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⚠️Will Your State Reject The Fed's Digital Dollar?⚠️
December 04, 2022
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Volumes have been written on America’s experience with money of varying veracity.  Here we’ll touch on a few key events.

Article I, Section 8, of the U.S. Constitution empowers Congress to coin money and regulate its value thereof.  Article I, Section 10, specifies that no state shall make anything but gold and silver coin a tender in payments of debts.

The Federal Reserve Act of 1913, passed by the 63rd Congress and signed into law by President Woodrow Wilson on December 23, 1913, established the Federal Reserve System, the central bank of the United States.  The Federal Reserve Act also delegated the right to issue money from Congress to the Federal Reserve.

In this regard, the current U.S. dollar, a Federal Reserve Note, is illegal money.  It is issued by the Federal Reserve – not Congress – in direct violation of the U.S. Constitution.  Moreover, when states collect tax dollars that are devoid of gold or silver coin, they violate the Constitution.

Economic freedom has been greatly undermined by Washington over the years.  Executive Order 6102 of 1933, for example, forced all American citizens to turn in gold coins and bars.  Gold ownership in the United States, with some small limitations, was illegal for the next 40 years.

Economic freedom was again undermined when President Nixon “temporarily” suspended the convertibility of the dollar into gold in 1971.  This action removed any remaining protection workers and savers had against their hard-earned dollars being inflated away.

But now, as the year 2022 nears its close, another extremely destructive event approaches

Proof of Concept Project

Over the last 110 years economic freedom in the United States, as in the world, has been in decline.  Through a continuing process of debasement, the Fed has inflated away 96 percent of the dollar’s value.

In other words, today it takes $1 to buy the equivalent of what $0.04 could buy in 1913.  This is a downright disgrace.

Yet over this time, the paper dollar did preserve some modicum of economic freedom.  Payments in cash provide some level of privacy in what you’re buying and selling.  Specifically, the government is unable to readily trace and monitor transactions conducted using cash.

This soon may change…

Have you ever heard of something called the New York Innovation Center?  On November 15, the Federal Reserve Bank of New York published a very important press release.  Here’s a key excerpt:

“The Federal Reserve Bank of New York today announced that its New York Innovation Center (NYIC) will participate in a proof-of-concept project to explore the feasibility of an interoperable network of central bank wholesale digital money and commercial bank digital money operating on a shared multi-entity distributed ledger.

 

“This U.S. proof-of-concept project is experimenting with the concept of a regulated liability network.  It will test the technical feasibility, legal viability, and business applicability of distributed ledger technology to settle the liabilities of regulated financial institutions through the transfer of central bank liabilities.”

This, without question, marks a significant step in the Fed’s efforts to rollout a Central Bank Digital Currency (CBDC).  The project, as we understand it, will inform how the Fed intends to work with actual banks to introduce a digital dollar.  This digital dollar would ultimately replace the paper dollar and would eliminate the privacy of cash payments.

Traceable and Programmable

David Haggith, publisher and editor-in-chief of The Great Recession Blog, has been closely covering the rapidly approaching advent of CBDCs and digital dollars for several years.  Haggith recently offered the following perspective as to the significance of what’s at stake:

“We’re on the brink of a dramatic change where we’re about to — and I’ll say this boldly — we’re about to abandon the traditional system of money, and accounting, and introduce a new one….  The new accounting is what we call ‘blockchain.’  It means digital.  It means having an almost perfect record of every single transaction that happens in the economy, which will give us far greater clarity over what’s going on…. It also raises huge dangers in terms of the balance of power between states and citizens.”

What you must understand is the adoption of a digital dollar by the U.S. government would be one of the greatest expansions of federal power ever made.  You also must understand that a digital dollar would be much different than a cryptocurrency like bitcoin, which is decentralized and has limitations on its ultimate quantity.

The key distinction is that Fed issued digital dollars would be traceable and programmable and would be integrated with the Fed and private banking.  Specifically, digital dollars would be programmed to have various rules and restrictions governing how and when they are spent.

We know from the executive order released by the Biden administration on March 9, which required several federal agencies to study digital currencies and to identify ways to regulate them, that CBDCs and other policies governing digital assets must mitigate “climate change and pollution” and promote “financial inclusion and equity.”

What does this mean, exactly?

At the World Economic Forum (WEF) earlier this year, one zealous central planner clearly stated that the intent of traceable and programmable CBDCs is to monitor, “where you are traveling, how you are traveling, what you are eating, what you are consuming – individual carbon footprint tracker.”

Will Your State Reject the Fed’s Digital Dollar?

U.S. government debt is now over $31 trillion.  Tack on unfunded liabilities like social security, Medicare, federal debt held by the public, and federal employee and veterans’ benefits, and the government debt number jumps to over $172 trillion.

What’s more, trillion-dollar deficits year after year imply that the government is borrowing money to pay the interest on the debt.  At this point, there really is no honest way for Washington to ever repay all this debt.

The tracking features of CBDCs are very appealing to central planners and government control freaks.  But we believe what’s compelling the urgency of a Fed issued digital dollar is the elaborate cover its rollout will provide.  The introduction of a digital dollar can and will be used as a means to obscure an outright default.

Your account may get credited with digital dollars at rollout.  However, these new digital dollars will come at a price.  We’re not entirely clear on what that is.  But we think it’ll involve a loss of value that’s proportional to the insane levels of debt that Washington’s on the hook for.

In short, this is a last-ditch effort by Washington to mask a government default.  If you don’t own any physical gold and silver yet…, what are you waiting for?  Don’t overcomplicate things.  Go to your local coin shop and pick up a few coins today.

Meanwhile, as the NYIC figures out just how to go about introducing the digital dollar, some states are figuring things out too.  In fact, certain states may not be too keen on a Fed issued – traceable and programmable – digital dollar.

Utah, Nevada, Wyoming, and New Hampshire are already issuing “gold-backs.”  These are privately issued notes that contain actual gold.  They are accepted in these states under their respective legal tender laws, which provides for the adoption of gold and silver as legal tender by the state.

Here in the Volunteer State, Tennessee State Senator Frank Niceley has some ideas too.  He recently chatted with former U.S. Assistant Secretary of Housing and Urban Development, Catherine Ausin Fitts, about the strengths and benefits of a Sovereign State Bank modeled on North Dakota.

Niceley’s intent for a Tennessee Sovereign State Bank is to also include a state bullion depository and provide local banks and credit unions support to counter the threat of a Fed issued digital dollar.

There’s a lot to be worked out, of course.  Nonetheless, it’s about time state and local jurisdictions stood up to Washington and the Fed.  Developing gold-based local alternatives to the Fed’s digital dollar is a start.

Your economic, personal, and political freedoms depend on it.

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Meanwhile, Reza Pahlavi, the exiled son of Iran’s last monarch, called on military and security forces to abandon the regime, accusing Supreme Leader Ayatollah Ali Khamenei in a Persian-language social media post of forcing Iranians into an unwanted war.

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The genius entrepreneur, is throwing a lifeline to the oppressed in Iran, and the libs can’t stand it.

Conservative talk show host Mark Levin praised Musk’s action, reposting a message stating that Starlink would "reconnect the Iranian people with the internet and put the final nail in the coffin of the Iranian regime."

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GENIUS Act lets State banks conduct some business nationwide. Regulators object

The Senate passed the GENIUS Act for stablecoins last week, but significant work remains before it becomes law. The House has a different bill, the STABLE Act, with notable differences that must be reconciled. State banking regulators have raised strong objections to a provision in the GENIUS Act that would allow state banks to operate nationwide without authorization from host states or a federal regulator.

The controversial clause permits a state bank with a regulated stablecoin subsidiary to provide money transmitter and custodial services in any other state. While host states can impose consumer protection laws, they cannot require the usual authorization and oversight typically needed for out-of-state banking operations.

The Conference of State Bank Supervisors welcomed some changes in the GENIUS Act but remains adamantly opposed to this particular provision. In a statement, CSBS said:

“Critical changes must be made during House consideration of the legislation to prevent unintended consequences and further mitigate financial stability risks. CSBS remains concerned with the dramatic and unsupported expansion of the authority of uninsured banks to conduct money transmission or custody activities nationwide without the approval or oversight of host state supervisors (Sec. 16(d)).”

The National Conference of State Legislatures expressed similar concerns in early June, stating:

“We urge you to oppose Section 16(d) and support state authority to regulate financial services in a manner that reflects local conditions, priorities and risk tolerances. Preserving the dual banking system and respecting state autonomy is essential to the safety, soundness and diversity of our nation’s financial sector.”

Evolution of nationwide authorization

Section 16 addresses several issues beyond stablecoins, including preventing a recurrence of the SEC’s SAB 121, which forced crypto assets held in custody onto balance sheets. However, the nationwide authorization subsection was added after the legislation cleared the Senate Banking Committee, with two significant modifications since then.

Originally, the provision applied only to special bank charters like Wyoming’s Special Purpose Depository Institutions or Connecticut’s Innovation Banks. Examples include crypto-focused Custodia Bank and crypto exchange Kraken in Wyoming, plus traditional finance player Fnality US in Connecticut. Recently the scope was expanded to cover most state chartered banks with stablecoin subsidiaries, possibly due to concerns about competitive advantages.

Simultaneously, the clause was substantially tightened. The initial version allowed state chartered banks to provide money transmission and custody services nationwide for any type of asset, which would include cryptocurrencies. Now these activities can only be conducted by the stablecoin subsidiary, and while Section 16(d) doesn’t explicitly limit services to stablecoins, the GENIUS Act currently restricts issuers to stablecoin related activities.

However, the House STABLE Act takes a more permissive approach, allowing regulators to decide which non-stablecoin activities are permitted. If the House version prevails in reconciliation, it could result in a significant expansion of allowed nationwide banking activities beyond stablecoins.

Is it that bad?

As originally drafted, the clause seemed overly permissive.

The amended clause makes sense for stablecoin issuers. They want to have a single regulator and be able to provide the stablecoin services throughout the United States. But it also leans into the perception outside of crypto that this is just another form of regulatory arbitrage.

The controversy over Section 16(d) reflects concerns about creating a regulatory gap that allows banks to operate interstate without the oversight typically required from either federal or state authorities. As the two Congressional chambers work toward reconciliation, lawmakers must decide whether stablecoin legislation should include provisions that effectively reduce traditional banking oversight requirements.

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If you find value in my content, consider showing your support via:

💳 PayPal: 
1) Simply scan the QR code below 📲
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Dubai regulator VARA classifies RWA issuance as licensed activity
Virtual Asset Regulatory Authority (VARA) leads global regulatory framework - makes RWA issuance licensed activity in Dubai.

Real-world assets (RWAs) issuance is now licensed activity in Dubai.

~ Actual law.
~ Not a legal gray zone.
~ Not a whitepaper fantasy.

RWA issuance and listing on secondary markets is defined under binding crypto regulation.

It’s execution by Dubai.

Irina Heaver explained:

“RWA issuance is no longer theoretical. It’s now a regulatory reality.”

VARA defined:

- RWAs are classified as Asset-Referenced Virtual Assets (ARVAs)

- Secondary market trading is permitted under VARA license

- Issuers need capital, audits, and legal disclosures

- Regulated broker-dealers and exchanges can now onboard and trade them

This closes the gap that killed STOs in 2018.

No more tokenization without venues.
No more assets without liquidity.

UAE is doing what Switzerland, Singapore, and Europe still haven’t:

Creating enforceable frameworks for RWA tokenization that actually work.

Matthew White, CEO of VARA, said it perfectly:

“Tokenization will redefine global finance in 2025.”

He’s not exaggerating.

$500B+ market predicted next year.

And the UAE just gave it legal rails.

~Real estate.
~Private credit.
~Shariah-compliant products.

Everything is in play.

This is how you turn hype into infrastructure.

What Dubai is doing now is 3 years ahead of everyone else.

Founders, investors, ecosystem builders:

You want to build real-world assets onchain.

Don’t waste another year waiting for clarity.

Come to Dubai.

It’s already here.

 

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🙏 Donations Accepted 🙏

If you find value in my content, consider showing your support via:

💳 PayPal: 
1) Simply scan the QR code below 📲
2) or visit https://www.paypal.me/thedinarian

🔗 Crypto – Support via Coinbase Wallet to: [email protected]

Or Buy me a coffee: https://buymeacoffee.com/thedinarian

Your generosity keeps this mission alive, for all! Namasté 🙏 Crypto Michael ⚡  The Dinarian

 

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