CBDC Anti-Surveillance Act Clears U.S. House Vote

On May 23, the U.S. House of Representatives passed the Republican-led CBDC Anti-Surveillance State Act (H.R.5403). This legislation aims to prohibit the Federal Reserve from creating or launching a government-backed digital currency. Republican Majority Whip Tom Emmer introduced the bill, emphasizing the potential dangers to Americans’ monetary privacy.

Central bank digital currencies (CBDCs) represent a digital version of a nation’s fiat money, regulated by the country’s central bank. These can be used for both retail and wholesale transactions. Emmer argues that Fed-issued CBDC could severely undermine American monetary privacy. The House supported his stance, moving to ban the development of any such currency.

In addition to the outright ban, the House adopted amendments restricting the Federal Reserve from engaging in any CBDC pilots or research programs. Republican members criticized previous initiatives like “Project Hamilton,” calling it a blatant evasion of legislative scrutiny. “My legislation ensures that the United States’ digital currency policy remains in the hands of the American people so that any development of digital money reflects our values of privacy, individual sovereignty, and free market competitiveness,” stated Rep. Emmer following the vote.

Legislation and Broader Implications

The CBDC Anti-Surveillance State Act has garnered support across party lines, reflecting a shared concern about digital currency policies. This bipartisan effort aligns with the recent passage of the Financial Innovation and Technology for the 21st Century Act, or FIT21 Act, on May 22. The FIT21 Act aims to establish a clear regulatory framework for digital currencies, detailing the oversight roles of the Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC). The CFTC will oversee digital commodities markets, including exchanges and broker-dealers.

Both the CBDC Anti-Surveillance State Act and the FIT21 Act are set to advance to the Senate for further deliberation and potential amendments. As the 2024 U.S. Presidential elections approach, crypto advocates are actively lobbying for favorable regulatory policies.