US Senator Ted Cruz has introduced companion legislation to a January 2022 bill drafted by Representative Tom Emmer, which prohibits the Federal Reserve (Fed) from issuing a central bank digital currency (CBDC) directly to individuals.
The legislation bans the Fed from developing a direct-to-consumer CBDC that “could be used as a financial surveillance tool by the federal government, similar to what is currently happening in China,” Emmer’s office said in a statement.
“The bill aims to maintain the dollar’s dominance without competing with the private sector,” it said.
According to Cruz’s bill,
‘‘No Federal reserve bank may offer products or services directly to an individual, maintain an account on behalf of an individual, or issue a central bank digital currency directly to an individual.”
The senator said in a statement that his bill was designed to make ‘‘sure big government” does not try to centralize and control cryptoassets “so that it can continue to thrive and prosper in the United States.” He added that “we should be empowering entrepreneurs, enabling innovation, and increasing individual freedom—not stifling it.”
Cruz and Emmer are both members of the Republican Party, representing the states of Texas and Minnesota, respectively.
Commenting on his party colleagues’ initiative, Emmer said he was “glad” Cruz has agreed to offer “a Senate companion to my legislation limiting the Fed’s authorities,” adding:
“The Fed must only craft a CBDC framework that is open, permissionless and private.”
This said, some crypto industry observers are not sharing the representative’s enthusiasm for the draft legislation.
John Carvalho, CEO of crypto software provider Synonym, remarked that,
“Nothing centrally issued can be permissionless.”
“A cynical interpretation might note how this mandates that any cantillon-esque upside of seigniorage/issance must be experienced directly by the government alone,” tweeted user Travis.web1. “And yet, done in the name of Bitcoin.”
Tascha Che, the founder of audio content business Soundwise, commented that banning the Fed from allocating CBDC to individuals was “the stupidest plan politicians backed by crypto interests ever came up with.”
“Gov-run digital money is free marketing for crypto, expanding awareness & making the latter look better in comparison. Expand the pie & bigger opportunities for all,” she said.
The latest development comes as crypto executives and investors are reportedly gearing to launch a well-funded effort to elect a number of crypto supporters to Congress in the USA’s forthcoming midterm elections in what could become the industry’s first major foray into national politics, The Washington Post reported.