The National Anti-Surveillance Law was passed. Central Bank Digital Currency (CBDC)
The country’s central bank digital currency (CBDC) anti-surveillance law was passed by the US House of Representatives in a largely partisan vote on May 23. The bill, which has yet to be voted on in the Senate, amends the Federal Reserve Act of 1913 to prohibit Federal Reserve banks “from providing certain products or services directly to an individual, prohibiting the use of central bank digital currency for monetary policy and other purposes. »
Discussions on the Republican-backed bill saw low participation. Republican supporters cited the potential for abuse of central bank digital currencies (CBDCs), while Democrats focused on the innovation and international competitiveness of the dollar and the bill’s poor wording.
French Hill, Chairman of the Financial Services Committee Subcommittee on Digital Assets, Fintech, and Inclusion, said:
“We live in a world where government can abuse the tools at its disposal. »
Rep. Mike Flood repurposed his rhetoric and urged the audience to “imagine the politician you despise most” controlling central bank digital currencies.
Financial Services Committee Ranking Member Warren Davidson described the New York Fed’s Hamilton Project as “the same scary surveillance tool” as China’s digital yuan. He said the pilot project “could be developed into something more advanced.” He said the Fed does not respond to dialogue and therefore must respond to the law.
This idea was echoed by Rep. Alexander Mooney, author of an amendment to the bill restricting research into central bank digital currencies, who said central bank digital currencies should not be “available at any time” .
Related: New York Fed Partners with Singapore MAS to Explore Central Bank Digital Currencies
The digital yuan and the closure of bank accounts in Canada were repeatedly discussed during a truckers’ protest against coronavirus vaccination. Warren also mentioned George Orwell – author of 1984 – the New Testament book about the Apocalypse and the Death Star – a device in the Star Wars film series – in his arguments. Marjorie Taylor Greene spoke about the “deep state” and the “democratic system.”
The bill’s exact implications were also controversial. Brad Sherman described the bill as “word power” that favors “crypto bros.” He added that no one will be forced to use a central bank digital currency (CBDC).
While Republicans’ arguments focused on central bank retail digital currencies, Maxine Waters, ranking member of the Financial Services Committee, said the bill could also be interpreted to ban central bank wholesale digital currencies. . Waters said the bill would “risk undermining the primacy of the U.S. dollar” globally.
Waters said the bill could also be interpreted to prohibit the Fed from holding bank reserves, which are necessary to run payment systems:
“(The bill) hobbles the American economy as it operates today and for decades to come.”
Waters also mentioned zero-knowledge technology that can ensure user privacy. She added that dollar-pegged stablecoins could lose value if they continue, unlike digital currencies issued by central banks.
Financial Services Committee Ranking Member Jake Auchincloss said his bill, the Mint Power Act, would achieve similar goals without the drawbacks of the bill under consideration, but it was blocked by Republicans .
The state’s anti-CBDC surveillance law was introduced in the House of Representatives by Rep. Tom Emmer in February 2023. It passed by a vote of 216 to 192.
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