Senators in the United States are once again targeting the possibility of a digital currency issued by the central bank linked to the dollar.
Yesterday, a group of Republican legislators, led by Ted Cruz, introduced the CBDC Anti-Surveillance State Act. Bill Hagerty, Rick Scott, Ted Budd, and Mike Braun were also among those who co-sponsored the bill.
The proposal is straightforward. It includes a revision to the Federal Reserve Act stating that no Federal Reserve bank can provide products or services to individuals, hold individual accounts, or create a central bank digital currency or similar digital assets for individuals.
The following portions explicitly prevent the Federal Reserve from utilising a CBDC in any way, whether directly or indirectly, to conduct monetary policy.
In the final section of the Act, it is made clear that existing cryptocurrency stablecoin issuers are exempt from all proposed bans.
This Act and its amendments will not affect dollar coin issuers like Tether and Circle as long as the dollar-denominated currency remains open, permissionless, and private, and upholds the privacy protections of US coins and physical currency.
Texas Senator Ted Cruz stated in a press release that Congress needs to make it clear that the Federal Reserve does not have the authority to introduce a CBDC, as the Biden administration is eager to violate our freedom and invade citizens’ privacy by monitoring their spending behaviours.
Senators Battle Over CBDCs and DAMLA
Senator Elizabeth Warren’s DAAMLA legislation, aimed at combating money laundering, was first proposed in 2022. Ever since its introduction, the senator has been tirelessly working to garner support in Congress for its passage.
Critics such as the Chamber of Digital Commerce (CDC), a US organisation supporting cryptocurrency, argue that her actions are jeopardising the entire field with overly strict and unrealistic reporting mandates for crypto miners and validators.
The discussion surrounding DAAMLA has recently gained momentum, mirroring the ongoing debate over CBDCs, as cryptocurrencies take centre stage in the current Presidential election.
The Blockchain Association, a lobbying group based in Washington, has once again reached out to the House Financial Services Committee and Senate Banking Committee with their second letter, addressing their worries regarding DAAMLA.
80 signatories, including numerous ex-military, law enforcement, and intelligence personnel, were drawn to the letter. In November of the previous year, a similar letter had only managed to gather 40 signatories.
US Congressman French Hill, chair of the House Financial Services Subcommittee on Digital Assets, Financial Technology, and Inclusion, argued that imposing stricter reporting rules on miners and validators is unnecessary because they play a crucial role in operating blockchain networks rather than interacting with customers.
Frequently Asked Questions:
What does the proposal of the CBDC Anti-Surveillance State Act by Republican Senators entail?
Republican Senators Ted Cruz, Bill Hagerty, Rick Scott, Ted Budd, and Mike Braun have introduced the CBDC Anti-Surveillance State Act. This proposed legislation seeks to modify the Federal Reserve Act by specifically preventing the Federal Reserve from distributing CBDCs or comparable digital currencies to individual citizens.
How exactly does the proposed Act change the Federal Reserve Act?
The revised Act has a new provision that prohibits Federal Reserve banks from providing services or products to individual consumers, managing their accounts, or creating Central Bank Digital Currencies (CBDCs). It also restricts the Fed from utilizing CBDCs as a tool for monetary policy or issuing them indirectly.
Will the Act impact stablecoin issuers such as Tether and Circle that are already in operation?
The Act specifically excludes any dollar-denominated currency that meets certain criteria from its applicability. This type of currency must be open, permissionless, and private, and must fully protect the privacy rights of United States coins and physical currency. This exception covers current stablecoin issuers in the cryptocurrency industry.
What is the reason behind the resistance from Republican Senators towards the adoption of CBDC?
Senator Ted Cruz believes that the resistance stems from fears of the Biden administration violating the privacy and freedoms of citizens by monitoring their financial transactions. These senators insist that it is essential for Congress to specify that the Federal Reserve cannot introduce a Central Bank Digital Currency (CBDC).
In what way is Senator Elizabeth Warren’s DAAMLA legislation connected to the ongoing debate about Central Bank Digital Currencies (CBDCs)?
The discussion surrounding CBDCs is just one aspect of the larger discourse on digital assets. Senator Elizabeth Warren’s DAAMLA bill, which centres on preventing money laundering, has sparked controversy as well. The focus on both CBDCs and DAAMLA has heightened, with cryptocurrency emerging as a significant issue in the ongoing Presidential campaign.
The Blockchain Association has raised certain issues regarding DAAMLA.
The Washington lobbying organization, Blockchain Association, has voiced their apprehensions about DAAMLA, specifically the strict transaction reporting rules that have been placed on cryptocurrency miners and validators. They believe that these requirements could present practical difficulties and potentially harm the industry.
In what ways has Congressman French Hill highlighted the difficulties that stricter reporting requirements pose for miners/validators?
Chairman of the House Financial Services Subcommittee on Digital Assets, Financial Technology, and Inclusion, Congressman French Hill, emphasized the lack of logic in imposing more stringent reporting rules on miners/validators. He argued that these individuals do not have direct interactions with customers but instead offer an essential service for the functioning of blockchain networks.
In what way does the CBDC Anti-Surveillance State Act tackle the issue of privacy during the implementation of CBDC?
The disclaimer in The Act ensures that current cryptocurrency stablecoin issuers are exempt from the proposed bans, preserving the privacy protections of US coins and physical currency for open, permissionless, and private dollar-denominated currencies.
What is the Chamber of Digital Commerce’s stance on Senator Elizabeth Warren’s DAAMLA legislation?
Senator Elizabeth Warren’s DAAMLA legislation is being challenged by the Chamber of Digital Commerce (CDC), which believes that the transaction reporting obligations it places on crypto miners and validators are overly burdensome and unworkable. The CDC warns that these requirements have the potential to harm the entire cryptocurrency sector.
Why has the discussion surrounding Central Bank Digital Currencies and Distributed Autonomous Asset Management Ledger Applications become a key issue in the Presidential campaign?
The Presidential race has brought attention to both the debate surrounding CBDCs and Senator Elizabeth Warren’s DAAMLA legislation. These digital assets are becoming a significant factor in financial policy, sparking debates and conflicts among politicians and industry players.
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