U.S. Senator Ted Cruz (R-TX) on Tuesday introduced legislation to prohibit the Federal Reserve from developing a central bank digital currency (CBDC) in an effort to prevent the federal government from using such a currency as a “financial surveillance tool.”
Sen. Cruz is a Ranking Member of the Senate Committee on Commerce, Science, and Transportation.
“As countries like China develop CBDCs that omit the benefits and protections of cash, as well as the control and security of many existing digital cryptocurrencies, it is more important than ever to ensure the United States’ digital currency policy protects financial privacy, maintains the dollar’s dominance, and cultivates innovation,” a press release from Cruz’ office reads.
“CBDCs that fail to adhere to these three basic principles could enable an entity like the Federal Reserve to mobilize itself into a retail bank, collect personally identifiable information on users, and track their transactions indefinitely. It is important to note that while the Fed does not, and should not, have the authority to offer retail bank accounts, it is already looking into what establishing a digital currency would look like,” the release goes on to say.
The Texas senator introduced the legislation, saying, “The federal government has no authority to unilaterally establish a central bank currency. This bill goes a long way in making sure big government doesn’t attempt to centralize or control cryptocurrency and instead, allows it to thrive in the United States.”
“We should be empowering entrepreneurs, enabling innovation, and increasing individual freedom—not stifling it,” he added.
CBDCs are different from decentralized digital currencies like Bitcoin because they are “issued and backed by a government entity and transact on a centralized, permissioned blockchain,” according to the press release.
“Not only would this CBDC model centralize Americans’ financial information, leaving it vulnerable to attack, it could be used as direct surveillance tool into the private transactions of Americans,” the release continues.
His bill is cosponsored by Sens. Braun (R-IN) and Grassley (R-IA).
