If crypto is a gift from heaven, CBDCs are an offering from hell.
Amid the chaos in the lead-up to the 2024 Presidential Election, US congressional discourse has been toing and froing at the idea of implementing Central Bank Digital Currencies (CBDCs) across the ‘land of the free’.
With such period also being met with continuous DeFi clampdowns from the U.S. Securities and Exchange Commission (SEC), crypto has most-certainly taken a beating over the last few months, however per activity from the Fed earlier this week, a crypto win has finally been bestowed upon us.
This win comes by way of the proposed ‘CBDC Anti-Surveillance State Act,’ which was passed in the House Financial Services Committee on Wednesday.
Such news was publicised by the bill’s author Tom Emmer (Majority Whip of the United States House of Representatives), who stated that it’ll now face a congressional vote after garnering support from 60 members of Congress.
This article will explore the concept of CBDCs, and how the ‘CBDC Anti-Surveillance State Act’ intends to combat its totalitarian implementation in the USA.
What Are CBDCs?
CBDCs are government-issued digital currencies that are developed on government-controlled centralised blockchains. For many - and in wake of a mass shift towards card and contactless payments - CBDCs are seen as the pinnacle (or ‘end game’) solution of a cashless society.
CBDCs would come to fruition as the only legal tender of an adopting nation, meaning the entirety of an economy’s transactions would revolve around these government-issued (and trackable) digital coins… which, for anyone with any desire of liberty, is a very disturbing prospect.
For example, CBDCs issued by America’s Federal Reserve would essentially manifest as digital US Dollars (however not the decentralised stablecoin type), whilst those issued by the UK’s Bank of England would be digital pounds - and whilst on the topic, it’s also important to note that UK Prime Minister Rishi Sunak is another CBDC bull.
Given their blockchain nature, many of the potential benefits of CBDCs are the same as those of DeFi - i.e. cheap and speedy domestic/cross-border transactions, which could then be useful when governments deliver payments such as stimulus cheques etc.
On the flip side, CBDCs also come with a plethora of tyrannical features, such as the fact that governments would be able to freeze or ban people’s bank accounts easier than ever, reverse transactions as they please, and have access to unprecedented amounts of financial data.
Additionally, CBDCs can be taxed in a way that’ll only allow them to be used for purchasing particular goods, which in turn would prohibit them from being used to purchase other goods (such as competing assets like Bitcoin).
On the personal side of things, with people’s money being stored in a singular digital wallet, CBDC adoption would see citizens face greater risks of experiencing total losses of funds, as this could take place through just one simple on-chain hack.
On the economy side of things, CBDCs aren’t exempt from inflationary effects, meaning the purchasing power struggles we face today would still be a possibility within a world of centralised digital currencies.
As of June 2023, 11 countries have adopted CBDCs (many of which being Caribbean tax havens), with 53 being in advanced planning stages, and additional 46 still researching the topic.
As for China, the communist state began developing its own CBDC called the ‘digital yuan’ (a.k.a. e-CNY) back in 2014, with a pilot version launching in 2020.
Worryingly, countries that make up over 90% of the world’s economy are interested in exploring the dystopian concept, with these explorations leading to the idea of digital ‘bridges’ wherein countries’ respective CBDCs could be connected to one another.
As is evident, CBDCs essentially serve as centralised cryptos that hand power back in favour of governments and sponsoring banks. Here, not only do they fly in the face of America’s ever-proud ‘land of the free’ alias, but they also warrant even bigger concerns if applied across jurisdictions that frequently dabble in corruption and human rights violations.
However, ultimately, if citizens were to actually possess authentic trust in their respective governments and centralised authorities, many of these worries would become completely redundant.
The ‘CBDC Anti-Surveillance State Act’ Progression
Put simply, the ‘CBDC Anti-Surveillance State Act’ is aimed at preventing ‘unelected bureaucrats in Washington’ from completely renovating the traditional financial system by issuing wholly-centralised CBDCs.
The bill contains provisions that would inhibit the Federal Reserve from issuing any form of CBDC to American citizens, as well as prevent the Fed from using CBDCs within monetary policy frameworks.
Further, per a press release from Emmer’s own website:
“The CBDC Anti-Surveillance State Act prevents the Federal Reserve from issuing a CBDC directly to individuals, ensuring the Fed cannot mobilize into a retail bank able to collect personal financial information on Americans. It prohibits the Federal Reserve from indirectly issuing a CBDC to individuals through an intermediary, preventing the Federal Reserve from launching a retail CBDC via our two-tier financial system. Furthermore, the legislation makes it clear that the Federal Reserve and the U.S. Treasury lack the authority to issue a CBDC without Congressional authorization. The legislation prohibits the Federal Reserve from using any CBDC to implement monetary policy, ensuring the Federal Reserve cannot use a CBDC as a tool to control the American economy. Finally, the legislation aims to protect innovation and the development of any future digital cash that maintains the privacy protections of cash”.
Per more words from the pioneer behind it all, CBDCs can also be attributed as a direct threat to American values:
“American values. American values. This is what the future global digital economy needs. If not open, permissionless, and private — just like cash — a central bank digital currency is nothing more than a CCP [Chinese Communist Party]-style surveillance tool that can be weaponized to oppress the American way of life.”- Tom Emmer, Majority Whip of the United States House of Representatives.
If not open, permissionless, and private – like cash – a CBDC is nothing more than a CCP-style surveillance tool that can be weaponized to oppress the American way of life.
— Tom Emmer (@GOPMajorityWhip) September 13, 2023
We’re not going to let that happen – not on House Republicans’ watch. pic.twitter.com/XVq6ySu0Xc
As further suggested by Emmer’s statement “if China embraces it, you know it’s something worth standing against in this country,” CBDCs can also be seen as a direct danger to capitalism - i.e. the fundamental backbone behind ‘the American dream’.
Formerly introduced to Congress in February 2023 before being dropped, Emmer and 60 of his Republican colleagues/co-sponsors reintroduced the bill on September 14th (meaning it’s been a very productive week in the fight-back against ridiculously-centralised finance). As for the future, it’s now faced with a vote in Congress.
With regards to what this means for crypto, the progression of the ‘CBDC Anti-Surveillance State Act’ in Congress is nothing but bullish news, as by virtue, DeFi would find it harder to thrive (or perhaps impossible to exist) within a world governed by CBDCs.
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This article is intended for educational purposes and is not financial advice.
