The CBDC Anti-Surveillance State Act was approved by the United States House of Representatives on May 23, with the bill now awaiting a vote in the Senate. This legislation seeks to amend the Federal Reserve Act of 1913 by prohibiting Federal Reserve banks from directly offering certain products or services to individuals, as well as prohibiting the use of central bank digital currency (CBDC) for monetary policy purposes, among other provisions.
The debate surrounding the Republican-backed bill was not well-attended, with Republican supporters expressing concerns about the potential abuse of a CBDC, while Democrats focused on issues of innovation, the international competitiveness of the US dollar, and criticisms of the bill’s drafting.
During the debate, French Hill, Chairman of the Financial Services Committee Subcommittee on Digital Assets, Financial Technology, and Inclusion, stated that the bill aimed to prevent the misuse of a CBDC. Representative Mike Flood employed a rhetorical device, urging listeners to imagine the politician they despise the most having control over a CBDC. Warren Davidson, a member of the Financial Services Committee, likened the pilot project called Project Hamilton to China’s digital yuan, referring to it as a “creepy surveillance tool” that could potentially be developed further. Davidson argued that since the Federal Reserve was not engaging in dialogue, it needed to respond to the law.
Representative Alexander Mooney, who authored an amendment to the bill restricting CBDC research, expressed the view that a CBDC should not be readily available. References to China’s digital yuan and the freezing of bank accounts in Canada during a truck drivers’ protest against COVID-19 vaccination were frequently made during the debate. Warren also incorporated mentions of George Orwell’s novel “1984,” the Book of Revelations in the New Testament, and the Deathstar from the Star Wars franchise into his arguments. Marjorie Taylor Greene referred to the “deep state” and the “Democrat regime” in her remarks.
The exact implications of the bill were a subject of dispute. Brad Sherman criticized the bill as a “word salad” that favored “crypto bros,” asserting that no one would be obligated to use a CBDC. While Republicans primarily focused on retail CBDCs, Maxine Waters, the ranking member of the Financial Services Committee, argued that the bill could also be interpreted to ban wholesale CBDCs, potentially undermining the global primacy of the US dollar.
Waters also mentioned zero-knowledge proof technology as a means to ensure user privacy, and she highlighted the vulnerability of dollar-pegged stablecoins in a run compared to the resilience of a CBDC.
Financial Services Committee member Jake Auchincloss mentioned his proposed “Power of the Mint Act,” which aimed to achieve similar goals as the CBDC Anti-Surveillance State Act but had been blocked by Republicans.
Introduced by Representative Tom Emmer in February 2023, the CBDC Anti-Surveillance State Act passed in the House with a vote of 216-192.
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