The Interplay of Digital Currency, Metal Recycling, and Personal Freedom

In July 2023, the Federal Reserve Bank (FRB) launched FedNow, a new service aimed at facilitating immediate central bank digital currency (CBDC) payments for transactions involving goods and services. This initiative is seen as an effort to modernize payment systems, allowing registered individuals and businesses to complete transactions swiftly. However, while the FRB promotes CBDC as a convenience, it raises concerns about the potential expansion of the FRB’s monetary authority and oversight over consumer transactions. As the U.S. increasingly transitions to digital payment methods, there are underlying fears regarding the implications of monitoring consumers’ financial activities and the potential loss of privacy.

Currently, a significant portion of dollar payments in the U.S. is processed through the Automated Clearing House (ACH), an electronic funds transfer system established in 1974. ACH transactions typically take one to two business days to settle, making them less timely compared to the instant capabilities being proposed with the FedNow service. The impact of CBDC payments could drastically alter the landscape of transactions across various industries, including scrap metal recycling, where businesses often make and receive payments in cash (US dollars) for processing and selling metals like aluminum, copper, and steel. This reliance on cash raises questions about how the transition to digital payments could alter the financial practices of recycling businesses and their customers.

One potential consequence of the federal shift towards a cashless society could be the mandatory adoption of CBDC for all transactions, including those in the scrap metal sector. This could allow the Federal Reserve to monitor every aspect of metal recycling transactions—tracking how metals are acquired, sold, and stored. This increased scrutiny could lead to invasive federal inquiries into the financial activities of individuals and businesses participating in recycling. Participants in these transactions would be compelled to report CBDC received from metal sales as taxable income, adding complexity and oversight to what has traditionally been a straightforward business model.

The significance of recycled metals in modern industrial applications cannot be overstated. Steel, aluminum, and copper are essential for a myriad of infrastructures, from transportation to construction. Approximately 70% of U.S. steel production relies on recycled scrap metal, underscoring the critical role of recycling in the economy. However, the individuals selling these recyclable materials often represent a marginalized segment of the population. Known as the “underbelly” of society, these contributors play an important role in the supply chain, yet their economic activities may become subject to increased regulation and surveillance under a CBDC framework.

By implementing a system where every transaction in metal recycling requires the use of a CBDC, the FRB would necessitate that all participants—from buyers to sellers—possess the necessary digital tools, such as smartphones or specialized cards. This transition would lead to a significant loss of privacy across the board, as every transaction would be documented and accessible to federal oversight. The imposition of these requirements would represent a drastic shift in how business is conducted and could be seen as an infringement on personal liberties.

The movement toward adopting CBDCs, especially in sectors like metal recycling, raises critical concerns about privacy, autonomy, and federal control over financial transactions. Many in the industry are likely to oppose the loss of cash options and the imposition of stringent reporting requirements that come with the mandatory use of CBDCs. As the FRB continues to roll out its digital currency initiatives, it is essential for stakeholders to consider the long-term implications on privacy, the economy, and the lives of those who operate in the often-overlooked areas of the recycling industry.