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US Congressman Introduces Bill Preventing Fed From Issuing CBDC To Individuals

With discussions for a US-based CBDC underway, forces are already acting to ensure it doesn’t mimic China’s digital yuan. For example, Tom Emmer – a Republican House member – recently introduced a bill preventing the Fed from issuing a CBDC directly to individuals.

Stepping Away From Authoritarianism

Emmer announced the bill in a tweet on Wednesday, attached to a thread explaining its purpose. He insisted that a United States CBDC must ensure financial privacy, cultivate innovation, and maintain the dollar’s dominance. Otherwise, an entity like the Fed could effectively function as a retail bank, tracking users’ transactions indefinitely through identifiable information.

Emmer says Target donation controversy 'too personal' | MPR News
Tom Emmer. Source: MPR News

At his re-nomination hearing yesterday, Fed chair Jerome Powell was challenged on this exact issue by pro-crypto Senator Pat Toomey. The chairman agreed that nothing about the Fed’s history lent it towards acting as a retail bank regarding CBDCs.

Emmer argued that a CBDC issued from the central bank to citizens would both violate their privacy and create a “single point of failure.” This is one of the great contradictions of central bank digital currency, built on a technology designed to eliminate trust.

“Requiring users to open an account at the Fed to access a United States CBDC would put the Fed on an insidious path akin to China’s digital authoritarianism,” said the congressman.

To counteract this, Emmer proposed that a CBDC be open, permissionless, and withhold the privacy of cash. This way, it could retain “American characteristics” rather than “mimic China’s authoritarianism.”

Why An American CBDC?

The crypto community has generally detested CBDCs as the total antithesis of what Bitcoin was made for. Rather than remove power from central banking institutions, they would grant them greater surveillance and authority.

Proponents argue that CBDCs can increase the financial system’s efficiency while operating under the regulatory umbrella. This would be in contrast with the stablecoins of today, which congresspeople fear are used for illicit activity and are not sufficiently backed.

Emmer’s proposition of a ‘cash-private’ CBDC would indeed address the issue of surveillance but also neuter one of its main use-cases. Furthermore, open and permissionless currency properties are already available through numerous cryptos, including Bitcoin.

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However, Jerome Powell does not consider Bitcoin a real currency, calling it “failed” due to its price volatility in July. So far, only El Salvador has dared to deem Bitcoin a form of legal tender.

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