House Financial Services Committee Advances CBDC Anti-Surveillance State Act

By approving the CBDC Anti-Surveillance State Act, the House Financial Services Committee (HFSC) has made a significant advancement that might lead to a future House floor vote. Congressman Tom Emmer (R-MN), a fervent proponent of cryptocurrencies, presented this legislation to stop the Federal Reserve from distributing Central Bank Digital Currency (CBDC) to particular persons. Emmer described CBDCs as “financial surveillance tools,” and Robert F. Kennedy Jr. and Florida Governor Ron DeSantis both agreed with him.

Emmer showed profound worry during his speech, saying, “This is not just alarming—it’s downright un-American.” He gave examples of how governments have used financial institutions to impose control over people, including the Chinese Communist Party’s use of CBDCs to track purchases and Justin Trudeau’s suspension of demonstrators’ bank accounts in Canada.

Additionally, the Act forbids CBDCs from implementing monetary policy. The European Central Bank has emphasized that the potential impact of CBDCs on monetary policy might vary, making it a complicated issue. It’s important to note that private market stablecoins like Circle’s USD Coin (USDC) and Tether’s USDT are unaffected by the measure.

Like many other cryptocurrency-related problems, support for the law is mostly divided along party lines. Despite having 60 Republican co-sponsors, no Democratic member of the Committee voted for moving the bill forward, and 20 voted against it.

The bill’s supporters, according to Representative Brad Sherman (D-CA), are “hypocritical” because they prefer privately owned cryptocurrencies to those that are issued by central banks. He said, “I’d be willing to support this bill if it also ended crypto.”

Rep. Maxine Waters, a Democrat from California, blasted Republicans for taking a “anti-innovation” position while pointing out that nations like China are embracing technology. She asserted that delaying the implementation of a CBDC might lead to the dollar losing its position as the world’s reserve currency and prevent Americans from taking advantage of quicker, less expensive, and easier transfers.

Patrick McHenry, the Republican chairman of the House Financial Services Committee, has previously charged that Waters and other Democrats obstructed earlier stablecoin legislation under White House pressure. The Clarity for Payment Stablecoins Act of 2023, which sought to provide a legal framework for private stablecoins, was opposed by the majority of Democrats. They said that, after months of talks, the measure unfairly benefitted the crypto business.

The adoption of the CBDC Anti-Surveillance State Act is a significant advancement in the continuing discussion over the place of private cryptocurrencies and CBDCs in the financial system.