Texas Senator Ted Cruz, Ranking Member of the Senate Committee on Commerce, Science, and Transportation, has introduced legislation to prohibit the Federal Reserve from developing a direct-to-consumer central bank digital currency (CBDC), citing concerns over financial privacy and government surveillance.
Cruz’s bill, which was co-sponsored by Sens. Braun of Indiana and Grassley of Iowa, aims to protect the financial privacy of Americans, maintain the dollar’s dominance, and cultivate innovation in digital currencies.
According to Cruz, CBDCs that do not adhere to these basic principles could allow the Federal Reserve to collect personally identifiable information on users, track their transactions indefinitely, and mobilize itself into a retail bank, putting Americans’ financial information at risk.
CBDCs, unlike decentralized digital currencies like Bitcoin, are issued and backed by a government entity and transact on a centralized, permissioned blockchain. This centralization could leave Americans’ financial information vulnerable to attack and be used as a direct surveillance tool into the private transactions of Americans.
The bill comes at a time when other countries, like China, are developing their own CBDCs. The Senator emphasized the importance of ensuring that the United States’ digital currency policy protects financial privacy, maintains the dollar’s dominance, and cultivates innovation.
Cruz stated that the federal government has no authority to establish a central bank currency unilaterally and that the bill would prevent the government from centralizing or controlling cryptocurrency, allowing it to thrive in the United States. Instead, he believes that the government should be empowering entrepreneurs, enabling innovation, and increasing individual freedom rather than stifling it.
The bill has raised questions over the Federal Reserve’s CBDC ambitions, and it remains to be seen how the legislation will progress in Congress. However, the introduction of this bill highlights the growing concerns over government surveillance and privacy in the digital currency space.