Author: Jeff Cassman

On August 9, EPIC urged the Federal Communications Commission to prioritize privacy and cybersecurity in its rulemaking on deploying Next Generation 911 (NG911) technologies. NG911 is expected to enable transmission of photos, videos, health records, and other data—not merely voice or text—to support first responders and other emergency personnel. EPIC’s comments highlighted concerns about threats inherent to NG911 voiced by the Cybersecurity and Infrastructure Security Agency as well as by the FCC’s advisory Communications Security, Reliability and Interoperability Council. EPIC also reiterated concerns about misuse of data by authorized entities.

EPIC advocates for improved safeguards for location data, the privacy and security of emergency assistance requests, greater consumer protection from the unsavory practices of data brokers, and regularly files comments with the FCC.

“Experts” at the Federal Reserve and other central banks proudly broadcast the potential “financial inclusion” that could be achieved with a central bank digital currency (CBDC). In the Fed’s main CBDC paper, “Money and Payments: The U.S. Dollar in the Age of Digital Transformation,” they make it clear: “Promoting financial inclusion—particularly for economically vulnerable households and communities—is a high priority for the Federal Reserve . . . a CBDC could reduce common barriers to financial inclusion.”

The term has a ring to it that signals support for progressive goals. “Inclusion” is part of the Orwellian trio of terms “diversity, inclusion, and equity,” which, as Dr. Michael Rectenwald writes, means “surveillance, punishment of the ‘privileged,’ sacrifice of national citizens to global interests, and the labeling as ‘dangerous’ and marking for (virtual) elimination those supposed members or leaders of ‘hate groups’ who oppose such measures.” The central banks’ use of “financial inclusion” involves the same reversal of meanings.

Financial Inclusion and Unbanked Households

Consider that a retail CBDC would be like having a bank account with the Federal Reserve, even if it is intermediated by another bank. There is a lot of guesswork about how a CBDC will be implemented, but some say that it will not just be like having a bank account with the Fed, but that it could be exactly that.

Either way, if a CBDC were genuinely aimed at financial inclusion, it would offer something to those who have chosen to forgo a bank account entirely. This “unbanked” population constitutes about 5.4 percent of US households according to a 2021 Federal Deposit Insurance Corporation (FDIC) survey. The survey asked each household why they do not have a bank account, and the responses indicate that minimum balance requirements, privacy, trust, and fees are the most significant factors.

Figure 1: Unbanked households’ reasons for not having a bank account, 2021 (percent)

Source: FDIC, 2021 FDIC National Survey of Unbanked and Underbanked Households (FDIC, 2022), fig. ES.3.

The critical question, then, is this: what does a CBDC offer these households that physical cash and other nonbank financial services (e.g., check cashing, money orders, prepaid cards) do not?

Privacy (or Lack Thereof)

A CBDC undermines privacy. Whatever a central bank might say about privacy protection with a CBDC can be safely dismissed. The Fed paper, for example, says, “Protecting consumer privacy is critical. Any CBDC would need to strike an appropriate balance, however, between safeguarding the privacy rights of consumers and affording the transparency necessary to deter criminal activity.” We should not conflate the characteristics of a CBDC with those of cryptocurrencies in general, which offer anonymity and pseudonymity to their users.

Consider how the IRS recently pried open PayPal, Venmo, and Cash App accounts with transactions over $600. Consider also that the Supreme Court just ruled that the IRS can investigate your bank accounts without notification in some circumstances, including if you are a friend, family member, or associate of someone who owes the IRS.

Beyond taxes,…

In the dynamic and ever-evolving digital landscape, open protocols have emerged as a powerful force, challenging closed-source models and reshaping industries. Beyond their technical merits, open protocols embody fundamental economic principles that foster innovation, competition, decentralized decision-making, and even censorship resistance. By embracing open protocols, societies can harness the creative energies of individuals and entrepreneurs, empowering them to discover, create, communicate freely, and resist censorship in the digital age.

Spontaneous Order and the Market Process

At the core of open protocols lies the principle of spontaneous order, enabling decentralized decision-making and voluntary interactions among individuals and businesses. Unlike closed-source models that exert centralized control, open protocols promote dynamic competition, foster innovation, and drive the discovery of novel solutions through the collective wisdom of the crowd. By leveraging decentralized coordination, open protocols create a self-regulating system that adapts and evolves based on market signals.

One distinguishing feature of open protocols is permissionless innovation, eliminating barriers to entry and encouraging entrepreneurial experimentation. Entrepreneurs and innovators can freely develop and deploy new applications and services without seeking authorization or overcoming restrictive gatekeepers. This freedom fosters a culture of risk-taking, creativity, and the development of disruptive solutions. It provides opportunities for a diverse range of entrepreneurs to experiment, iterate, and bring fresh ideas to the market, nurturing a vibrant ecosystem of competition.

Open protocols also facilitate a free and competitive marketplace of ideas by empowering individuals to pursue their interests and engage in mutually beneficial exchanges directly. This decentralized marketplace encourages collaboration, competition, and the free flow of information, maximizing the potential for discovery. By nurturing the exchange of diverse ideas and perspectives, open protocols fuel innovation, continuous improvement, and societal progress.

Within open protocols, spontaneous entrepreneurship thrives due to the absence of permission requirements and reduced barriers to entry. This freedom inspires individuals to identify market gaps, take risks, and create innovative applications and services that cater to the diverse needs and preferences of consumers. Encouraging entrepreneurial dynamism, open protocols drive continuous improvement, consumer satisfaction, and economic growth. Entrepreneurs are free to explore their visions, adapt swiftly to changing market conditions, and learn from failures. This culture of spontaneous entrepreneurship within open protocols cultivates a dynamic ecosystem that rewards innovation, creativity, and resilience, enabling transformative solutions to shape industries and drive progress.

Censorship Resistance and Freedom of Expression

Open protocols possess inherent qualities that make them resistant to censorship and protect freedom of expression. Closed-source protocols are susceptible to arbitrary censorship or restrictions imposed by centralized entities. In contrast, open protocols empower individuals to communicate and express their ideas freely, without fear of suppression or interference. The decentralized nature of open protocols combined with cryptographic techniques make it challenging for any single authority to control or manipulate the flow of information. This resistance to censorship safeguards the diversity of voices and ideas, fostering an environment that nurtures creativity and innovation while preserving fundamental rights.

Open protocols provide a censorship-resistant infrastructure where individuals can freely express their ideas and opinions without fear of…

In comments to the Federal Trade Commission, EPIC applauded the proposed modifications to the Health Breach Notification Rule (HBNR). EPIC commended the proposed rule’s expanded scope of HBNR-covered entities to include mobile applications and other digital services, a reflection of how consumers interact with health service providers today. Additionally, EPIC praised the Commission’s expanded definition of a “breach of security” but urged the FTC to also classify overcollection—that is, the collection of more identifiable health information than is reasonably necessary to provide a product or service sought by the consumer—as a breach.

EPIC regularly files comments in response to proposed FTC rulemakings regarding business practices that violate privacy rights. Additionally, EPIC has long advocated for health privacy safeguards. Recently, EPIC published an analysis of the FTC’s focus on health privacy and HBNR authority after the GoodRx enforcement action.