US Senator Cruz Introduces Bill to Prevent Federal Reserve From Using Digital Currency as Surveillance Tool
U.S. Senators Mike Braun (R.IN) and Chuck Grassley, (R.IA), cosponsored the bill.
The bill’s text reads: “No Federal Reserve bank can offer products or services directly or maintain an account for an individual. Or issue a central bank digital money directly to an person.
The announcement stated that “The bill aims at maintaining the dominance of the dollar without competing with the privat sector” and that “It is important that you note that the Fed doesn’t have the authority to offer retail banking accounts.”
The legislation prevents the Federal Reserve deriving a CBDC direct-to-consumer that could be used by the federal government as a financial surveillance tool, much like what is happening in China.
Senator John McCain believes central bank digital currencies must follow three fundamental principles. They must protect financial privacy, preserve the dominance of the dollar, and foster innovation. CBDCs that do not comply with these principles could allow an entity such as the Federal Reserve to become a retail bank, collect personally identifiable data on users, and track transactions indefinitely.
The senator noted that CBDCs, unlike decentralized digital currencies such as bitcoin, are issued and backed government entities and transact on a central, permissioned blockchain.
This CBDC model would centralize Americans’ financial data, making it vulnerable to attacks. It could also be used to monitor private transactions.
Senator Cruz stated that the federal government had the power to either encourage and foster innovation in the crypto space or completely destroy it. He stressed:
This bill is a great way to ensure that big government doesn’t try to centralize and manage cryptocurrency in order to allow it to continue to thrive in the United States.
Cruz concluded, “We should empower entrepreneurs, enable innovation and increase individual freedom – rather than stifling them.”
U.S. Representative Tom Emmer, R-MN, made an announcement following Senator Cruz’s introduction. He stated that Cruz’s bill was a companion bill to his bill which also aims to ‘prohibit the Federal Reserve from issuing central bank digital currencies (CBDCs) directly to individuals’. Emmer presented his bill Jan. 18.
He said that Senator Cruz had agreed to provide a Senate companion for my legislation to limit the Fed’s authority.
The Fed can only create a CBDC framework which is open, permissive, and private. This means that any digital dollar must be available to everyone, that transactions must be transparent to all and that cash must remain private.
The congressman stated that Americans are on the path to financial authoritarianism in the CCP style.
The Federal Reserve is yet to decide whether or not it will issue a CBDC. The Federal Reserve published a report in January that explored various aspects of the digital dollar.
Federal Reserve governors and lawmakers aren’t sure whether the U.S. should issue digital currency for central banks. Michelle Bowman, Federal Reserve Governor, similarly stated that she was not sure if she understood or saw the business case for creating a digital currency.