Recently, the U.S. House of Representatives passed an anti-CBDC (Central Bank Digital Currency) bill, which has been met with widespread applause within the cryptocurrency community. However, a closer examination reveals that this legislative action is more political theater than a substantive change. The Federal Reserve already lacked the explicit statutory authority to issue a CBDC directly to individuals or to use a CBDC for monetary policy, and this bill merely clarifies the existing situation.
Legislative Developments and Their Impact
While the passing of this bill might appear as a victory for those opposed to CBDCs, it is essential to understand that the recent legislative changes may actually accelerate the adoption of CBDCs through a different route. Much of the new legislation empowers banks, granting them greater control over the custody of cryptocurrencies and stablecoins.
Banks and Stablecoins: A Potential Backdoor for CBDCs
One critical aspect of the new legislation is the enhanced authority given to banks to issue stablecoins. These stablecoins, pegged to the U.S. dollar, could function similarly to digital cash, facilitating transactions, savings, and other financial activities. While the Federal Reserve would not directly issue these stablecoins, it could provide the necessary infrastructure support, such as settlement services, liquidity assurance, and integration into the broader financial system.
This arrangement allows the Federal Reserve to exert significant influence over the digital currency ecosystem indirectly. Although H.R. 5403 specifically prohibits the Federal Reserve from issuing CBDCs directly or indirectly, the issuance of stablecoins by banks does not fall under this definition. Consequently, this could create a parallel system that achieves many of the same goals as a CBDC, without technically violating the bill.
Privacy and Surveillance Concerns
The issuance of stablecoins by banks could also raise similar concerns about privacy and surveillance that are associated with CBDCs. Depending on how transaction data is managed and accessed by regulatory authorities, these stablecoins could still pose significant privacy risks. The infrastructure and regulatory support provided by the Federal Reserve could lead to a scenario where the control over the digital currency ecosystem mirrors that of a CBDC.
It is important to note that in times of emergency, Congress could potentially authorize the issuance of a CBDC regardless of existing prohibitions, drawing parallels to historical legislative actions like the Patriot Act, TARP, and the CARES Act. This possibility underscores the precarious nature of relying on legislative measures alone to prevent the introduction of CBDCs.
The Broader Financial System: A Dystopian Reality
While the focus is on preventing CBDCs, it is crucial to acknowledge the dystopian elements already present in the current financial system. Banks today have considerable power to censor individuals, change fees, sell and share customer data, and alter terms of service without consent. These actions are facilitated by sophisticated AI systems and regulatory partnerships, such as those with the IRS.
The current system’s ability to control and manipulate financial activity highlights the underlying issues that CBDCs would only exacerbate. The anti-CBDC bill, therefore, can be seen as political theater, offering no real solutions to the systemic problems.
The Only Way Forward
The passing of H.R. 5403 is a reminder that legislative actions often fall short of addressing the root causes of financial control and surveillance. True freedom from these systemic issues might require more radical steps, such as moving away from using the dollar altogether. The belief is that non-compliance and the adoption of alternative financial systems, such as cryptocurrencies, could pave the way for a more decentralized and equitable financial future.
While the anti-CBDC bill may seem like a victory, it is essential to remain vigilant about the broader legislative and regulatory landscape. The empowerment of banks to issue stablecoins and the potential for emergency legislative measures highlight the complexity and ongoing challenges in the fight for financial privacy and freedom.
The current system, with its inherent dystopian characteristics, cannot be saved by Congress or the President. Instead, a fundamental shift in how we engage with money and financial systems might be the only viable path forward.
Author Profile
- Lucy Walker covers finance, health and beauty since 2014. She has been writing for various online publications.
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