The COVID-19 stimulus package passed by the US government in the wake of the ongoing pandemic and financial crisis allots $1200 to American citizens from the CARES Act. The payment process has commenced and is the aid is being provided to all those who authorized the IRS (Internal Revenue Service) to deposit it in their bank accounts. However, there is a looming risk that banks might intercept the payments as debt collection and the intended individual in need of the money may end up without a single penny.
The USA was fast to come to the people’s aid, fast-tracking a $2 trillion financial stimulus package and ensuring that all families in need receive the money at the earliest. However, there has been one major loophole in the entire process. The stimulus payments have not been exempted from private debt collection. It means that creditors like banks and others can legally intercept the emergency payments before it reaches the recipient.
Had the payments been disbursed in crypto form, then this would have been lest of the people’s worries, which again brings us to the advantages that come with crypto in such situations.
The Banks are Repeating the Past
The Banks and creditors are at it again, just like the twelve years ago when they caused a global financial crisis. They received a substantial amount of the total $440 billion that was disbursed during that time to the people through the TARP program in the form of private debts. There is a high probability of the same happening all over again.
Read Also: COVID-19 Stimulus Packages: Why Governments Should Considers Paying in Stable Coins
The payments in the present scenario cannot be intercepted by the federal or state agencies, with the sole exception of child support payments, it does not extend to private debt collection, laying a major loophole for anyone to take advantage of. Even though the Treasury has the authority to prevent the interception by banks and other creditors, no steps have been taken as of yet.
There have already been reports of banks taking the payments as a part of the private debt collection policy, putting the citizens in financial peril. Most of these families have the working hours of their earning members reduced due to the pandemic crisis. The stimulus money is their only hope for survival.
If Only There was Crypto
Very few know, but Bitcoin the first-ever cryptocurrency was created to fight the financial crises that we are facing at present. The banking systems and payment structures are governed by third-party intermediaries that not only make it a cumbersome and costly process but lead to aforesaid interception risks in emergencies.
Crypto was launched with the idea to abolish the third-party problems from within the financial and payment ecosystem. The creators wanted to establish a trustless system for transactions, and it is the need of the hour, considering that not all intermediaries are trustworthy.
While the government is striving to provide the people with financial aids so that they can survive the downturn, some banks and creditors are taking advantage of the situation. Only if there was a blockchain-based payment system, the situation could have been averted. It would provide the people with the money directly instead of the existing routing via a bank process. Crypto payments get credited directly to a person’s wallet, which cannot be intercepted by a third party like a bank.
Read Also: Blockchain’s Role in Bringing Transparency to Corona Relief
This pandemic is yet another wake-up call, that the world needs a trustless financial system. The recent events have proven beyond that the legacy banking systems can thwart all efforts made by the government to ensure financial stability amid an economic crisis. It might be the nudge that all needed to wake up and acknowledge the benefits of crypto.