Washington, D.C.— Today, Senator Ted Cruz (R-Texas) introduced companion legislation to Representative Emmer’s (MN-06) bill prohibiting the Federal Reserve from issuing a central bank digital currency (CBDC) directly to individuals. Representative Tom Emmer first introduced this legislation on January 18, 2022.
Specifically, the legislation prohibits the Federal Reserve from developing a direct-to-consumer CBDC which could be used as a financial surveillance tool by the federal government, similar to what is currently happening in China. The bill aims to maintain the dollar’s dominance without competing with the private sector.
Representative Emmer said, “I’m glad Senator Cruz has agreed to offer a Senate companion to my legislation limiting the Fed’s authorities. The Fed must only craft a CBDC framework that is open, permissionless and private – meaning any digital dollar must be accessible to all, transact on a blockchain that is transparent to all, and maintain the privacy elements of cash. Anything less puts Americans on the road to CCP-style financial authoritarianism.”
“The federal government has the ability to encourage and nurture innovation in the cryptocurrency space, or to completely devastate it,” said Sen. Cruz. “This bill goes a long way in making sure big government doesn’t attempt to centralize and control cryptocurrency so that it can continue to thrive and prosper in the United States. We should be empowering entrepreneurs, enabling innovation, and increasing individual freedom – not stifling it.”
Unlike decentralized digital currencies like Bitcoin, CBDCs are issued and backed by a government entity and transact on a centralized, permissioned blockchain. In some cases, this provides a central bank control over individual payment and transfer activity. The Fed does not have the authority to offer retail bank accounts.
In January, the Federal Reserve issued a report entitled “Money and Payments: The U.S. Dollar in the Age of Digital Transformation.” The report expresses interest in a potential CBDC that is “identity-verified,” and solicits public comment through May 20, 2022.
You can read the bill in its entirety here.