House Votes to Block Federal Reserve from Issuing Digital Dollar

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  • The US House of Representatives has passed the CBDC Anti-Surveillance State Act with sharp partisan divisions
  • Tom Emmer has introduced the bill to prevent the Federal Reserve’s development of a digital dollar
  • Concerns over government overreach and surveillance have delayed the development of a central bank digital currency

In a vote marked by sharp partisan divisions, the US House of Representatives has passed the CBDC Anti-Surveillance State Act, aiming to halt the Federal Reserve’s development of a central bank digital currency (CBDC). The bill, introduced by Majority Whip Tom Emmer, seeks to prevent the creation of a digital dollar, citing concerns over potential government overreach and control. Fears over the surveillance power of a CBDC have caused delays in the development of a digital dollar as debate over the issue has ramped up.

CBDC Vote Goes Along Party Lines

US legislators appear to have made little progress on a US CBDC, and yesterday’s vote, while not being a death knell by any means, is a sign that things aren’t getting any easier. Republican supporters of the bill argue that a CBDC could be used to monitor and control Americans’ financial transactions, posing significant privacy risks. Emmer and his allies contend that preventing the Federal Reserve from advancing this technology is crucial to safeguarding individual freedoms.

Conversely, Democrats criticized these fears as exaggerated during the pre-vote debate on Thursday, warning that banning the development of a CBDC would stifle public sector innovation and hinder necessary research into digital currencies. The final vote saw 213 Republicans and three Democrats in favor of the bill, while 192 Democrats opposed it.

This vote follows a starkly different outcome from Wednesday, when a bipartisan coalition passed the Financial Innovation and Technology for the 21st Century Act (FIT21). This crypto market structure bill, supported by 208 Republicans and 71 Democrats, aims to enhance the regulatory framework for digital assets. It grants the US Commodity Futures Trading Commission greater authority over spot markets and clarifies the role of the Securities and Exchange Commission in the sector.

Fed No Longer Looking “Very Carefully” at Digital Dollar?

Despite these legislative advancements, both the anti-CBDC bill and FIT21 face uncertain futures in the Senate. Neither bill currently has a corresponding version in the upper chamber, casting doubt on their prospects for becoming law.

It seems, therefore, that three years after Federal Reserve Chair Jerome Powell said that the authority was looking “very carefully” at a digital dollar, it seems that the US is taking zero steps forward and two steps back in its actual development of one.