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U.S. House of Representatives Blocks Federal Reserve’s Digital Dollar Initiative

The U.S. House of Representatives voted to block the Federal Reserve from developing a central bank digital currency (CBDC), while also passing a crypto market structure bill, highlighting a divided stance on financial innovation and control.


The US House of representatives passed a bill blocking the Fed from developing a Digital Dollar.
Credit: Foretoken Media 2024

WASHINGTON, D.C. — In a move largely divided along party lines, the U.S. House of Representatives voted to prevent the Federal Reserve from issuing a central bank digital currency (CBDC). The CBDC Anti-Surveillance State Act, spearheaded by Majority Whip Tom Emmer (R-Minn.), aims to halt the central bank’s efforts towards developing a digital dollar.


Digital Dollar: Concerns Over Control and Privacy


Republicans expressed significant concerns that a U.S. CBDC could lead to unprecedented governmental control over citizens’ financial transactions and privacy. Emmer, the leading proponent of the bill, stated that a digital dollar could be a tool for surveillance, posing a threat to American freedoms.


“The introduction of a central bank digital currency could fundamentally change the relationship between Americans and their government, giving unprecedented power to monitor and control.”

Democrats Advocate for Innovation and Research


On the other side, Democrats argued that the concerns about control and surveillance were overstated. They highlighted that banning the CBDC would hinder public sector innovation and research, preventing the U.S. from keeping pace with other countries exploring digital currencies. One Democrat representative against the measure commented:


“Blocking the development of a digital dollar is a step backward for financial innovation and economic progress [...] We need to ensure our financial systems evolve to meet future challenges.”

The vote saw 213 Republicans and three Democrats in favor of the bill, while 192 Democrats opposed it. This division reflects the polarized views on the potential risks and benefits of a CBDC.


Crypto Industry Celebrates Passage of FIT21


Interestingly, the House vote on the CBDC bill came just a day after a more bipartisan decision on the Financial Innovation and Technology for the 21st Century Act (FIT21). This crypto market structure bill aims to give the U.S. Commodity Futures Trading Commission (CFTC) greater authority over digital assets’ spot markets and define the role of the Securities and Exchange Commission (SEC) in the sector.


The FIT21 Act saw 71 Democrats join 208 Republicans in support, marking a significant moment for the crypto industry. Kristin Smith, head of the Blockchain Association, hailed the vote as a watershed moment, indicating growing Congressional recognition of the sector’s importance.


Uncertain Future in the Senate


Despite these legislative advancements in the House, both the anti-CBDC bill and the FIT21 Act face uncertain futures in the Senate. Without corresponding support from the other chamber of Congress, both pieces of legislation may stall.


“The future of these bills in the Senate remains unclear, but their passage in the House is a crucial first step,” said Nicole Valentine, director of FinTech at the Milken Institute.

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