The House of Representatives passed HR 5403 on Thursday to prohibit the US Federal Reserve from using central bank digital currencies (CBDCs).
The bill, titled the “CBDC Anti-Surveillance State Act,” would amend the Federal Reserve Act to restrain the central bank’s ability to use CDBCs and offer any related products or services to individuals.
The bill states: “A Federal Reserve bank shall not offer a central bank digital currency or any digital asset that is substantially similar under any other name or label, indirectly to an individual through a financial institution or other intermediary.” The vote saw 213 Republicans and 3 Democrats in favor, while 192 Democrats opposed it. Four Republicans and 18 Democrats did not vote.
House Majority Whip Tom Emmer (R-MN) spoke about the bill during a September House Financial Services Committee session, saying “This bill is simple: it halts the efforts of this Administrative State under President Biden from issuing a financial surveillance tool that will undermine the American way of life.”
Emmer also noted the authoritarian actions of Canada and China while criticizing the Biden administration’s interest in CBDCs.
Proponents of the bill are alarmed by the prospect of the government using CBDCs for authoritarian purposes, such as restricting individuals’ ability to receive and spend money or surveillance their economic activity. Like Bitcoin and other digital currencies, a CBDC would have a clear chain of custody, providing all transaction information to those who can access it. Unlike other digital currencies, CBDCs would be centrally controlled, with a central bank being able to manipulate it as they see fit.
The bill will now face scrutiny from the Senate, where it must pass before it can be signed into law by President Biden. If it sees a similar party-line vote there, it may not achieve the three-fifths vote threshold required by both congressional bodies to overturn a presidential veto.
Last year, the President of the European Central Bank (ECB) announced they were preparing to create a CBDC. China has already conducted real-world trials of their CBDC, the digital yuan. The Central Bank of the Bahamas was one of the first to officially launch a CBDC.
While the implementation of HR 5403 is still unclear in the US, authorities around the world are moving forward with CBDCs, meaning the long-term effects of this economic system will soon be tested in real time.
