Bitcoin and Ethereum, the two most widespread cryptocurrencies in the world, could soon become even more popular, thanks to the new CBDC (Central Bank Digital Currency) Anti-Surveillance State Act.
Introduced by Majority Whip Tom Emmer, the CBDC Anti-Surveillance State Act aims to block the U.S. Central Bank from developing a Federal Reserve-issued digital dollar, due to concerns over consumer privacy and government overreach.
The CBDC Act could dramatically affect the cryptocurrency landscape, especially popular coins like Ethereum and Bitcoin. Tom Emmer warned,
“The administration has made it clear: President Biden is willing to compromise the American people’s right to financial privacy for a surveillance-style CBDC.”
Whether you agree with Emmer or not, one thing is clear — most investors across the world want to be in control of their financial transactions that are free from government surveillance. Cryptocurrencies like Ethereum and Bitcoin allow consumers the ability to do this, whereas CBDCs would be controlled and tracked by the government.
People in favor of the CBDC Act argue that a digital dollar could be used to monitor and control the financial activities of Americans, infringing on their privacy and freedom. The Act seeks to prevent the Federal Reserve from issuing a CBDC.
If passed, this CBDC legislation could significantly alter digital currency development in the United States, and instead, emphasize the importance of decentralized alternatives like Ethereum.
What is Ethereum and How Does It Play a Role in DeFi?
If you’re new to cryptocurrency, here’s some background on Ethereum. It is a decentralized platform that allows developers to build and distribute smart contracts and other decentralized applications (dApps).
Some popular DeFi applications on Ethereum include Uniswap (a decentralized exchange), MakerDAO (a decentralized lending platform), and Aave (a decentralized money market). These platforms have collectively locked billions of dollars in value, and demonstrate the growing consumer interest and trust in DeFi solutions.
Decentralized Finance (DeFi) refers to a financial ecosystem built on blockchain technology that offers traditional financial systems like lending, borrowing, and trading, without relying on central authorities such as governments or banks.
With DeFi platforms, anyone with an internet connection can access these financial services without needing approval from a central authority.
Unlike Bitcoin, which primarily functions as a digital currency and store of value, Ethereum’s versatility allows it to support a wide range of applications beyond simple monetary transactions.
For example, Ether tokens fuel the Ethereum network, which power various applications, like decentralized finance (DeFi) projects, non fungible tokens (NFTs) or the tokenization of real world assets like commodities, securities, art, and real estate.
By offering these decentralized financial services like smart contracts, Ethereum provides a practical alternative to traditional financial systems, especially in the face of concerns about government surveillance and control as highlighted by the CBDC Anti-Surveillance State Act.
The CBDC Act could drive more people to explore Ethereum and its DeFi applications, leading to increased investment and participation. As concerns about financial privacy and control grow, Ethereum’s decentralized nature becomes even more attractive. The legislative push against a CBDC may also spur more innovation in privacy-enhancing technologies within the Ethereum ecosystem.
While the Act could boost Ethereum’s adoption, it may also attract greater regulatory scrutiny. Lawmakers and regulators might seek to impose stricter controls on DeFi platforms to guarantee compliance with existing financial regulations. Navigating this regulatory landscape will be essential for Ethereum’s continued growth and success.
What about Bitcoin?
Bitcoin, the first and most well-known cryptocurrency, serves primarily as a store of value, often referred to as “digital gold.” The introduction of the CBDC Anti-Surveillance State Act could reinforce Bitcoin’s role as a decentralized financial asset, appealing to those who prioritize privacy and freedom.
The Act’s emphasis on preventing government surveillance and control could increase Bitcoin’s attractiveness as a secure store of value. Investors seeking to protect their wealth from potential government overreach may turn to Bitcoin as a safe haven asset.
Positive market sentiment towards decentralized assets like Bitcoin could drive increased investment and adoption. As more people become aware of the risks associated with centralized digital currencies, Bitcoin’s position in the financial ecosystem could strengthen.
Ethereum vs. Bitcoin
While both Ethereum and Bitcoin will be affected by the CBDC Anti-Surveillance State Act, their responses and the impacts will differ due to their unique characteristics and use cases.
Ethereum’s broader range of use cases, particularly in DeFi and dApps, means it could experience a more direct impact from the Act. The increased interest in decentralized financial solutions could drive significant innovation and adoption within the Ethereum ecosystem.
Bitcoin’s primary role as a store of value means it will continue to be seen as a key asset. The Act could reinforce Bitcoin’s position, driving steady growth and adoption as a secure, decentralized financial asset. However, both cryptocurrencies will face regulatory challenges. Navigating these legal hurdles will be crucial for the continued growth and success of Bitcoin and Ethereum.
At the time of writing this article, one Ethereum or ETH is just over $3,700. From May 2023 through May 2024, the price of ETH nearly doubled. By the way, you can also purchase fractional shares of cryptocurrencies like Ethereum for smaller amounts.
Ethereum’s all-time low price was $0.43 on October 20, 2015. Its all-time high was $4,878.26 on Nov 10, 2021. That’s an increase of 112,588%!
And year-to-date, as of May 29, 2024, Ethereum is up nearly 60%.
If you’re new to cryptocurrency and want to buy Ethereum (ETH), here’s a basic step-by-step guide to help you get started.
How To Buy Ethereum (or Bitcoin)
- Choose a Crypto Exchange
The first step is to choose a cryptocurrency exchange where you can buy Ethereum. Popular options include Coinbase, Binance, and Kraken. These platforms are user-friendly and secure, making them ideal if you’re a beginner.
- Create an Account
Once you’ve chosen an exchange, you’ll need to create an account. This usually involves providing some personal information and verifying your identity with a government-issued ID. This step confirms that your account is secure.
- Add Funds
After your account is set up, you’ll need to deposit funds. Most exchanges accept deposits via bank transfer, credit card, or debit card. Choose the method that works best for you and add the amount you’re comfortable investing. Remember, you should only invest the amount you’re prepared to lose.
- Buy Ethereum
With funds in your account, you can now buy Ethereum. Go to the trading section of the exchange, select Ethereum, and enter the amount you want to purchase. Confirm the transaction, and you’ll own some ETH.
- Store Your Ethereum
It’s important to store your Ethereum securely. While you can leave it on the exchange, using a personal wallet is safer. Options include hardware wallets (like Ledger or Trezor) or software wallets (like MetaMask).
Buying Bitcoin and most other cryptocurrencies is very similar to this process. Always check the current price before buying.
What’s Next?
The introduction of the CBDC Anti-Surveillance State Act is just one part of the changing regulatory landscape for digital currencies. As lawmakers and regulators continue to debate over decentralized finance and digital assets, the future of cryptocurrencies like Ethereum and Bitcoin will be shaped by their ability to adapt and innovate moving forward.
This Act could also lead to a range of regulatory responses, from increased scrutiny of DeFi platforms to new legislation aimed at balancing innovation and consumer protection. The outcome of these efforts will greatly impact the growth and adoption of Ethereum and Bitcoin.
The CBDC Anti-Surveillance State Act could be a game changer for Ethereum and Bitcoin, driving increased interest and investment in decentralized financial solutions. While Ethereum stands to benefit the most from this legislation due to its versatile applications, Bitcoin’s role as a secure store of value will also be reinforced. The future of digital currencies will be shaped by the balance of privacy, decentralization, and regulatory compliance, with Ethereum and Bitcoin leading the way.
In other recent news, the Securities and Exchange Commission (SEC) has just allowed the creation of ETFs (Exchange-Traded Funds) that will hold Ether, similar to how it approved Bitcoin ETFs some months ago. These Ethereum ETFs are expected to be smaller initially compared to Bitcoin ETFs.
Although Ethereum ETFs have been approved by the SEC, it could be weeks or even months before they are available for you as an investor to purchase directly, like you now can with Bitcoin ETFs. Overall, this recent SEC decision about Ethereum ETFs marks a potential shift in the SEC’s attitude towards cryptocurrencies.
Get Informed with YMM
In the meantime, if you want to explore your options to invest in Bitcoin, check out “The Wise Investor’s Guide to Bitcoin and Bitcoin ETFs,” courtesy of Your Money Maestro.