Republican senators Ted Cruz (R-Texas), Bill Hagerty (R-Tenn.), Rick Scott (R-Fla.), Ted Budd (R-N.C.), and Mike Braun (R-Ind.) introduced legislation to ban central bank digital currencies (CBDCs).
According to a press release from Senator Cruz and Senator Scott, CBDCs could give the federal government significant transaction-level data and potentially choke out politically unpopular activity.
GOP Senators Introduce Anti-CBDC Legislation
According to the senators behind the legislation, Federal-backed CBDCs could pose significant privacy concerns and give regulatory authorities access to the private spending habits of individual Americans. According to a press release by Senator Ted Cruz, federally-backed digital currencies, also called central bank digital currencies, could potentially give the federal government significant transaction-level data right down to the individual user.
“A CBDC is government-controlled programmable money that, if not designed to emulate cash, could give the federal government not only significant transaction-level data down to the individual user, but also the ability to program the CBDC to choke out politically unpopular activity.”
Senator Cruz himself was extremely critical of CBDCs and demanded that Congress issue a clarification stating that the Federal Reserve had no authority to implement CBDCs.
“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. I’m proud to lead the fight in the Senate to restrict the Federal Reserve’s exploration of and attempt to introduce a CBDC to the American economy.”
The initiative from the GOP senators indicates that any research or development of a federally-issued stablecoin or stablecoin technology could lead to increasingly hostile partisanship. The proposal would bar the Federal Reserve from authorizing Fed stablecoins for individuals. It would also bar credit unions, retail banks, financial cooperatives, and other third parties from issuing them to customers.
Senator Rick Scott was equally scathing and stated,
“Big government has no business spying on Americans to control their personal finances and track their transactions. It is a massive overreach and a non-starter for me. That is why I am proud to join Senator Ted Cruz to introduce the CBDC Anti-Surveillance State Act to stand up against this invasive practice and keep Big Brother out of your bank account.”
The Biden Administration And CBDCs
The Biden administration has had a long-standing interest in studying the use of cryptocurrencies since 2022. The administration even issued a wide-ranging executive order on the technology and even received reports on incorporating it into the American economy. In a statement issued in 2022, the White House had said,
“Recognizing the potential benefits and risks of a U.S. central bank digital currency (CBDC), the reports encourage the Federal Reserve to continue its ongoing CBDC research, experimentation, and evaluation.”
The Federal Reserve and Treasury Department have both been studying the potential uses of CBDCs and have also commissioned a working group to explore their applications.
“Like existing forms of money, a CBDC would enable the general public to make digital payments. As a liability of the Federal Reserve, however, a CBDC would be the safest digital asset available to the general public, with no associated credit or liquidity risk.”
Despite the interest, the White House has not explicitly endorsed the creation of a CBDC, with Federal Reserve Chair Jerome Powell stating that the Central Bank would not create one without an act from Congress.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
