The House passed a bill Thursday barring the Federal Reserve from issuing a central bank digital currency (CBDC) unless it has explicit authorization from Congress.
The CBDC Anti-Surveillance State Act passed the chamber by a 216-192 vote, almost entirely along partisan lines.
The move is largely symbolic, as the Fed has not put forward plans to issue a CBDC and has repeatedly emphasized that it would not move forward without congressional approval.
Even so, Republicans, including former President Trump, have voiced concerns about potential government misuse of a CBDC.
A CBDC is a digital version of a currency issued by a central bank. In the U.S., this would entail the Fed issuing a digital dollar that could be used the same way as a regular dollar.
House Majority Whip Tom Emmer (R-Minn.), who introduced the legislation, has argued that a digital dollar “could give the federal government the ability to surveil Americans’ transactions and choke out politically unpopular activity.”
Emmer’s views on the issue track closely with those of Trump, who has vowed to block the creation of a CBDC if reelected.
“As your president, I will never allow the creation of a central bank digital currency,” Trump, who is now the presumptive GOP nominee, said at a rally in New Hampshire in January.
“Such a currency would give a federal government, our federal government, the absolute control over your money,” he added at the time. “They could take your money. You wouldn’t even know it was gone. This would be a dangerous threat to freedom.”
However, Rep. Maxine Waters (D-Calif.), ranking member of the House Financial Services Committee, argued on the House floor Thursday that banning CBDCs “directly threatens the primacy of the U.S. dollar.”
“There is nothing inherent about a CBDC that would compromise privacy — that is a design feature that is within our control,” she added. “This bill is, instead, an attempt to stifle U.S. innovation and competitiveness abroad, and to undermine the federal agency that is the most critical to fighting inflation.”