House Republicans have added a provision banning central bank digital currencies (CBDCs) into a 1,300 page bill which lays out defense spending and priorities for the next financial year. The amendment, included in bill H.R. 3838, would prohibit the Federal Reserve from testing, developing or implementing a CBDC under any label.
It adds an exception for “any dollar-denominated cy that is open, permissionless, and private, and fully preserves the privacy protections of United States coins and physical cy. Attaching our Anti-CBDC Surveillance State Act to the NDAA will ensure unelected bureaucrats are NEVER allowed to trade Americans’ financial privacy for a CCP-style surveillance tool,” GOP Majority Whip Tom Emmer said last month, referring to the bill.
The charge to stop CBDCs in the U.S. is a largely Republican-led effort. Emmer himself attempted to introduce a CBDC Anti-Surveillance State Act in 2023 but it failed to gain momentum. It was reintroduced upon Trump coming to office and is currently making its way through the Senate. Globally, however, CBDCs are advancing rapidly. According to the Atlantic Council, 137 countries are exploring digital versions of their currencies, up from just 35 in 2020, and with 72 already in advanced stages of development. The U.S. remains an outlier after President Trump’s executive order earlier this year to halt all retail CBDC work.
The opposition to CBDCs in the U.S. reflects competing visions of the future of money. Critics of CBDCs fear government overreach, surveillance and disruption to the banking sector. The American Bankers Association (ABA), which backed the House measure in July, argued that a CBDC “would fundamentally change the relationship between citizens and the Federal Reserve, undermine the important role banks play in extending credit, exacerbate economic and liquidity crises, and impede the transmission of sound monetary policy.”
Nanak Nihal Khalsa, Co-Founder of human.tech by Holonym, told Decrypt that he hoped the senate bill against CBDCs passed because he feared “sleepwalking into surveillance money.” “The fears are definitely justified,” he said, calling CBDCs “programmable money controlled by the state.” He added that, “Once every transaction runs through a state ledger, privacy is gone by default and the question isn’t if it gets abused, it’s when.”
“If the US takes a stand against CBDCs, it opens up space to build alternatives that are open, permissionless, and actually preserve privacy, the things that made digital money worth caring about in the first place,” Khalsa said. Khalsa added that stablecoins issued by private companies also carried some of the same risks. “Private companies have the same incentives to track, exclude, and monetize,” he said. “The only difference is who you’re forced to trust, the state or a corporation. Without privacy guarantees built into the protocol itself, you’re choosing which empire you want to live under.”
Europe-based financial non-profit Finance Watch told Decrypt it believed concerns about surveillance are about “design, not about the concept of a CBDC itself.” “It is entirely possible to create a CBDC that is open, permissionless, and preserves the same privacy protections as cash,” a spokesperson said. “That requires privacy by design and by default, strict limits on data collection, and offline functionality for small payments.”
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