Legislation Halts U.S. Central Bank Digital Currency (CBDC) Ambitions

House Committee Puts a Pin on U.S. CBDC Proposals

In a significant move, the House Financial Services Committee gave the nod to a bill that aims to halt any advancements towards a U.S. central bank digital currency (CBDC). This move was initiated by Republicans, marking a significant stride in the realm of digital assets legislation.

A Barrier to Central Bank Digital Currency

Rep. Patrick McHenry (R-N.C.), the chairman of the House Financial Services Committee, expressed his perspective on the bill, emphasizing its intention to require explicit authorization by Congress for any U.S. CBDC. Furthermore, he highlighted the need to protect the financial infrastructure and the privacy of American citizens from the potential hazards a CBDC might bring along.

Interestingly, amidst looming fears of a U.S. government shutdown, House representatives dedicated time to put the breaks on what many refer to as the “digital dollar.” Designed with meticulous care, this legislation strives to eliminate any chances of CBDC pilot programs before they gain traction. It also seeks to prevent the Federal Reserve from launching a digital currency with surveillance capacities and mandates that Congress must explicitly empower any progress on a government-endorsed digital token.

Senate Reception: A Glimpse of Uncertainty

While the House’s move on CBDC-related legislation is groundbreaking, its acceptance in the Senate remains uncertain. Senator Sherrod Brown (D-Ohio), who leads the Senate Banking Committee, doesn’t resonate with the Republican views concerning digital assets.

Rep. Maxine Waters (D-Calif.), a leading Democrat on the committee, was vocal in her opposition. Waters cautioned that such legislation could place the U.S. in the backseat, especially when nations like China are swiftly steering ahead in the global CBDC race. She pointed out the “anti-innovation” stance adopted by the Republicans, warning of the potential repercussions, like the U.S. dollar losing its dominant reserve currency status and citizens missing out on efficient payment systems.

Meanwhile, the Fed’s Vice Chairman for Supervision, Michael Barr, recently mentioned that any decision related to the CBDC would only be taken following directives from the White House and subsequent legislative authorization from Congress. While Republicans argue that the Biden administration is leaning towards a CBDC, there’s no tangible proposal for a digital dollar as of now, and agencies remain engaged in preliminary research about a potential U.S. token.

In conclusion, although the House might support crypto-related bills championed by the Republicans, a warm reception in the Senate, led predominantly by Democrats, appears improbable.