Ron DeSantis’ proposal to ban CBDCs could do ‘more harm than good’, says Haven1 director

Responding to Ron DeSantis' latest proposal to ban central bank digital currencies (CBDCs) in the United States if elected president, Akash Mahendra said such a decision could do "more harm than good."

Mahendra, director at Haven1 Foundation and portfolio manager at the digital wealth platform Yield App, told The Block in an email that the digitization of money is inevitable, and CBDCs will eventually be integrated into existing payment systems. 

“Central bank digital currencies (CBDCs) have once again been thrust into the spotlight, this time in light of Ron DeSantis vowing to ban CBDCs in the U.S. if elected president,” Mahendra said. “Yet mixing pure politics with crypto could do more harm than good. At its core, cryptocurrencies offer unique features that have only just been made possible, with immutability, privacy, transparency, decentralization and scarcity — fundamentally different from CBDCs.”

“The digitization of money is the future, and it’s only a matter of time before CBDCs are integrated into existing payment systems,” he added. “However, if the U.S. government decides to establish a CBDC, it should be solely based on its technological advantages and merits.”

Mahendra cited examples in other countries such as Project Rosalind in the UK, where companies like Quant Network were selected to collaborate with the Bank for International Settlements and Bank of England to develop APIs for CBDCs and bring the concept closer to reality.

The portfolio manager believes that “cash and cryptocurrencies can co-exist alongside a government-issued currency.” However, “individuals should have the freedom to choose their preferred payment methods, including the choice not to solely use a CBDC,” he added.

Mahendra suggested that CBDCs could help over 7 million unbanked Americans, plus billions globally, while reducing criminal activity and cross-border fees.

“It’s been proposed that CBDCs will help over 7 million Americans, on top of billions of individuals across the globe who are unbanked, as well as reduce criminal activity by allowing the government to easily track payments. By improving the cross-border payment system that burdens immigrants with excessive fees, it could really make a difference in day-to-day lives,” he said.

DeSantis’ crypto pledges

The latest pledge by the U.S. presidential candidate, made at the Family Leadership Summit in Iowa on Friday, follows a similar move in March — when DeSantis touted a bill to ban any use of a Fed-backed digital currency in Florida, where he is currently Governor.

In early May, DeSantis claimed the Biden administration wants “to get rid of crypto,” and previously accused President Joe Biden of eyeing the technology for “surveillance and control.” While the Republican is an avid critic of centrally controlled digital currencies, he has expressed support for decentralized cryptocurrencies that the government has no control over.

On May 24, DeSantis officially launched his presidential campaign in a Twitter Spaces event with Elon Musk, promising to protect bitcoin if he is elected next year. "I just do not have an itch to have to control everything that people may be doing in this space, and I think the current regime, clearly, they have it out for bitcoin, and if it continues for another four years, they'll probably end up killing it," DeSantis said at the time.