- The majority of countries are either piloting, developing, or researching CBDCs.
- U.S. lawmakers deal a blow to the digital dollar.
- Stablecoins may take the role of the digital dollar.
Central bank digital currencies (CBDCs) are on a seemingly unstoppable rise, with 36 countries piloting them and 74 others developing or researching CBDCs, according to the Atlantic Council. Despite governments’ eagerness to explore CBDCs, many freedom advocates condemn them as potential tools for financial control, which is all the more alarming considering the rise of authoritarianism and surveillance in the West.
In a rare victory for civil liberties, the U.S. House of Representatives passed the CBDC Anti-Surveillance State Act on Thursday. This move earned praise from those concerned about the potential for state-sanctioned coercion and control. However, does this mean the digital dollar is finished?
Republicans Stand Up to CBDCs
The House of Representatives passed the CBDC Anti-Surveillance State Act on Thursday by a 216-192 vote, with all 192 “nays” coming from Democrats.
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The legislation amends the Federal Reserve Act to prevent the central bank from issuing a CBDC, stopping “unelected officials” at the Fed from undermining financial privacy rights, according to Congresswoman Marjorie Taylor Greene.
Rep. Patrick McHenry argued there are troubling examples globally of governments “weaponizing their financial systems against their own citizens.” He stated bluntly that such financial surveillance enabled by a CBDC “has no place in the United States.”
Mirroring the concerns voiced by Republicans, the CBDC Anti-Surveillance State Act proposed amending the Federal Reserve Act to tackle the issue head-on.
Game Over For Digital Dollar?
The CBDC Anti-Surveillance State Act proposed to amend the Federal Reserve Act to prohibit the Fed from issuing a CBDC directly to individuals or indirectly through financial institutions and other intermediaries.
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However, the legislation includes a “get out clause” allowing the Fed to issue a CBDC or be instructed by the Treasury Secretary to do so, but only with explicit authorization from Congress. This means Thursday’s vote did not necessarily spell the end for the digital dollar.
Moreover, the CBDC Anti-Surveillance Act still needs to pass the Senate before becoming law. Nonetheless, Thursday’s passage through the lower house still represented a significant win for freedom advocates concerned about government overreach.
Stablecoins to Replace CBDC?
Given the contentious issue of government overreach, observers noted that the CBDC Anti-Surveillance State Act may pave the way for private cryptocurrencies.
The Act endorsed the Fed’s introduction of a “dollar-denominated currency that is open, permissionless, and private and fully preserves the privacy protections of the United States coins and physical currency.”
Influencer Marty Party opined that, in the absence of a digital dollar, the Fed will be forced to adopt a dollar-backed stablecoin under this Act. JackTheRippler drew attention to the XRP Ledger, suggesting that Ripple’s stablecoin as a state-backed currency is a done deal.
Fed chair Jerome Powell places CBDC implementation on Congress.
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