US anti-CBDC Bill progresses, but is there more than meets the eye?
The CBDC Anti-Surveillance State Act, introduced into US Congress as a Bill in February of this year has moved through the powerful House Financial Services Committee, taking a step closer to being voted for on the floor of the US Congress for a vote. The Bill's author is US Representative Tom Emmer.
The Bill aims to prevent the US Federal Reserve from issuing a Central Bank Digital Currency (CBDC), or a digital asset that is substantially similar, and require the Federal Reserve's Board of Governors to obtain congressional authorisation before issuing a CBDC. The concern appears that the Federal Reserve might issue a CBDC too similar to the Chinese digital yuan, which has been accused by Wired as "open[ing] up new forms of government surveillance and social control".
In his press release, Representative Emmer, the Majority Whip of the House of Representatives, stresses the importance of the Bill as protection against consumer tracking:
In short, a central bank digital currency is government-controlled programmable money that, if not designed to emulate cash, could give the federal government the ability to surveil and restrict Americans' transactions.
CBDCs have taken a reputational hit in 2023, with models being analyzed and structural problems found including:
potential privacy issues, including mass surveillance, misuse and abuse of CBDC data by central banks and intermediaries, and more
For many, CBDC seems to be a shorthand for government surveillance, with Governor DeSantis promising to ban CBDCs if elected President. Representative Emmer believes in the decentralised potential of Web3, saying:
[the] future digital economy [needs to be] open, permissionless, and private - just like cash.
While the Bill may be seen as stifling innovation by those wanting to see CBDCs move forward (and the CBDC tracker shows a huge number of pilots underway), the real purpose of the Bill, given Representative Emmer's views, is to champion privacy for consumers and prevent
[communist]-style surveillance tool that can be weaponized to oppress the American way of life.
The Bill is set for a congressional hearing where, following discussion, debate and a vote, could be enacted as legislation preventing the issuance of a CBDC in the US without congressional authorisation, which would definitely slow down CBDC pilots or adoption in the US given how fractured the US congress presently is.
In Australia, such privacy concerns have not gained traction, and the Reserve Bank of Australia and the Digital Finance Co-operative Research Centre have released a report on how a CBDC could benefit Australia's payment system with positive views on implementing digital asset technology. It remains unclear just how much privacy would be protected in any potential Australian CBDC.
By Michael Bacina and Luke Misthos