A new Senate bill, called the CBDC Anti-Surveillance State Act, proposes tight limits on the Federal Reserve’s involvement in CBDC.
In a move that could affect the future of digital currencies in the United States, a new Senate bill titled the Anti-CBDC Surveillance Act has been introduced to amend the Federal Reserve Act. The bill seeks to prohibit Federal Reserve banks from offering products or services directly to individuals, including issuing central bank digital currency (CBDC) for monetary policy purposes.
Consequences of the proposed legislation
The proposed bill introduced by Senator Cruz highlights growing concerns among US lawmakers regarding privacy and the potential for increased surveillance through the use of CBDCs. By limiting the Federal Reserve’s ability to issue CBDC directly to individuals or indirectly through financial institutions, the bill seeks to ensure that digital currencies do not compromise the privacy protections afforded by physical coins and currency.
Open and Private Currency Protections
The legislation goes further to protect open, permissionless and private dollar-denominated currencies that fully preserve the privacy of US coins and physical currency. This protection could encourage the growth of decentralized digital currencies that offer more privacy than a potential CBDC could.
Position on monetary policy and digital assets
According to the bill, the Board of Governors of the Federal Reserve System and the Federal Open Market Committee would be prohibited from using CBDC or a similar digital asset to implement monetary policy. This provision suggests a clear position of the bill’s supporters to maintain a separation between the issuance of digital currency and the traditional levers of monetary policy.
Congressional authorization is required to issue CBDCs
The bill emphasizes that the Federal Reserve System cannot issue CBDCs without express authorization from Congress, effectively placing the power to create US CBDCs in the hands of the nation’s elected representatives, rather than the central banking system.
Potential change in digital currency dynamics
If passed, this bill could change the dynamics of digital currency development in the US, potentially delaying CBDC implementation while encouraging the use of existing cryptocurrencies that comply with the bill’s privacy standards. It also opens a wider debate about the role of central banks in the digital currency space and the importance of privacy in the digital age.
Look forward
As the legislation progresses through the Senate, its potential impacts on future actions by the Federal Reserve, the privacy of digital currency users, and the overall trajectory of CBDCs in the United States will be closely watched by stakeholders in the blockchain, cryptocurrency, and financial sectors.
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