House passes bill to limit Fed’s CBDC authority

The U.S. House of Representatives approved a bill on Thursday that requires the Federal Reserve to obtain congressional approval before issuing a central bank digital currency (CBDC).

The CBDC Anti-Surveillance State Act, passed with a 216-192 vote, aims to safeguard financial privacy and prevent government overreach.

The bipartisan support for the bill reflects concerns over privacy and the potential for government surveillance through digital currencies.

The bill, known as H.R. 5403, seeks to amend the Federal Reserve Act, barring the Fed from providing direct consumer services or leveraging CBDCs for monetary policy without Congress’s explicit consent.

The House’s decision marks a significant moment in crypto-focused legislative activity, with this being the third crypto-related bill passed in May.

The debate around the bill revealed a split between Republican worries about financial surveillance and Democratic interests in fostering innovation and maintaining the dollar’s international status.

Proponents of the bill, including House Financial Services Committee Chairman Patrick McHenry, have pointed to foreign examples, such as China’s use of CBDCs for citizen monitoring, to justify the need for strict regulations.

According to the Atlantic Council, at least 134 countries and currency unions are exploring a CBDC. Three of them have launched and 36 of them are running pilot trials.

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