On Monday, Florida Governor Ron DeSantis announced a new legislative proposal to “protect Floridians from the Biden administration’s weaponization of the financial sector through a Central Bank Digital Currency (CBDC).” The announcement dealt heavily with the issue of privacy, echoing other Republicans who have recently claimed that a digital dollar will strip Americans of their right to financial privacy.
“The Biden administration’s efforts to inject a Centralized Bank Digital Currency is about surveillance and control,” Mr DeSantis said, claiming that a federally controlled digital dollar is yet another attempt by liberal elites to push “woke ideology” into the financial sector. The potential Presidential candidate worries that, unlike decentralized digital currencies, a CBDC will threaten individual privacy and economic freedom, as well as diminish the role of community banks and credit unions in the financial system.
Specifically, the legislative proposal calls for:
- Prohibiting the use of a federally adopted CBDC within Florida’s Uniform Commercial Code (UCC).
- Instituting similar protections against foreign-issued CBDCs.
- Inviting like-minded states to adopt equivalent prohibitions to fight back against CBDCs at the national level.
The UCC is a standardized set of business laws dealing with different aspects of loans and banking, which facilitates commerce between companies, particularly in other states. Among other things, these laws deal with sales and leases, investment securities, and secured transactions, so restricting the use of a digital dollar as money within Florida’s UCC could severely limit its widespread adoption.
Coming back to the issue of privacy, although the Federal Reserve has not yet committed to issuing a digital dollar, it has stated that any form of CBDC will be privacy-preserving. Unlike Governor DeSantis’ claims, the government would not be able to see consumer activity or cut off access to goods and services. Anti-money laundering checks would likely continue to be performed by commercial banks, and only suspicious transactions would be shared with government officials. However, as with current payments, that could still lead to a large number of false positives.
Still, some Republicans worry that once a CBDC is in place, even if it is privacy-preserving, a less benevolent future government could expand its reach and enhance population surveillance.
However, like others who have referred to CBDCs as government-controlled surveillance tools, Mr DeSantis may also be keen to protect the interests of the crypto community. Florida is a crypto-friendly state, and last year, the Governor signed legislation to ease cryptocurrency regulation.