US House Financial Services Committee Advances Bill to Block Digital Dollar Launch

The United States House Financial Services Committee is going forward with the legislative measures aimed at controlling the issuance of a digital dollar.

Chairman Patrick McHenry recently announced that the Committee has scheduled a markup session for two crucial bills related to the potential digital dollar. 

A markup is a pivotal stage where lawmakers discuss the intricate details of a bill before it progresses to the House floor, marking an essential milestone in the legislative process.

Digital Dollar Prevention Act Seeks to Restrict Fed from Issuing CBDC

One of the key bills under consideration is the Digital Dollar Pilot Prevention Act, designated as H.R. 3712. 

This legislation, introduced by Representative Alex Mooney in May, seeks to restrict the Federal Reserve from launching pilot programs to test CBDCs without prior approval from Congress.

The move comes in response to recent developments where the Federal Reserve, while not confirming its decision to issue a CBDC, has indicated its readiness to proceed with the issuance only under the framework of an authorizing law. 

Despite this cautious stance, the Federal Reserve of San Francisco has been actively recruiting technical experts for a CBDC project, suggesting that the digital dollar remains a topic of serious consideration.

The second piece of legislation involves an amendment to the Federal Reserve Act. This amendment would prohibit Federal Reserve banks from offering specific products or services directly to individuals. 

It also includes provisions that restrict the use of CBDCs for monetary policy purposes and other unspecified objectives.

The proposed amendment states, “A Federal Reserve bank shall not offer a central bank digital currency, or any digital asset that is substantially similar under any other name or label, indirectly to an individual through a financial institution or other intermediary.”

CBDC Becomes a Point of Debate Among Presidential Candidates 

The potential implementation of a digital dollar has generated a mix of opinions within the United States. Notably, presidential candidates Robert F. Kennedy Jr. and Ron DeSantis have publicly expressed concerns about the establishment of a CBDC, citing apprehensions regarding financial privacy.

On the other hand, proponents of CBDCs argue that they could strengthen the position of the US dollar on the global stage and further foster the adoption of cryptocurrencies. 

Over a 100 countries are currently working on CBDC projects in some capacity. China has already successfully piloted its digital yuan in many cities.