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Robert Bench, director of applied research at the Federal Reserve Bank of Boston, believes that privacy should be a priority in the creation of digital currencies, not after the fact.
Bench stated at the “Digital Chamber of Commerce” panel meeting on Friday: “We have realized that from a technical point of view, privacy is a vital issue.”
“One of our experiences is that the issue of privacy and identity must be considered in the early stages of creation. From a privacy or identity perspective, it is not good to treat privacy or identity as a temporary process, and it is more important from a security perspective. So.”
The digital world usually means less privacy. Currency is no exception. Although countries have set their sights on central bank digital currencies (CBDC), the privacy of payments has declined compared with cash transactions. However, CBDC may or may not give users privacy.
Speaking of privacy issues, Bench said: “Policy makers need to consider this as early as possible. If you add it later, the effect will be poor.
Bench’s comments answered questions from panel host and former chairman of the US Commodity Futures Trading Commission, Chris Giancarlo. Giancarlo asked about the privacy considerations of the US CBDC and other digital currencies.
During the discussion, Craig Sellars, co-founder of Tether (USDT), regarded physical cash as a benchmark for necessary privacy in the digital world. He said: “They have certain characteristics that cannot be removed: point-to-point fungibility, privacy and anonymity.”
“We should transfer our question to this question: If we have the technology to preserve the characteristics of paper money, why should we accept digital dollars with less freedom? I don’t think we should and need not do this.”