Central bank digital currencies CBDC is the hottest issue in Florida politics
Good morning. Here’s what happens:
Prices: Meme coins soar as crypto giants stumble amid mixed market signals in Asia
Insight: North Carolina and Florida have both voted to ban CBDCs. Welcome to the wedge case for the 2024 election.
As the East begins its trading day, crypto is confused.
Nobody can understand this market much. CryptoQuant data says there is both high selling pressure due to an increase in currency reserves. But at the same time, there is both a high Coinbase premium and a high Korean premium, which indicates a lot of buying pressure.
Meanwhile, over in the world of macroeconomic signals, China’s economy appears to be slowing down.
Thursday’s (Asia time) release of the Caixin China General Manufacturing PMI, which measures the performance of the manufacturing sector, showed that things were slipping – but it didn’t look bleak.
Caixin’s PMI fell to 49.5 in April 2022, marking the first decline in factory activity since January due to a property slump and fears of a global slowdown. Input prices fell for the first time in seven months, causing the steepest drop in sales prices since December 2015 as firms sought to attract new business, according to a release.
Singapore’s QCP said in a recent note that the market is “confused and rankled” because it is caught between two minds.
“This lack of direction has led to an absolute crushing of implied volatility across asset classes,” QCP wrote on Telegram.
Conflicting narratives about a hawkish Fed and strong employment with sticky inflation are holding back from breaking to new highs, while USD positioning is heavily skewed to the short side, the trading firm wrote.
Friday’s jobs numbers will likely be a good test of which side of the narrative equation wins.
CBDCs stir strong opinions in Florida
American politics has a handful of hot-button issues: guns, health care, illegal immigration and LGBT rights.
Fireband Florida governor, and possible Republican presidential candidate, Ron DeSantis, has taken a stand on all of these in the state legislature. Whether you agree with him or not, his tenure as governor is helping to define the next federal election narrative.
But what problem has gotten his office the most phone calls? Central bank digital currencies (CBDCs), Samuel Armes, president of the Florida Blockchain Business Association, told CoinDesk.
“If CBDCs are the encroachment on our civil liberties that the majority of people believe they are, we don’t have time to wait,” Armes said. “At the end of the day, if the feds want something, they’re going to try to get it. So it’s our job to try to stop it.”
As of now, the US has no concrete plans to issue a CBDC. China continues its nationwide rollout of its CBDC, eCNY, which as of January is 0.13% of the total circulation of the Chinese renminbi yuan. While many nations are researching CBDCs, apart from China, only the Bahamian sand dollar and the Bank of Jamaica’s JAM-DEX have been deployed.
Republicans argue that a CBDC would give the government too much control. Armes notes that many who have immigrated to Florida from authoritarian states like Cuba and Venezuela are horrified by the idea, as it reminds them of what they fled.
Florida law declares that CBDCs will not be recognized by the state as money. Other anti-CBDC bills that are still on the drawing board, or have passed, have taken different approaches, which Armes says is great because there will be “no perfect policy.”
Florida not recognizing CBDCs as money is likely to put the state on a warpath with the FBI. If a state were to refuse to recognize a particular type of money authorized by the federal government, it could potentially face a lawsuit for interfering with the federal government’s constitutional power to regulate this – over which it has a monopoly.
Amers says that if the federal government sues Florida, the resulting legal battle will delay the implementation of CBDCs and buy time for states to figure out different strategies to counter them. North Carolina’s House of Representatives also voted this week to ban CBDCs.
“Litigation complicates matters, bogs them down in the administrative state to the point that by the time they are implemented, many disputes have caused significant delays,” he told CoinDesk. “It’s going to be a federalism issue, like any other issue.”
CBDCs potentially undermine the autonomy of state-chartered banks and allow the federal government to encroach on rights and regulations at the state level, Armes argues, pointing to Caitlin Long and Custodia’s long battle with the federal government as an example of federal encroachment on rights. of states to charter financial institutions.
“We’ve had this dual banking system between the states and [Federal Reserve] which really turns into just a federal banking system. And a CBDC is going to further strengthen that,” Armes said.
Regardless of what happens in Washington, DC with CBDCs, DeSantis appears to have struck a chord, even if his stance seems counterintuitive. Some might argue that Republicans should support CBDCs as a tool against de-platforming. A CBDC could theoretically allow for a constitutional defense that cannot be used against a private company.
All of this is a particularly odd question, since, unlike other national debates that have pitted states against Washington, DC, like guns and abortion, this one hasn’t materialized yet; it is currently not on the agenda. But there are well-paid lobbyists standing by on Capitol Hill when it comes to the agenda.
Meanwhile, the issue continues to bode well for DeSantis.
As part of our “CoinDesk Turns 10” series looking back at seminal stories from crypto history, “All About Bitcoin” examined the rise and fall of defunct crypto exchange Mt. Gox with author, journalist and CoinDesk contributor Jeff Wilser. In addition, digital asset strategist Joe Orsini discussed his outlook for bitcoin (BTC) as its dominance rate has increased sharply since the start of the ongoing instability in the US banking sector nearly two months ago.
