With the support of the financial services industry, the House Financial Services Committee passed legislation restricting the federal government's ability to introduce a U.S. Central Bank Digital currency (CBDC).

Known as the "CBDC Anti-Surveillance State Act," H.R. 5403, passed 27-20, with amendments designed to prevent the country's central banks from issuing digital assets.

With support from 67 Republican co-sponsors and zero Democrats, Rep. Tom Emmer (R-Minn.) introduced the bill in September. Democrat opposition to the bill came from Democrats, who framed it as “anti-innovation” rather than “anti-surveillance.” The measure also gained support from financial trade associations and other advocacy groups.

The bill states, "The Federal Reserve Bank shall not indirectly offer a central Bank Digital Currency or any digital asset that is substantially similar under any other name or label to an individual through a financial institution or other intermediary."

Furthermore, the measure prohibits the Federal Reserve and the Federal Open Market Committee from using "any central Bank Digital currency, or any digital asset that is substantially similar under any name or label."

The bill has been his work for at least three years. In his remarks, he compared the bill to the central bank digital currency issued by China, which allows the government to track transactions and freeze citizens' bank accounts, describing it as a means of stopping "this administrative state under President Biden from issuing a financial surveillance tool that will undermine the American way of life."

Rep. Maxine Waters (D-Calif.) countered Emmer's assertion, asserting the bill would undermine the U.S. dollar's status as a global reserve currency and allow China to set the global standard for central bank digital currencies.

As of right now, we do not know how CBDCs could change the global financial landscape, Waters said in her testimony. "Republicans are making baseless attacks against a CBDC that does not even exist."

According to Waters and Rep. Stephen Lynch (D-Mass. ), the measure cannot take effect unless the U.S. Treasury Secretary informs Congress that the Chinese Yuan could not replace the U.S. dollar as the principal global reserve currency if there were no U.S. central bank digital currency. Party lines resulted in the rejection of these amendments.

Independent Community Bankers of America (ICBA) and the American Bankers Association oppose the creation of a central bank digital currency.

According to ICBA President and CEO Rebeca Romero Rainey, ICBA and community banks across the nation strongly oppose the establishment of a U.S. central bank digital currency. This would negatively impact community banks, limit access to credit, and compromise consumer privacy. The CBDC Anti-Surveillance State Act would prevent the Federal Reserve from issuing a U.S. CBDC to consumers, mitigating potential risks for consumers and small businesses. Congress is urged to continue promoting this crucial legislation.

Supporting Documentation:  Emmer’s CBDC Anti-Surveillance State Act Passes Financial Services Committee | Press Releases | Congressman Tom Emmer (house.gov)