The US House of Representatives passed a bill Thursday barring the Federal Reserve from issuing a central bank digital currency (CBDC) without explicit authorization from Congress. The CBDC Anti-Surveillance State Act passed with a 216-192 vote, largely along partisan lines.
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A CBDC is a digital version of a currency issued by a central bank. In the US, this would mean the Federal Reserve issuing a digital dollar that could be used like physical currency. The Fed has said it has no plans to issue a CBDC and stated it would not do so without congressional approval.
Republicans Stand Against the CBDC
The bill directly reflects Republicans’, including Donald Trump’s, concerns about the US government’s overreach into the personal finances of average Americans. House Majority Whip Tom Emmer (R-Minn.), who introduced the bill, argues that a digital dollar “could give the federal government the ability to surveil Americans’ transactions and choke out politically unpopular activity.”
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Emmer’s views align with those of Trump, who has promised to block the creation of a CBDC if reelected. Trump, the presumptive GOP nominee, said at a rally in New Hampshire, “As your president, I will never allow the creation of a central bank digital currency. Such a currency would give a federal government, our federal government, the absolute control over your money. They could take your money. You wouldn’t even know it was gone. This would be a dangerous threat to freedom.”
The Fed Doesn’t Want to Control Americans
On the other side, Rep. Maxine Waters (D-Calif.), ranking member of the House Financial Services Committee, argued that banning CBDCs could threaten the primacy of the US dollar.
Waters stated:
There is nothing inherent about a CBDC that would compromise privacy. That is a design feature that is within our control. This bill is, instead, an attempt to stifle US innovation and competitiveness abroad and to undermine the federal agency that is the most critical to fighting inflation.
Interestingly, Federal Reserve Chair Jerome Powell has emphasized that the Fed is not even close to creating this central bank digital currency. In his speech to Congress in March, Powell mentioned that if the Fed were to ever consider that, it would be done through the banking system, as they do not want to have individual accounts for all Americans.
CBDC Ban Is Good News for Crypto
The passage of the CBDC Anti-Surveillance State Act is great news for the US crypto industry. Kristin Smith, who heads the Blockchain Association, described it as a “watershed moment and badge of Congressional validation.”
This vote follows the House passing the Financial Innovation and Technology for the 21st Century Act a day earlier, a crypto market structure bill that enhances the Commodity Futures Trading Commission’s authority over cryptos and clarifies the Securities and Exchange Commission’s role.
Industry participants celebrated Wednesday’s vote as a sign that the crypto sector is finally receiving recognition. “For more than two years, we have worked to educate, grow support, and pass this important legislation, which prevents unelected bureaucrats from issuing a financial surveillance tool to fundamentally undermine our American values,” Emmer said.
Cryptopolitan reporting by Jai Hamid
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