House Republicans rallied on the House floor yesterday, urging the passage of Tom Emmer’s crucial bill aimed at banning the Federal Reserve’s proposed digital currency pilot program. The bill, known as the CBDC Anti-Surveillance State Act, garnered significant support and ultimately passed with a vote of 216-192. It will now proceed to the Senate for further consideration.

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Remarkably, three Democrats crossed party lines to join Republicans in support of the bill, while 192 Democrats voted against it, highlighting the bipartisan nature of concern over the potential risks associated with a government-sponsored digital currency.

The CBDC Anti-Surveillance State Act seeks to amend the Federal Reserve Act, effectively prohibiting Federal Reserve banks from offering specific products or services directly to individuals. Additionally, it aims to prevent the use of a central bank digital currency for monetary policy, among other purposes.

Notably, Representative Maxine Waters (D-Calif.), ranking member of the Financial Services Committee, opposed the bill, arguing that the existence of a central bank pilot program for a digital currency does not guarantee the future implementation of an official government-backed digital currency. However, her stance was met with strong rebuttals from Republican lawmakers.

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Representative Warren Davidson (R-Ohio) challenged what he called “word weasels” who seek to downplay the significance of a pilot program. He made a compelling case against a government digital currency, describing it as “the creepiest surveillance tool known to man,” emphasizing the potential threats it poses to personal freedoms and individual autonomy. According to Davidson, such a currency could lead to coercion, control, and an erosion of privacy rights.

“Why would we enable it?” he questioned. “Everywhere it’s depicted as evil.”

Additionally, Davidson firmly asserted that the Federal Reserve should not proceed with the development of a digital currency without explicit authorization from Congress. He argued that implementing such a currency contradicts the fundamental principles of a free society and warned against granting the Federal Reserve the responsibility of designing and building it.

Representative Waters, however, dismissed the Republicans’ concerns over privacy as unwarranted. Despite her position, the overwhelming support for the CBDC Anti-Surveillance State Act underscores the growing anxiety among lawmakers from both sides of the aisle about the potential risks and dangers of implementing a government-controlled digital currency.

As the bill now advances to the Senate, the fate of the Federal Reserve’s digital currency pilot program hangs in the balance, with lawmakers poised to shape the future of American fiscal policy.


You can read Tom Emmer’s full press release below:

Emmer’s Flagship CBDC Anti-Surveillance State Act Passes House of Representatives

May 232024

Washington, D.C. – Today, the House of Representatives considered and passed Congressman and Majority Whip Tom Emmer’s (MN-06) flagship legislation, the CBDC Anti-Surveillance State Act.

In a vote of 216 – 192, the House of Representatives passed Emmer’s bill that would prohibit the Federal Reserve from issuing a surveillance-style central bank digital currency (CBDC) that could give the federal government the ability to monitor and control individual Americans’ spending habits.

“For more than two years, we have worked to educate, grow support, and pass this important legislation, which prevents unelected bureaucrats from issuing a financial surveillance tool to fundamentally undermine our American values. My legislation ensures that the United States’ digital currency policy remains in the hands of the American people so that any development of digital money reflects our values of privacy, individual sovereignty, and free market competitiveness. This is what the future global digital economy needs. We are proud to have led this effort and thank my colleagues for their support,” Congressman Emmer said. 

Click here to see what key stakeholders are saying in support of the CBDC Anti-Surveillance State Act.

Before today’s vote, Whip Emmer delivered the following remarks on the House Floor in support of the CBDC Anti-Surveillance State Act: 

“These last two weeks have been historic for financial innovation in Congress. Adoption of the SAB-121, the resolution by both chambers and bipartisan passage of the Financial Innovation and Technology for the 21st Century Act just yesterday shows that digital asset policy is no longer a backburner issue in Congress. It is now front and center, and we are just getting started.

The policies we’ve recently debated and adopted are in response to an Administration that has failed to provide the clarity and guidance the budding digital asset industry in the United States has been begging for. Because of their failures, Congress has voted to reverse incoherent regulation and establish new standards that will allow our economy to move deeper into the 21st-century economy.

Today, we continue these efforts to once again do what this Administration has failed to do, and I am proud to have my legislation, the CBDC Anti-Surveillance State Act, on the Floor for a vote.

This bill was the first anti-central bank digital currency legislative effort introduced in the United States, and, for the past two Congresses, I’ve worked with my colleagues to update, improve, and grow support for it. This bill is simple: It halts the efforts of this Administrative State under President Biden from issuing a financial surveillance tool that – if not done correctly – will fundamentally alter the lives of every American.

Unlike decentralized cryptocurrencies, a CBDC is a digital form of sovereign currency that is designed, issued, and monitored by the federal government. It 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 and monitor every aspect of their daily lives. 

And this is not hyperbole. We have already seen examples of governments developing these types of tools and use them to weaponize their financial systems against their citizens.

In China, the Communist Party employs a CBDC that can be used to monitor citizens’ spending habits.

Closer to home in the Western Hemisphere, the Canadian government demonstrated the power of federal financial surveillance and control when it froze the bank accounts of hundreds of truckers protesting the COVID vaccine mandate in 2022.

It is naïve to believe that your government won’t weaponize the tools it has to control you. So, it shouldn’t come as any surprise that the appetite for financial surveillance can be an attractive proposition right here at home.

In 2023 the White House issued an executive order placing an ‘urgency’ on CBDC research and development, and the agency reports to that executive order have made it clear that the Biden administration is not only itching to create a CBDC, but they are interested in developing and deploying one, potentially undermining the privacy rights of every one of our citizens.

Congress can’t allow this to happen.

My bill ensures the United States digital currency policy remains in the hands of the American people – not the Administrative State – so that any development of a digital money will reflect our American values: privacy, individual sovereignty, and free market competitiveness.

This legislation affirms that if the federal government seeks to create a digital version of the U.S. dollar, they can only do so with the explicit authorization from Congress. They can do that. But they have got to get authorization from Congress and they’ve got to make it open, permissionless, and private.

Whatever is ultimately developed must emulate the core tenets of cash. Simply put: any digital currency issued by the government, again must be open, permissionless, and private.

It cannot be used in the way the Chinese have deployed their digital yuan to build social credit scores on their citizens based on their purchases and their behavior. These types of tools cannot exist in a free society like ours, and we should only accept a digital currency that’s consistent with our values.

American values.

This is what the future global digital economy needs. If not open, permissionless, and private – like cash – a CBDC is nothing more than a CCP-style surveillance tool that will ultimately be used to oppress our American way of life.

If China embraces it, you know it’s something worth standing against.

We can and will continue to launch our economy deeper into the digital age without jeopardizing who we are as Americans, and this bill is designed to ensure that that happens.

I want to thank the 165 Members of Congress who have joined as a cosponsor of my legislation, in addition to Chairman McHenry, Chairman Hill, Chairman Davidson, and the many others on both sides of the political aisle who have worked tirelessly with me and my team to make sure we keep the United States the beacon of innovation and global economic strength without undermining what makes our nation so special.

I urge all of my colleagues to support this legislation and I yield back the balance of my time.”

 

Background:
Unlike decentralized cryptocurrencies, like Bitcoin, a CBDC is a digital form of sovereign currency that is designed and issued by a central government and transacts on a digital ledger that is controlled by that government. In short, a CBDC is government-controlled, programmable money, that if not designed to emulate the privacy protections of cash, could give the federal government the ability to surveil Americans’ transactions and suppress politically unpopular activity.

In 2022, the Biden Administration issued Executive Order 14067, which placed urgency on the research and development of a central bank digital currency. The Federal Reserve’s 2022 CBDC report, as well as other agency reports pursuant to the Executive Order, outlined the Biden Administration’s interest in researching and developing a surveillance-style CBDC.

Foreign governments around the world have already shown a willingness to weaponize their financial system against their citizens. In China, the Communist Party employs a CBDC that has been used to monitor and control citizens’ spending habits. In Canada, the Trudeau Administration froze the bank accounts of hundreds of their citizens who were engaged in the trucker protests of 2022.

The CBDC Anti-Surveillance State Act protects Americans from the growing Administrative State by banning the Federal Reserve from issuing a central bank digital currency. Specifically, this bill bars the Federal Reserve from directly issuing a CBDC to individuals, preventing the Fed from becoming a retail bank that gathers personal financial information on American citizens. It prohibits the Fed from indirectly issuing a CBDC to individuals through intermediaries, preventing the issuance of a CBDC through our two-tier financial system. It ensures that the Fed cannot use any CBDC to implement monetary policy, preventing it from using a CBDC to manipulate the American economy. It requires that Congress pass legislation authorizing any government-created digital dollar. Finally, the legislation safeguards innovation and any future development of digital cash.

Since the 117th Congress, Whip Emmer has been the leading voice against any Federal Reserve-issued central bank digital currency.

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