CBDC central bank digital currencies are the hottest issue in Florida politics

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Good morning. Here is what happens:

Price: Meme coins soar as crypto giants stumble amid mixed market signals in Asia

Insights: North Carolina and Florida both voted to ban CBDCs. Welcome to the 2024 election corner issue.

As the East begins its trading day, crypto is confused.

No one can make much sense of this market. Data from CryptoQuant indicates that there is both elevated selling pressure due to an increase in foreign exchange reserves. But at the same time, there is both a high Coinbase premium and a high Korean premium indicating strong buying pressure.

Meanwhile, in the world of macroeconomic signals, the Chinese economy appears to be slowing down.

Thursday’s (Asia time) release of China’s Caixin General Manufacturing PMI, which measures the performance of the manufacturing sector, showed things were down but not bleak.

The Caixins PMI measure fell to 49.5 in April 2022, marking the first contraction in factory activity since January due to a housing slowdown and fears of a global slowdown. Input prices fell for the first time in seven months, driving the biggest drop in selling prices since December 2015 as companies sought to attract new business, a statement said.

Singapore’s QCP said in a recent note that the market is confused and extended because it is caught between two minds.

This lack of direction has led to an absolute crush in implied volatility across all asset classes, QCP wrote on Telegram.

Contradictory narratives of a hawkish Fed and strong employment with persistent inflation are holding back new highs, while USD positioning is heavily skewed to the short side, the trading firm wrote.

Friday’s job count will likely be a good test of which side of the narrative equation wins out.

CBDCs arouse strong opinions in Florida

American politics has a handful of burning issues: guns, health care, illegal immigration and LGBT rights.

Fireband Florida Governor and possible Republican presidential candidate Ron DeSantis has taken a stand on all of these issues in the state legislature. Whether you agree with him or not, his tenure as governor helps set the narrative for the upcoming federal election.

But what problem has generated the most phone calls in his office? Central bank digital currencies (CBDC), Samuel Armes, president of the Florida Blockchain Business Association, told CoinDesk.

“If CBDCs are the encroachment on our civil liberties that the majority of people believe they are, we don’t have time to wait,” Armes said. , they’ll try. So it’s our job to try to stop it.

For now, the United States has no concrete plans to issue a CBDC. China is continuing the nationwide rollout of its CBDC, eCNY, which as of January accounted for 0.13% of total Chinese yuan renminbi circulation. While many countries are researching CBDCs, aside from China, only the Bahamian Sand Dollar and the Bank of Jamaica JAM-DEX are deployed.

Republicans argue that a CBDC would give the government too much control. Armes notes that many who have immigrated to Florida from authoritarian states such as Cuba and Venezuela are horrified by the idea, as it reminds them of what they fled.

Florida’s bill states that CBDCs will not be recognized by the state as cash. Other anti-CBDC bills that are still on the drawing board or have passed have taken different approaches, which Armes says is great because there won’t be a perfect policy.

Florida not recognizing CBDCs as money will likely put the state on a warpath with the federal government. If a state refused to recognize a specific type of money that was authorized by the federal government, it could potentially face legal action for interfering with the federal government’s constitutional power to regulate what it has a monopoly on.

Amers says that if the federal government sues Florida, the resulting legal battle would delay the implementation of CBDCs and give states time to come up with different strategies to counter them. The North Carolina House of Representatives also voted this week to ban CBDCs.

“Lawsuits complicate things, bog them down in administrative state to the point that by the time they are implemented, many litigations have caused significant delays,” he told CoinDesk. “It will be a question of federalism, like all other questions.”

CBDCs potentially compromise the autonomy of state-chartered banks and allow the federal government to encroach on state-level rights and regulations, Armes claims, pointing to Caitlin Long and Custodias’ long battle with the federal government , as an example of federal encroachment on states’ rights to establish financial institutions.

“We had this dual banking system between the states and the [Federal Reserve] which really turns into a simple federal banking system. And a CBDC is going to reinforce that further,” Armes said.

Regardless of what’s going on in Washington, DC with the CBDCs, DeSantis seems to have touched on a sensitive topic, even if his stance seems counterintuitive. Some might argue that Republicans should support CBDCs as a tool against de-platforming. A CBDC could theoretically allow a constitutional defense that could not be used against a private company.

This is all a particularly curious question because, unlike other national debates that have pitted states against Washington, DC, such as guns and abortion, this one has yet to materialize; it is not on the agenda at the moment. But there are well-paid lobbyists ready on Capitol Hill for when this is the order of the day.

In the meantime, the question continues to sound good for DeSantis.

As part of our “CoinDesk Turns 10” series looking back at landmark stories in crypto history, “All About Bitcoin” took a close look at the rise and fall of former crypto exchange Mt. Gox with the Author, Journalist, and CoinDesk Contributor Jeff Wilser. Additionally, digital asset strategist Joe Orsini discussed his outlook for bitcoin (BTC) as its dominance rate has risen sharply since the onset of the current instability in the US banking sector nearly two months ago.

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