David Woo on why an American CBDC could be big trouble for Bitcoin

David Woo, a former top Bank of America executive, is famous for his 2013 prediction that Bitcoin would prove to be a viable alternative to traditional money transfer providers.

Nearly a decade later, Woo is still prognosticating about the future of Bitcoin and other cryptocurrencies, though given the current macro backdrop, his outlook is significantly bleaker. 

In the latest episode of The Scoop podcast, Woo joins host Frank Chaparro to explain why Bitcoin may not be spared from the economic and geopolitical issues he sees potentially forming on the horizon: 

“I think the most important story that we could be transitioning into is basically Cold War II,” he said. “Cold War II that pits the US and its allies against China and Russia… That’s not going to be fun.”

US efforts to potentially develop its own central bank digital currency in such an environment also spells trouble, though the Fed itself hasn’t given the official green-light on this front. As Woo discussed during the interview:  

“If we go back to the 70s situation where they are printing money… you think they are just going to encourage people to go into Bitcoin?” He went on to add, “Once you have CBDC, they are going to know every cent you have… Everything is going to be under government control, and at that point, they’re going to crack down on bitcoin like mad.”

To illustrate his point, Woo pointed to China, where the launch of a CBDC resulted in  a harsh crackdown on services facilitating the exchange of fiat currencies and crypto assets.

According to Woo, the main reason the US has yet to crack down on Bitcoin is political. He explains:

“The main reason is because the government in the US doesn’t want to take the side of the banks… The banks represent the established monopolies, the payment system, the dinosaurs and that Bitcoin represents the new kid on the block that’s going to make everything more efficient. Even if they think crypto is a bit speculative, they’re afraid to crack down too hard because they are going to be accused of basically being pro-Wall Street.”

Despite the political unpopularity, Woo believes the creation of an American CBDC and the accompanying crypto crackdown is inevitable:

“China just launched their CBDC…Nobody wants China to get ahead, so America needs to basically show that the US is not ready to surrender the dollar’s reserve currency status in this new struggle.”

Earlier this month the Biden Administration issued an executive order which, among other things, “places the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC.”

Woo suggests that it is this particular event that will have a profound impact on Bitcoin: “Once you have a [CBDC], do you not think the attitude towards Bitcoin is going to change completely?”

During this episode, Woo and Chaparro also discuss:

• The factors driving inflation
• Why the conflict between Russia and Ukraine may result in “Cold War 2” 
• Why inflation, tech stocks, and the US dollar matter for crypto

This episode is brought to you by our sponsors Fireblocks, Coinbase Prime & Chainalysis
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