Lawmakers trip over privacy and security of digital dollar

Digital assets need a license plate too, Foster said. If someone mugs you, you know roughly what they look like and where they are. You can report the crime, cordon off the area and potentially track them down, Foster said. 

“If someone puts a gun to your head and says, ‘Transfer your crypto assets to some account on my cellphone,’ then it’s gone and it’s gone instantaneously. That’s the difference,” he said. “Ultimately, every crypto wallet is going to have to have a license plate on it. We won’t have to know under normal circumstances who the owner is, but we have to be able to inspect it, make sure it’s a valid license plate, and thereby know that if something goes wrong in the transaction, you have the ability to demonstrate a crime has been committed and unmask them.”

‘Google knows’

Brandon Neal, chief operating officer at Euler Labs, said the public should consider privacy risks carefully before moving forward with a central bank digital currency. Neal, who worked for the Federal Reserve Bank of New York before joining the cryptocurrency company, said he has yet to see a digital dollar design that adequately protects privacy. 

“There are many privacy-minded advocates within the Fed. I just know that institutions can change,” Neal said in an interview. “You could have the most well-intentioned people in an institution today, but different people might be in charge of that institution tomorrow, and their ideas might be rather different. So privacy is by far the top concern in my mind.”

Jennifer Lassiter, executive director of the Digital Dollar Project, said a solution will present itself as the U.S. does more research into technical designs for a central bank digital currency.