House Financial Services Committee Debates, Passes CBDC Anti-Surveillance State Act
During the deliberation of the CBDC Anti-Surveillance State Act (H.R. 5403) in the US House of Representatives Financial Services Committee on September 20. The bill sought to address the critical issues surrounding central bank digital currencies (CBDCs), such as the privacy of American citizens and the role of government in daily life.
The CBDC Anti-Surveillance State Act prevents the Federal Reserve from issuing a CBDC directly to individuals, ensuring the Fed cannot mobilize into a retail bank able to collect personal financial information on Americans. It prohibits the Federal Reserve from indirectly issuing a CBDC to individuals through an intermediary, preventing the Federal Reserve from launching a retail CBDC via our two-tier financial system. Furthermore, the legislation makes it clear that the central bank and U.S. Treasury lack the authority to issue a CBDC without Congressional authorization, among other proposed restrictions.
Tom Emmer, the bill’s sponsor, introduced it after the committee had already passed several other bills. He described his legislation as “straightforward,” asserting that it was designed to halt the Biden administration’s pursuit of a financial surveillance tool that he argued could undermine the American way of life. Emmer expressed concerns that if the CBDC didn’t function similarly to physical cash, it might grant the federal government excessive control over monitoring and restricting Americans’ financial transactions.
In his presentation, Emmer drew parallels with the Chinese digital yuan and its association with the government’s social credit system, as well as the freezing of bank accounts during the 2022 Canadian truckers’ protest. He claimed that the bill had garnered support from 50 senators and numerous organizations.
Maxine Waters, the ranking member, rebranded the bill as the “CBDC Anti-Innovation Act” and voiced apprehensions about its potential impact on the US dollar’s status as the leading global reserve currency. She contended that the consequences of introducing a CBDC on the global financial landscape were still uncertain and criticized what she saw as unfounded attacks on a nonexistent CBDC by Republicans.
Following a rigorous debate on the pros, cons and intricacies of the bill, lawmakers ultimately reached a consensus that the bill would prevent the issuance of a CBDC without congressional approval, a position in alignment with the Federal Reserve’s stance from the outset. Both sides also acknowledged the broader issue of financial privacy deficits within the country.
Waters and Lynch proposed amendments to clarify the bill’s scope regarding authorizing the Fed to investigate the Chinese digital yuan, which could potentially facilitate efforts to evade US sanctions. Waters referenced the mBridge pilot project involving China, Hong Kong, Thailand, and the United Arab Emirates in this context.
House Financial Services Committee Passes CBDC Anti-Surveillance State Act
In the end, the House Financial Services Committee passed eleven pieces of legislation out of Committee that strengthen national security, protects Americans’ financial privacy, and prevents the issuance of a central bank digital currency (CBDC) without explicit authorization from Congress.
Additional information on all eleven bills reported out of the Financial Services Committee can be found by clicking here.