The Nothaus Judgment: relevant case to understand the central bank digital currencies (CBDC)
In August 2021, Bernard von Nothaus, a creator of Liberty Dollar, was condemned by an American federal jury for breach of the exchange of goods (CEA) and the National Currency Act (NCA). The conviction has significant consequences for the concept of central bank digital currencies (CBDC), which is the digital representations of FIIT currency, which can be used as a replacement medium. In this article, we explore the case of Nothaus and its relevance against CBDC.
The Change of Goods (CEA) and the National Currency Act (NCA)
In 1970, Congress accepted CEA, which regulates the trade of goods such as gold and oil. The NCA followed in 1934, regulating national currencies such as the US dollar. The purpose of these laws is to prevent prohibited activities such as counterfeiting and money laundering.
The Liberty Dollar case
Nothaus is based on the creation of Liberty Dollar, the digital version of the US dollar. In 2016, Nothaus launched Liberty Dollar on its website, claiming it is not a currency but a “digital representation” of the US dollar. He claimed that until he used Liberty Dollar to carry out prohibited activities such as counterfeiting or money laundering, he did not violate the laws.
Nothaus conviction
In July 2021, Nothaus was convicted by two counts: one for violations of CEA 12 (a) to be exempted and distributed without permission and the other for violation of Section 4 (g) (2) of NCA. illegal transactions “with foreign governments.
The jury found that Nothaus had actually created and distributed the Liberty Dollar, which was essentially the same as the digital dollar. However, the prosecutor argued that by creating and using a decentralized, open source cryptocurrency, such as Liberty Dollar, Nothaus tried to bypass US laws regulating national currencies.
The relevance of nothaus is
Nothaus conviction has significant consequences for CBDC. Although it is not directly related to traditional currency control, it highlights the complexities surrounding the use of decentralized technologies and digital currencies within the regulatory framework created by national governments.
CBDCs are designed to become a digital representation of Fiat currencies, but require clear standards to avoid illicit activities. The Liberty Dollar case emphasizes the need for lighter guidelines for the legitimacy of such decentralized cryptocurrencies.
Regulatory frame
Nothaus’s conviction shows that there is a risk that individuals and companies are engaged in prohibited activities if they do not meet the regulatory requirements. The US government’s approach to CBDC’s regulation was cautious, and many experts argued that a clear framework was needed before allowing decentralized cryptocurrencies such as Liberty Dollar.
Conclusion
Nothaus is a reminder that the use of decentralized technologies and digital currencies should be carefully regulated to prevent prohibited activities. As the concept of CBDCs further develops, it is essential that political decision -makers create clear guidelines for the legitimacy of these digital representations of Fiat. By understanding the case of Nothaus and its consequences, we can better navigate the complexities surrounding the regulation of decentralized cryptocurrencies.
References
- Press release from the United States Ministry of Justice. (2021). Bernard von Nothaus condemned him in the Liberty Dollar case.
- Reuters found it guilty in Count “Bernard von Nothaus 2”.