Financial Surveillance in the West is More Like China’s Than Many Would Like to Admit – According to Report
Former Chair of the Commodity Futures Trading Commission (CFTC), Christopher Giancarlo, believes that anti-money laundering (AML) and know-your-customer (KYC) measures are outdated and may violate constitutional rights.
In an op-ed piece in The Hill on March 13, Giancarlo stated that the U.S. should lead the development of central bank digital currencies (CBDCs) and move towards “freedom coins” rather than “surveillance coins” by leveraging the technology used in some cryptocurrency protocols.
My op-ed in @theHIll with @Jim Harper: the question is not whether #CBDCs can be stopped (they can’t), but whether sovereign AND non-sovereign #digitalcurrency will enslave or liberate citizens of free societies. https://t.co/h1oT14NalK
— Chris Giancarlo (@giancarloMKTS) March 13, 2023
Advocating for “freedom coins”
Giancarlo co-authored a report with Jim Harper for the policy think tank the American Enterprise Institute.
The report argues that CBDCs offer an opportunity to reassess contemporary financial surveillance activities and enhance constitutional protections by taking advantage of zero-knowledge proofs, homomorphic encryption, and multiparty computation.
These technologies could enable parties to prove an encrypted proposition is true without revealing the underlying information, making “intelligent enforcement” of crime prevention possible.
Reexamination of financial surveillance policies
The authors took issue with one recent document published by the administration of U.S. President Joe Biden, the White House Office of Science and Technology Policy’s (OSTP) recent Technical Evaluation for a U.S. Central Bank Digital Currency System, which shows that financial surveillance in the West is more like China’s than many would like to admit.
Risks of CBDCs without privacy
Giancarlo and Harper argued that if a CBDC’s privacy is not guaranteed, it risks being used as it is in China. The e-yuan allows the Chinese government to link political conformity to individual prosperity and relegate political dissenters to poverty by making all transactions visible to the People’s Bank of China.
Similar concerns expressed by U.S. Senator Tom Emmer
U.S. Senator Tom Emmer, who is a vocal opponent of a U.S. CBDC, has expressed similar concerns. Emmer introduced the CBDC Anti-Surveillance Act in 2022, arguing that there is a risk of a CBDC that “tracks transaction level data down to the individual user” and can be programmed “to choke out politically unpopular activity.” Emmer is also co-chair of the U.S. Congressional Blockchain Caucus.