The Fed expects more advances in its investigation implementing a CBDC in the United States.

In Short

• For Bank of America, stablecoin will enter a period of increased adoption.

• The paper published by the Fed does not take a position on whether or not the U.S. will adopt CBDCs.

The Fed recently published a paper on the potential challenges and opportunities offered by digital means of payment and the use of central bank digital currencies (CBDCs). Following that, Bank of America commented that the arrival of the digital dollar is "inevitable."

On behalf of the entity, the comment was issued this Monday, January 24, by Alkes Shah and Andrew Moss, who is part of the research team in the area of cryptocurrencies of Bank of America, and published by the Bloomberg news portal.

The United States will likely have its cryptocurrency or CBDC between 2025 and 2030, according to Bank of America. It could lag a bit behind other world powers already moving forward with regulations for their own CBDCs, such as China. CBDCs are "an inevitable evolution" within a state's economy for the bank.

In addition to this, due to the waiting time, while implementing a CBDC for the digital dollar advances, Bank of America considers that stablecoins issued by private entities may have a strong growth within the United States. At this point, several banking entities in the country could be preparing to launch their stablecoin.

However, regulation may dump the growth of such stablecoin cryptocurrencies. In December 2020, it became known of a bill that could ban all stablecoins within U.S. territory, except for those issued by federal banks. However, throughout 2021, several movements pushed for improvements in regulations instead of restricting their use within the country.

Bank of America's position is straightforward on CBDCs and stablecoins. In the case of bitcoin (BTC), in a document published in March 2021, the bank qualified this cryptocurrency as "impractical and volatile."

Does China ban bitcoin to launch its CBDC?

China applied a rather aggressive strategy to restrict all use of bitcoin within the country to launch their digital yuan, from the persecution of miners, under the allegation of environmental protection, to ban all bitcoin transactions. Can the United States follow the same path?

The Fed's document does not show a stance of shutting down the use of bitcoin and cryptocurrencies within the United States, but instead of the impact that CBDCs could have. Added to this, the current head of the Federal Reserve, Jerome Powell, has stated that the United States does not plan to ban bitcoin and cryptocurrencies.

However, while authorities don't seem to adopt a prohibition stance, the lack of clear regulations means that companies in the cryptocurrency industry remain inside a legal limbo. Due to this, different companies have made several attempts to lobby in the corresponding areas to define the regulatory framework on bitcoin and crypto assets in the United States.