The Fed moves closer to crypto, but ’don’t hold your breath’ as Congress and the White House deliberate

<p>By publishing a hazy outline of potential benefits and drawbacks on Thursday, the Federal Reserve took the first step towards exploring a digital currency.</p> <p>The difficult aspect will be for the Fed to figure out how to develop a central bank digital coin (CBDC) that satisfies Congress and the White House while seamlessly integrating into the payment and banking systems.</p> <p>The Fed maintains that it will not proceed without the "unambiguous backing" of the executive and legislative branches, "preferably in the form of a formal authorising law," Fed officials stated in the CBDC report.</p> <p>Congress looks to be largely receptive to authorising a CBDC, though the Fed will need to iron out issues in order to satisfy both parties. A White House spokeswoman did not immediately respond to a request for comment from Yahoo Finance.</p> <p>Senator Sherrod Brown, chairman of the Senate Financial Committee, described the Fed's study as a positive first step towards developing a central bank digital currency that will attract more Americans to our banking system. "I'm looking forwards to collaborating with the Federal Reserve and the Biden Administration to guarantee that workers, small businesses, community banks, and credit unions may continue to engage in our digital economy," Brown said.</p> <p>Separately, Republican Senator Pat Toomey, a ranking member of the Banking Committee, said he is "encouraged" by the report, which he describes as "an important move by the Fed in recognising the permanency of cryptocurrencies and their underlying technologies."</p> <p>He did, however, raise reservations about the Fed's approach to protecting Americans' privacy.</p> <p>"I'm concerned that the Fed has not articulated how it intends to safeguard customer transaction data," he added. "I'm also not sure if the Fed's report implies that a CBDC would prohibit direct peer-to-peer transactions. This is a critical trait."</p> <p>Toomey previously sought assurances from Federal Reserve Chairman Jerome Powell regarding