WASHINGTON—Ahead of this week’s Senate Banking Committee hearing examining the digitization of money and payments, NAFCU Vice President of Legislative Affairs Brad Thaler wrote committee Chairman Mike Crapo (R-ID) and Ranking Member Sherrod Brown (D-OH) to share the association's support of the idea to expand financial inclusion, while also expressing concerns over a full move to a digital currency system.
“A governmental digital currency would be a ready target for cyberattacks and could present numerous money laundering problems, especially for smaller financial institutions who are already facing extensive Bank Secrecy Act/anti-money laundering regulatory burdens,” wrote Thaler. “In the context of a digital currency, whether tokenized or account based, hypothetical remedies for potential money laundering risks would almost certainly entail substantial loss of individual privacy at a time when many consumers are concerned about the misuse of their personal data.”
Such a tradeoff, Thaler noted, is unlikely to meet the goal of financial inclusion among the underbanked.
In addition, Thaler explained that while the primary convenience of a digital currency is faster payments, credit unions and other financial institutions already provide this.