity.
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The Context: The Executive Director of the President’s Council for Advisors for Digital Assets sat down for an interview with CoinDesk where he said the recent World Economic Forum in Davos served as a stage for the Trump administration to signal its commitment to normalizing digital assets as a permanent asset class. He said:
- The administration aims to strike a balance between traditional financial incumbents and new crypto entrants through a "symbiosis" where they can coexist and compete.
- Consumers benefit from this competition, positioning the current administration as firmly on the side of technological innovation.
- The President renewed a pledge at the event to establish the United States as the undisputed "crypto capital of the world".
Latest Developments: Regulatory movement is accelerating in Washington with key committee markups scheduled for major digital asset legislation.
- The Senate Agriculture Committee is set to mark up its portion of the market structure bill on Thursday, January 29th at 10:30 AM.
- The Senate Banking Committee has postponed its markup, requiring further mediation on issues like stablecoin rewards and ethics.
- Witt expressed confidence that despite these delays, the legislation will eventually be reconciled and brought to the Senate floor.
Reading Between the Lines: Stablecoins are acting as a "gateway drug" for global business leaders who are beginning to grasp the technology's potential—and its threat.
- Witt observed a cycle where traditional players move from a lack of understanding to fear, and finally to incorporating crypto into their own product offerings.
- While some Senate Republicans worry about stablecoins causing deposit flight from community banks, Witt believes a "smooth glide path" into these future technologies is possible with patience and cooperation.
- “Consumers win when there’s choice,” he said, while also acknowledging concerns from Senate Republicans about community banks and financial stability. The administration, he suggested, sees convergence between crypto and traditional finance as inevitable but wants the transition to be smooth rather than destabilizing to all parties.
- U.S. regulators intend to lead the global regulatory conversation, even if the domestic legislative process results in imperfect "directionally accurate" rules.
What Comes Next: Once the primary market structure bill passes, the administration plans to pivot toward a major crypto tax package.
- Witt suggested there is still a window of opportunity to pass additional digital asset legislation this year before midterms dominate the congressional calendar.
- The administration is also monitoring "developing situations" regarding digital assets potentially seized in national security actions abroad, such as in Venezuela.
- Finally, Witt declined to specifically comment on speculation that Venezuelan enforcement actions may have involved seized digital assets, citing national security sensitivities and an evolving situation, but did add, “There’s a number of folks in the national security apparatus engaged,” in regards to how the Maduro regime was financed.
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