The United States may soon allow cryptocurrencies to operate within its economy as talks are underway. This idea would be accomplished by linking cryptocurrencies to the U.S dollar. This talk took place on Tuesday at a meeting held by the U.S. Fed.
The panelists at the meeting said that the dollar would gain in status as crypto becomes more popular. Moreover, this will be great for the digital currency industry.
Strength Of Dollar Could Improve Through Cryptocurrencies
Cryptocurrencies are still viewed with much skepticism, and many traditional investors and market players still doubt their value. However, the panelist thinks it might be time to incorporate cryptocurrencies into the U.S dollar.
They are convinced this will improve the status of both USD and cryptocurrency communities. The panel added that a rise in prices is possible as crypto traders continue to use these digital currencies, particularly the CBDCs (the cash-like coins/tokens). The dollar’s role in the international market is going to change drastically.
Jerome Powell, the chair of the Federal Reserve, told reporters last month that there is a tendency for altcoins and stablecoins to increase in price. This showed the move to link digital currencies to US Dollars has been in the works for a while. He added that the Federal Reserve has been assessing the use of CBDCs since they have seen such rapid growth.
The assessment process is designed to evaluate whether or not a CBDC would be able to withstand domestic payments’ efficiency and safety. In fact, a CBDC could help to maintain the international status of U.S dollars by making them more valuable than other currencies.
CBDCs As An Improvement To The U.S. Dollar
The panelists discussed whether or not the role of the dollar can be positively affected by crypto technology. They agreed that technological aspects alone couldn’t improve the ecosystem of a globally recognized currency like the USD.
This response points out that the current landscape of cryptocurrencies is inhospitable to institutional investors. There were steps taken toward establishing institutional investors, but they proved abortive due to the lack of regulatory framework in place at this time.
The US CBDCs will only be able to operate in the country’s retail sectors, which preserves their international status. However, Cross-border CBDCs are still not allowed in many countries, but they have been gaining popularity.