Texas Senator Ted Cruz on Wednesday introduced companion legislation to the U.S. Senate for Minnesota Rep. Tom Emmer’s bill to prevent the Federal Reserve from issuing central bank digital currency or CBDC directly to individuals, Emmer announced. Emmer introduced the bill to the House of Representatives on 18 January. Cruz’s fellow Republican legislation could potentially speed up the bill’s passage or rejection by allowing it to be considered in both houses of Congress at the same time.
Emmer, co-chair of the Congressional Blockchain Caucus, motivated his bill with concerns that a retail CBDC that forces consumers to open accounts with the Federal Reserve Bank could “be used as a surveillance tool that Americans should never tolerate from their own government.” to the deputy. Emmer said in January,
“Requiring users to open an account with the Fed to access the US CBDC would put the Fed on a treacherous path, akin to China’s digital authoritarianism.”
He also said that centralizing consumer financial information would create security concerns.
The Fed is not authorized to open accounts for individuals. In January, he published a policy paper on the CBDC that discussed disclosure issues at length, noting the need to balance personal privacy with the transparency needed to deter criminal activity. The paper found that the most appropriate form of US CBDC would be intermediation, meaning “the private sector will offer accounts or digital wallets to facilitate the management of CBDC assets and payments.”
The mediation will allow the creation of a CBDC without changing the powers of the Fed. It would also place the responsibility for identity verification, another important quality of a CBDC listed in the document, on the private sector financial services provider. The Fed document states that “the Federal Reserve does not intend to proceed with issuing a CBDC without explicit support from the executive branch and Congress, ideally in the form of specific enabling legislation.”
Cruz’s bill follows the Democratic Party’s proposal Monday in the House of Representatives to create an electronic non-blockchain version of the dollar to be issued by the Treasury Department instead of the Fed. This e-currency will be device based, not account based.