On February 26, 2024, Republican Senator Ted Cruz, along with fellow Republican Senators Bill Hagerty, Rick Scott, Ted Budd and Mike Braun introduced the CBDC Anti-Surveillance State Act. The Federal Reserve acts as the U.S. central bank. The proposed legislation states that no Federal Reserve Bank may “issue a central bank digital currency or any digital asset that is substantially similar, under any other name or label, directly to an individual.’’ This same prohibition was included in legislation that had been introduced in the House on September 12, 2023, also under the title CBDC Anti-Surveillance State Act. That Bill was introduced by Republican Majority Whip Tom Emmer, along with 50 co-sponsors.
In the press release accompanying the House Bill, Representative Emmer wrote that he was introducing the legislation:
…to halt the efforts of unelected bureaucrats in Washington, D.C. from issuing a central bank digital currency (CBDC) that dismantles Americans’ right to financial privacy. . . .
Unlike decentralized cryptocurrencies, like Bitcoin, a CBDC is a digital form of sovereign currency that is designed and issued by a government and transacts on a digital ledger that is controlled by that government. In short, a CBDC is government-controlled programmable money that, if not designed to emulate cash, could give the federal government the ability to surveil Americans’ transactions and choke out politically unpopular activity. . .
If not designed to be open, permissionless, and private – emulating cash – a government-issued CBDC is nothing more than a CCP-style surveillance tool that would be used to undermine the American way of life.
With respect to the Senate Bill, Senator Cruz said, “The Biden administration salivates at the thought of infringing on our freedom and intruding on the privacy of citizens to surveil their personal spending habits, which is why Congress must clarify that the Federal Reserve has no authority to implement a CBDC.”
The Blockchain Association, a lobbying firm whose members include many of the leading companies in the blockchain/crypto space (e.g., a16zcrypto, Coinbase, Kraken, Chainalysis, Dapper, Grayscale) issued the following statement: “CBDCs present major privacy concerns for everyday Americans, including granting the government the ability to collect intimate personal details on U.S. citizens, and potentially track and freeze funds for any reason. We applaud the introduction of the CBDC Anti-Surveillance State Act in the Senate – legislation aimed at preventing a CBDC from being issued in the United States.”
On the other side of the aisle, on September 14, 2023, Democratic Representative Stephen F. Lynch, Ranking Member of the Financial Service’s Subcommittee on Digital Assets, Financial Technology and Inclusion, reintroduced the Electronic Currency and Secure Hardware (ECASH) Act, which directs the Secretary of the Treasury to develop and pilot digital dollar technologies.
In his press release, Representative Lynch wrote:
As digital payment and currency technologies continue to rapidly expand and with Russia, China, and nearly 130 countries worldwide already researching and launching some form of Central Bank Digital Currency, it is absolutely critical for the U.S. to remain a world leader in the development and regulation of digital currency and other digital assets. By establishing a pilot program within Treasury for the development of an electronic U.S. Dollar, the ECASH Act will greatly complement and advance ongoing efforts undertaken by the Federal Reserve and President Biden to examine potential design and deployment options for a digital dollar. Importantly, this pilot program will also preserve a role in our financial system for smaller anonymous cash-like transactions which are currently transacted in physical dollars and which have seen a rapid decline in use.
In terms of the current Presidential race, on March 9, 2022, President Biden issued an Executive Order on Ensuring Responsible Development of Digital Assets, which encouraged the Federal Reserve to continue its ongoing CBDC research, experimentation and evaluation. In contrast, former President Trump is reported to have said during a January 2024 campaign speech that “as your President, I will never allow the creation of a central bank digital currency,” viewing it as a “dangerous threat to freedom” and warning that a CBDC would give the federal government “absolute control over your money” and the ability to seize funds without individuals’ knowledge. As to where the Federal Reserve stands in terms of the actual development of a CBDC, in a September 2023 speech, Vice Chair for Supervision Michael S. Barr explained that the Fed is “a long way off” from any decisions about developing a CBDC. For now, the Fed remains in the investigation phase of speaking to a broad range of stakeholders and conducting basic research into the technology.
As to where the Federal Reserve stands in terms of the actual development of a CBDC, in a September 2023 speech, Vice Chair for Supervision Michael S. Barr explained that the Fed is “a long way off” from any decisions about developing a CBDC. For now, the Fed remains in the investigation phase of speaking to a broad range of stakeholders and conducting basic research into the technology.
