US House of Representatives pass Republican-led anti-CBDC bill along partisan lines

The House of Representatives drew partisan lines in a vote to pass a Republican-led bill blocking a central bank digital currency. 

Lawmakers voted 216 to 192, with 213 Republicans in favor of the CBDC Anti-Surveillance State Act. Three Democrats voted for the bill, while 192 Democrats opposed it.

House Majority Whip Rep. Tom Emmer, R-Minn., introduced the bill in September 2023 to block the Federal Reserve Bank from issuing such an asset to individuals. CBDCs are a cryptocurrency issued and regulated by a country's central bank.

Emmer’s primary motivations stem from worries over broad monitoring of financial transactions. The lawmaker previously stated that CBDCs are “government-controlled programmable money that, if not designed to emulate cash, could give the federal government the ability to surveil Americans' transactions and choke out politically unpopular activity."

The bill advanced out of the House Financial Services Committee in September with heavy criticism from Democrats. House Financial Services Committee Ranking Democrat Maxine Waters, D-Calif., called the bill banning CBDCs " anti-innovation ."

The Fed's stance

The Federal Reserve has insisted that it was "nowhere near" making a recommendation or even adopting a CBDC. Fed Chair Jerome Powell has told lawmakers that if the central bank were to adopt a CBDC, it would be done through the banking system.

"The last thing we would want — we, the Federal Reserve, would want — would be to have individual accounts for all Americans, or any Americans for that matter," Powell said in March. "Only banks have accounts at the Fed and that's the way we're going to keep it."

The Federal Reserve has been exploring the possibility of issuing a CBDC and last year released a report examining the pros and cons of a CBDC, but central bank officials have thrown cold water on the idea in the past. Powell has also said the Fed won't issue a CBDC without congressional approval.

The Heritage Foundation, a conservative organization, has pressured lawmakers to pass a CBDC bill and, in February, urged them to cosponsor it, warning that if they don't, their score on the Heritage Action Scorecard "will be negatively impacted."

Sen. Ted Cruz, R-Texas, has also introduced a companion bill in the Senate to ban CBDCs, which has been endorsed by the Heritage Foundation and the Blockchain Association, among others. However, a bill to block CBDCs is unlikely to get very far in the Senate, where Democrats hold a majority. 

Investment bank TD Cowen said the House's anti-CBDC bill could have broader implications. 

"We view such a ban as negative for the global dominance of U.S. banks and for the global role of the U.S. dollar," the investment bank said in a note on Thursday. "This is because the ban would apply to wholesale as well as consumer use. That could give the Euro or other currencies that are digitalized an edge in being used for global trade as stable coin digital dollars could lose value if there is a redemption run while a digital Euro would not face that threat."