Former NSA contractor Edward Snowden has weighed in on cryptocurrencies for a second time over the last seven days, criticizing central bank digital currencies (CBDC).
While regulators have had issues with stablecoins, Snowden focused primarily on CBDCs, which many regulators hold to be far more viable as they do not threaten the economy (the same way stablecoins do, at least based on regulators' testimonies).
Snowden was tweeting about an article published in the New York Times in which columnist Dr Eswar Prasad from Cornell University argued that the Federal Reserve would be able to impose a negative interest rate on electronic balances should the economy shift to CBDCs.
This, Snowden argued, would mean that working-class people would have their savings “annihilated”.
“What is a Central Bank Digital Currency, you ask? Oh, you know: just a “useful policy tool” for casually annihilating the savings of every wage-worker in the country if they don't spend them fast enough”, Snowden said.
Snowden went further in a dedicated blog post in which he called out these digital currencies as a “perversion”. He then delivered a quick history lesson on the origin of money and how the use of Bitcoin and Ethereum could eliminate middlemen, such as banks, from the process.
Snowden's fears are not far-fetched. Multiple studies have revealed distrust in CBDCs. Regulators have cautioned that for a CBDC to go through successfully, it would need to not just digitalize a currency, but also offer strong incentives for people to adopt it.
One study in August found that only 24% of British adults would ever back a CBDC and 30% thought that that currency ultimately would do more harm than good to society.
The US has repeatedly criticized the digital yuan, a Chinese CBDC that is slowly rolling out across the country.
Senators have even requested for athletes and US residents to not use the e-yuan as it offers great vulnerabilities in terms of privacy. Chinese authorities have refuted and derided such claims.