A recent top economic adviser for President Joe Biden, Daleep Singh, told U.S. senators on Tuesday the administration was in active pursuit of a digital dollar as a means to crowd out private cryptocurrencies that enable ransomware and sanctions violations.
Singh, appointed by Biden as deputy director of the National Economic Council and deputy national security adviser at the National Security Council, was serving the president when the administration issued an executive order to encourage U.S. regulation of digital assets, he recalled in a Senate Banking Committee hearing.
He said Biden’s March 2022 order was “trying to push our government to launch a digital dollar, which I think is the single best step that we could take because it would crowd out the ecosystem of crypto that allows national security adversaries like Russia to exploit our deficiencies, our weaknesses in terms of our critical infrastructure.”
A central bank digital currency (CBDC) issued by the Federal Reserve could mark a dramatic shift in both the banking industry and the crypto sector – including in its potential effects on nongovernmental stablecoins whose role may overlap a virtual dollar backed by the government. Since Biden’s order, the U.S. Treasury Department followed up with its own report last year that recommended the federal government continue to work on a digital dollar while it assesses whether such a thing is in the “national interest.”
Singh, who has also occupied roles as an acting assistant secretary of the Treasury and as a senior official at the Federal Reserve Bank of New York, left the government in June to join PGIM Fixed Income as its chief global economist.
He suggested cryptocurrencies enable U.S. adversaries to “evade the impact of our sanctions,” to some degree. Though such evasion may not represent a major share of sanction violations, he said, “even a dollar of evasion is not something we ought to tolerate.”
Wall Street bank lobbyists have decried the idea of a digital dollar as a threat to the stability of the financial system, though a report from the Office of Financial Research argued in July that a U.S. CBDC could give the government an early-warning system for signs of economic distress.
The Federal Reserve would have to issue and manage the digital dollar, and at least one of the board members, Christopher Waller, is openly opposed to the idea.
Singh addressed crypto in response to questions from Sen. Elizabeth Warren (D-Mass.), who argued Tuesday that cryptocurrencies are being used to hold U.S. businesses for ransom.
“It’s being used to evade American sanctions, and it’s being used to enrich America’s adversaries,” she said. “We’ve got to stop helping these guys by letting crypto go unchecked.”