The easiest way to create such a currency would be to allow individuals to hold deposits directly at the Federal Reserve. But as the Fed paper
says, “The Federal Reserve Act does not authorize direct Federal Reserve accounts for individuals.” What it doesn’t say is that any attempt to create such accounts would provoke a firestorm of opposition from the banking industry, which doesn’t want to have to compete for customers with a basically infallible government bank. So if a digital currency were to be created, it would be run through private-sector intermediaries.
These intermediaries would, however, be required to obey the same rules that apply to other financial institutions, rules “
designed to combat money laundering and the financing of terrorism.” In particular, like banks and other financial institutions, these new intermediaries would be “required to verify the identity of their customers.”
And that observation brings the whole controversy into focus.
Right now the demand for cryptocurrency comes partly from people who honestly, rightly or wrongly, don’t trust banks, and partly from people engaged in illicit activities. The former group would probably flock to a central bank digital currency, which would offer the convenience of banking without its perceived risks. This would, however, help to deflate the crypto bubble. Maybe more important, it would suggest that those still using private digital currencies are probably up to no good. In effect, it would strip away the veil obscuring the dark side of crypto.
Which tells us what DeSantis’s attack on central bank digital currency would actually do. It wouldn’t protect the rights of Floridians to buy gas or guns; instead, it would protect the ability of wiseguys to evade taxes, launder money, buy and sell illegal drugs, and engage in extortion.
But hey, I guess thinking that money laundering and extortion are bad things is just another example of the wokeness that DeSantis is trying to kill.