On May 23, the CBDC Anti-Surveillance State Act passed the United States House of Representatives in a predominantly partisan vote.
This bill aims to amend the Federal Reserve Act “to prohibit the Federal reserve banks from offering certain products or services directly to an individual, to prohibit the use of central bank digital currency for monetary policy, and for other purposes.”
The bill now awaits a vote in the Senate.
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In the bill’s debate, Republican supporters highlighted the risk of central bank digital currency (CBDC) abuse, whereas Democrats focused on innovation, the global competitiveness of the dollar, and criticized the bill’s drafting quality.
Rep. Brad Sherman criticized it as a “word salad” favoring “crypto bros” and emphasized that using a CBDC would not be mandatory for anyone.
Rep. Maxine Waters, the ranking member of the Financial Services Committee, contended that the bill might also be interpreted to prohibit a wholesale CBDC, which could jeopardize the US dollar’s global dominance. Additionally, she pointed out that the bill could be seen as barring the Federal Reserve from holding bank reserves, which are essential for operating payment systems.
Waters highlighted the promise of zero-knowledge-proof technology in ensuring user privacy, also noting that while dollar-pegged stablecoins might lose value during a financial run, a CBDC would not face such an issue.
In contrast, Rep. French Hill, Chairman of the Financial Services Committee Subcommittee on Digital Assets, Financial Technology, and Inclusion, highlighted concerns about government overreach, saying:
We live in a world where the government can abuse the tools it has.
Rep. Warren Davidson, a member of the Financial Services Committee, criticized the New York Fed’s Project Hamilton, comparing it to China’s digital yuan and calling it “a creepy surveillance tool.” Rep. Alexander Mooney, who introduced an amendment to limit CBDC research, shared the sentiment, stating that a CBDC should not be accessible “at a moment’s notice.”
Financial Services Committee member Jake Auchincloss proposed the “Power of the Mint Act” as an alternative, claiming it would achieve similar goals without the drawbacks of the current bill, but Republicans blocked it.
Overall, the bill highlights the debate over the advantages and risks of CBDCs.
The bill was passed on the same day the US Securities and Exchange Commission (SEC) officially approved spot Ether exchange-traded funds (ETFs).
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
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