[Congressional Record Volume 170, Number 90 (Thursday, May 23, 2024)]
[House]
[Pages H3496-H3506]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    CBDC ANTI-SURVEILLANCE STATE ACT


                             General Leave

  Mr. McHENRY. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days in which to revise and extend their remarks 
and include extraneous material on the bill, H.R. 5403.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from North Carolina?
  There was no objection.
  The SPEAKER pro tempore (Mr. Self). Pursuant to House Resolution 1243 
and rule XVIII, the Chair declares the House in the Committee of the 
Whole House on the state of the Union for the consideration of the 
bill, H.R. 5403.

[[Page H3497]]

  The Chair appoints the gentleman from Louisiana (Mr. Higgins) to 
preside over the Committee of the Whole.

                              {time}  1129


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the state of the Union for the consideration of the bill 
(H.R. 5403) to amend the Federal Reserve Act to prohibit the Federal 
reserve banks from offering certain products or services directly to an 
individual, to prohibit the use of central bank digital currency for 
monetary policy, and for other purposes, with Mr. Higgins of Louisiana 
in the chair.
  The Clerk read the title of the bill.
  The CHAIR. Pursuant to the rule, the bill is considered read the 
first time.
  General debate shall be confined to the bill and amendments specified 
in section 2 of House Resolution 1243 and shall not exceed 1 hour 
equally divided and controlled by the chair and ranking minority member 
of the Committee on Financial Services or their respective designees.
  The gentleman from North Carolina (Mr. McHenry) and the gentlewoman 
from California (Ms. Waters) each will control 30 minutes.
  The Chair recognizes the gentleman from North Carolina (Mr. McHenry).

                              {time}  1130

  Mr. McHENRY. Mr. Chairman, I yield myself such time as I may consume.
  Today we are considering Majority Whip   Tom Emmer's H.R. 5403, the 
CBDC Anti-Surveillance State Act. This bill is straightforward. It 
halts unelected bureaucrats from issuing a central bank digital 
currency, or CBDC.
  We believe that a central bank digital currency would be detrimental 
to Americans' rights to financial privacy.
  We have previously seen examples of governments around the world 
weaponizing the financial system against their own citizens.
  For example, the Chinese Communist Party used a central bank digital 
currency to track spending habits of its citizens.
  This data is being used to create a social credit system that rewards 
or punishes people based on their behavior.
  This type of financial surveillance has no place in the United 
States. After all, we have the Bill of Rights, and they do not.
  Concerningly, it appears that the current administration does not 
agree that financial surveillance has no place in the United States.
  In 2022, the White House issued an executive order pushing for CBDC 
research and development. The corresponding report and the data related 
to the executive order the President issued does nothing to ease the 
concerns about financial snooping on citizens.
  This is why the CBDC Anti-Surveillance State Act is necessary. The 
bill requires authorizing legislation from Congress for the issuance of 
any central bank digital currency, ensuring that it must reflect 
American values and civil liberties protections.
  If not open, permissionless, and private, a central bank digital 
currency is no more than a CCP-style surveillance tool waiting to be 
weaponized.
  I thank my friend, Whip Emmer, for his work on spearheading this 
legislation, along with Representatives Hill and Mooney for their 
leadership on this issue. I also thank Representative Davidson for his 
commitment to financial privacy in a larger context.
  I urge my colleagues to support this commonsense legislation, and I 
reserve the balance of my time.
  Ms. WATERS. Madam Chair, I yield myself such time as I may consume.
  Madam Chair, I rise in strong opposition to H.R. 5403, which would 
not only prohibit the issuance of a central bank digital currency, or 
CBDC, but would go so far as to prohibit the Federal Reserve from 
holding bank reserves that are critical to operating payment systems 
and combating inflation.
  Let me start with the harmful implications of the bill's prohibitions 
on the issuance of a CBDC.
  A CBDC is a type of digital asset issued by a country's central bank, 
which in the United States is the Federal Reserve.
  Compared to other digital assets, CBDCs have a greater potential to 
maintain a stable value, garner public trust, and become a viable means 
of payment transactions.
  There are two main types of CBDCs, retail CBDCs that consumers could 
get from the Fed or a financial institution to pay for everyday things 
like a cup of coffee, and wholesale CBDCs that would not be used by 
individual consumers and instead only used for transactions among 
financial institutions and the Fed.
  CBDCs are no longer a remote, futuristic possibility. Madam Chair, 
134 countries and currency unions around the world, representing 98 
percent of global GDP, are currently exploring or implementing a CBDC.
  Some have referred to the development of a CBDC as the next space 
race, but the United States is way behind the curve.
  What is more, there is growing concern that China, which has already 
issued its own CBDC that has been used by hundreds of millions of 
people, will be able to significantly influence the rest of the world's 
CBDC development because the U.S. is so far behind.
  This is especially problematic, given the Chinese CBDC has government 
surveillance baked in while a United States CBDC could be designed to 
protect consumer privacy and other deeply held American values.
  This bill exacerbates these concerns by proposing to make the United 
States the first and only country in the world to ban a CBDC.
  By allowing other countries, especially China, to race ahead of us, 
H.R. 5403 directly threatens the primacy of the United States dollar.
  Today, more than half of all international trade and more than 90 
percent of all foreign exchange transactions are done in dollars. The 
dollar's dominance provides significant benefits to the United States, 
like lower borrowing costs for consumers, lower capital costs for 
United States businesses, and the ability to better implement U.S. 
foreign policy goals.
  In fact, the dollar's widespread use is what makes our sanctions so 
powerful, allowing us to block adversaries like Russia and Iran from 
doing business not just with the United States but with anyone who uses 
the dollar.
  That is why countries, including China and Russia, are trying to 
establish an alternative to the dollar, including developing 
alternative digital currencies so they can more effectively evade 
United States sanctions.
  CBDCs also have the potential to offer benefits compared to United 
States dollars like faster and cheaper transactions.
  If the United States sits on the sidelines as other major economies 
move forward with CBDC development, another digital currency like the 
digital euro could very well become the world's preferred currency for 
international trade.
  If this weren't bad enough, the nonpartisan Congressional Budget 
Office, or CBO, has pointed out that the ban on CBDCs in this bill can 
be interpreted to encompass the Federal Reserve's bank reserves.
  These reserves are instrumental to several core functions of the Fed, 
including their ability to conduct monetary policy.

  This means that H.R. 5403 would undermine the Federal Reserve's set 
of tools needed to ensure our economy does not enter a recession as 
inflation comes down.
  It also means that the bill could disrupt our banking system by 
preventing the Fed from using payment systems like Fedwire to quickly 
move funds between financial institutions.
  While some may think that this is merely a drafting error, it appears 
to be deliberate. During the markup of their bill, Democrats pointed 
out on the record how this overly broad definition of CBDC could harm 
the Fed's broader ability to conduct monetary policy.
  Despite having every opportunity to fix the bill before it was 
considered here today, Republicans have kept the language the same.
  Let's not forget that Donald Trump has made clear his intention to 
undermine the Fed with repeated threats to fire the Fed Chair when he 
was in office, and more recently, with reports that he would want to 
set interest rates from the Oval Office.
  Furthermore, Project 2025, which is an extreme MAGA transition 
playbook for a Trump administration, would abolish the Fed. House 
Republicans

[[Page H3498]]

have already introduced a bill to do just that.
  I urge Members to see this bill for what it is. It is not about 
protecting consumer privacy. After all, our current financial system 
has a number of data privacy shortcomings that this bill would do 
nothing to address.
  Moreover, there is nothing inherent about a CBDC that would 
compromise privacy. That is a design feature that is within our 
control.
  This bill is, instead, an attempt to stifle U.S. innovation and 
competitiveness abroad and to undermine the Federal agency that is the 
most critical to fighting inflation. Unbelievable.
  I urge Members to vote ``no'' on this bill. I reserve the balance of 
my time.
  Mr. McHENRY. Madam Chair, I now yield 5 minutes to the gentleman from 
Minnesota (Mr. Emmer), the majority whip, a great leader in the 
Financial Services Committee and an original actor in the space of 
cryptocurrency.
  Mr. EMMER. Madam Chair, these last 2 weeks have been historic for 
financial innovation in Congress. Adoption of SAB 121, the resolution 
by both Chambers, and bipartisan passage of the Financial Innovation 
and Technology for the 21st Century Act just yesterday, shows that 
digital asset policy is no longer a back-burner issue in Congress. It 
is now front and center, and we are just getting started.
  The policies we have recently debated and adopted are in response to 
an administration that has failed to provide the clarity and guidance 
the budding digital asset industry in the United States has been 
begging for.
  Because of their failures, Congress has voted to reverse incoherent 
regulation and establish new standards that will allow our economy to 
move deeper into the 21st century economy.
  Today, we continue these efforts to once again do what this 
administration has failed to do, and I am proud to have my legislation, 
the CBDC Anti-Surveillance State Act, on the floor for a vote.
  This bill was the first anti-central bank digital currency 
legislative effort introduced in the United States, and for the past 
two Congresses, I have worked with my colleagues to update, improve, 
and grow support for it.
  The bill is simple. It halts the efforts of this administrative state 
under President Biden from issuing a financial surveillance tool that, 
if not done correctly, will fundamentally alter the lives of every 
American.
  Unlike decentralized cryptocurrencies, a CBDC is a digital form of 
sovereign currency that is designed, issued, and monitored by the 
Federal Government.
  It is government controlled, programmable money that, if it is not 
designed to emulate cash, could give the Federal Government the ability 
to surveil and restrict Americans' transactions and monitor every 
aspect of their daily lives.
  This is not hyperbole. We have already seen examples of governments 
developing these types of tools and using them to weaponize their 
financial systems against their citizens.
  In China, the Communist Party employs a CBDC that can be used to 
monitor citizens' spending habits. Closer to home in the Western 
Hemisphere, the Canadian Government demonstrated the power of Federal 
financial surveillance and control when it froze the bank accounts of 
hundreds of truckers protesting the COVID vaccine mandate in 2022.
  It is naive to believe that your government won't weaponize the tools 
it has to control you, so it shouldn't come as any surprise that the 
appetite for financial surveillance can be an attractive proposition 
right here at home.

                              {time}  1145

  In 2023, the White House issued an executive order placing an 
``urgency'' on CBDC research and development, and the agency reports to 
that executive order have made it clear that the Biden administration 
is not only itching to create a CBDC, but they are interested in 
developing and deploying one, potentially undermining the privacy 
rights of every one of our citizens. Congress can't allow this to 
happen.
  My bill ensures the United States digital currency policy remains in 
the hands of the American people, not the administrative state, so that 
any development of digital money will reflect our American values of 
privacy, individual sovereignty, and free market competitiveness.
  This legislation affirms that if the Federal Government seeks to 
create a digital version of the U.S. dollar, they can only do that with 
the explicit authorization of Congress. It doesn't stop them. They can 
do that, but they have got to get authorization from Congress, and they 
have got to make it open, permissionless, and private. Whatever is 
ultimately developed must emulate the core tenets of cash.
  Simply put: any digital currency issued by the government, again, 
must be open, permissionless, and private. It cannot be used in the way 
the Chinese have deployed their digital yuan to build social credit 
scores on their citizens based on their purchases and their behavior. 
These types of tools cannot exist in a free society like ours, and we 
should only accept a digital currency that is consistent with our 
values, American values.
  This is what the future global digital economy needs. If not open, 
permissionless, and private, like cash, a CBDC is nothing more than a 
CCP-style surveillance tool that will ultimately be used to oppress our 
American way of life.
  If China embraces it, you know it is something worth standing 
against.
  We can and will continue to launch our economy deeper into the 
digital age without jeopardizing who we are as Americans, and this bill 
is designed to ensure that that happens.
  I thank the 165 Members of Congress who have joined as cosponsors of 
my legislation, in addition to Chairman McHenry, Chairman Hill, 
Chairman Davidson, and the many others on both sides of the political 
aisle who have worked tirelessly with me and my team to make sure we 
keep the United States the beacon of innovation and global economic 
strength without undermining what makes our Nation so special.
  I urge all of my colleagues to support this legislation.
  Ms. WATERS. Madam Chair, I yield 5 minutes to the gentleman from 
Massachusetts (Mr. Lynch), who is also the ranking member of the 
Subcommittee on Digital Assets, Financial Technology and Inclusion.
  Mr. LYNCH. Madam Chair, I thank the gentlewoman from California for 
yielding.
  As the ranking member of the Subcommittee on Digital Assets, I rise 
in strong opposition to H.R. 5403, the so-called CBDC Anti-Surveillance 
State Act.
  At the expense of U.S. global economic leadership, this misguided 
legislation would effectively prevent the Federal Reserve from 
researching or issuing a central bank digital currency, also known as a 
CBDC.
  Unfortunately, the facts surrounding the development of a central 
bank digital currency have been obscured by disinformation and infected 
by wrongheaded political ideology. Earlier this year, former President 
Trump vowed to protect Americans from tyranny and never allow the 
creation of a central bank digital currency.
  God help us.
  In Congress, Members of the House and Senate have also followed suit, 
introducing bill after bill to block the development and even the 
examination of a central bank digital currency based on unfounded 
claims that it violates user privacy and will be used as a surveillance 
tool by the Federal Government.
  The gentleman is correct when he says that China has developed a CBDC 
and conducts full-spectrum surveillance of their population. That is 
what they do. China is China. There is no Bill of Rights. There is no 
U.S.-like constitution that prohibits their government from doing that. 
They live in a communist regime. They don't have individual rights.
  That is not the case here in the United States. We have the ability 
to require any architecture that was developed for a central bank 
digital currency to preserve the individual rights of citizens in this 
country. This is like saying somebody used a car to rob a bank, so we 
are just going to ban cars because we don't want them to be used in 
that fashion.
  This is a technology. There is an architecture that underlies every 
CBDC. China does use their CBDC to conduct that surveillance, but we 
don't want that to be the dominant model. We

[[Page H3499]]

would like to have the Federal Reserve have the ability to develop a 
CBDC that actually protects the privacy of American citizens.
  In my own congressional district, the Boston Federal Reserve recently 
partnered with the Digital Currency Initiative at MIT on Project 
Hamilton, an initiative to build a potential CBDC whose architecture 
maximizes privacy, cybersecurity, and infrastructure resilience. 
According to researchers, CBDC architecture can serve as a rigorous 
privacy-preserving tool.
  I have also introduced legislation called the ECASH Act which would 
require the incorporation of the same security features associated with 
physical cash, which today is anonymous, into the development of a 
digital dollar. That would also be the goal of a CBDC.
  Currently, there are more than 130 countries, representing 98 percent 
of the global GDP, who are exploring the implementation or going 
forward with the implementation of a central bank digital currency. 
There is a widening gap between the U.S. and its G7 peers, all of whom 
have stronger privacy laws and personal data laws than the United 
States and who are far more advanced in this development of a CBDC.
  This bill would halt research in the U.S., but offshore researchers 
would continue to draw the talent necessary to develop a CBDC to our 
detriment and I think to the detriment of the primacy of the U.S. 
dollar.

  My Republican colleagues often argue that the U.S. cannot afford to 
fall behind in digital currency, but they insist on the U.S. shutting 
down a central bank digital currency before we even begin to explore or 
to research. The best researchers will move to other countries to 
conduct that research.
  Even if we did not want to deploy a central bank digital currency, we 
should want to know what the other 130 countries that are deploying 
central bank digital currencies are doing. We should yearn to 
understand it. We should be exploring the potential of a digital dollar 
to serve as an alternative to existing forms of payment and have 
benefits including instant payment settlement, provide a medium for 
cross-border transactions, and for greater financial inclusion.
  Madam Chair, I urge my colleagues on both sides of the aisle to vote 
against this wrongheaded bill.
  Mr. McHENRY. Madam Chair, I yield 2 minutes to the gentleman from 
Arkansas (Mr. Hill), the chairman of the Subcommittee on Digital 
Assets, Financial Technology and Inclusion, who had a great victory 
yesterday with 71 Democrats voting for his bill.
  Mr. HILL. Madam Chair, I rise in support of the Central Bank Anti-
Surveillance State Act.
  The Constitution and the Federal Reserve Act of 1913 create the 
foundation of our money and our economic policy in this country. 
Article I, Section 8, of the Constitution states that only Congress has 
the authority to coin money and regulate the value of such money.
  Today, Congress is exercising its Article I authority to state 
clearly that the Federal Reserve does not have the authority to create 
a central bank digital currency.
  This shouldn't be controversial. It shouldn't be partisan. We know 
that is the case. We will see how the vote falls today, Madam Chair, 
but this legislation is necessary, as you have heard this morning, 
because we live in a world where government can abuse the tools that 
they have.
  As noted by the whip, Canadian Prime Minister Justin Trudeau was 
freezing bank accounts of people protesting COVID-19 restrictions in 
his country. We read reports from the Select Subcommittee on the 
Weaponization of the Federal Government of how FinCEN, a bureau of the 
Treasury Department, pressured banks to screen private transactions of 
their customers for words like ``MAGA'' or ``Trump'' on behalf of 
Federal law enforcement.
  Is that really the country we want to live in? They even tracked 
people, according to that subcommittee, if you shopped at Bass Pro 
Shops. I shop at Bass Pro Shops all the time in my district.
  This kind of Big Brother-style surveillance of our financial lives by 
the government is alarming to Americans because it represents the 
political targeting of citizens in this country.
  We don't need a retail central bank digital currency. We have a 
payment system that can capitalize on the private sector. For example, 
private sector payment stablecoins are a terrific innovation that will 
become a ubiquitous way for people to transact and expand and enhance 
the dollar dominance of our currency around the world.
  Madam Chair, a vote for this bill is to vote to safeguard our 
freedom, protect our privacy, and preserve the integrity of our 
financial system.
  I urge a ``yes'' vote.
  Ms. WATERS. Madam Chair, I yield myself such time as I may consume.
  I am surprised by my friend Representative French Hill. 
Representatives French Hill and Bill Foster sent Fed Chair Jay Powell a 
letter on CBDCs stating:

       The Federal Reserve, as the central bank of the United 
     States, has the ability and the natural role to develop a 
     national digital currency.
       With the potential for digital currencies to further take 
     on the characteristics and utility of paper money, it may 
     become increasingly imperative that the Federal Reserve take 
     up the project of developing a U.S. dollar digital currency.
       We are concerned that the primacy of the U.S. dollar could 
     be in long-term jeopardy from wide adoption of digital fiat 
     currencies.
       Relying on the private sector to develop digital currencies 
     carries its own risks, including loss of control of monetary 
     policy, as well as the ability to implement and enforce 
     effective anti-money laundering and counterterrorism 
     financing.

  Madam Chair, I yield 5 minutes to the gentleman from California (Mr. 
Sherman), who is also the ranking member of the Subcommittee on Capital 
Markets.
  Mr. SHERMAN. Madam Chair, today the gross hypocrisy of crypto 
advocates is exposed. For several years, they were screaming: Don't 
touch crypto because it is innovative, and innovation is wonderful, and 
innovation shouldn't be stopped and if we don't innovate other 
countries will.
  Today, the crypto forces bring a bill up that has one purpose: to 
block innovation.
  Why do we block innovation? Because there might be a competitive 
payment system to the crypto payment system. In other words, the crypto 
bros need to innovate and create a better payment system, and if they 
face competition, we need a law to stop them.
  This is a bad bill if it did what the authors say it will do. What it 
will actually do is hard to know because of how poorly drafted it is.
  It bans a central bank digital currency or anything that comes close 
to one or anything that is substantially similar. The bill itself is a 
word salad of antigovernment and pro-crypto buzz words.
  How does it define this digital currency that it prohibits? It simply 
says digital money is a direct liability of the Federal Reserve system.
  Well, all our money is a direct liability to the Federal Reserve 
system. It bans that, presumably, if it is electronic, so it bans 20th 
century technology.
  When the Fed buys $100 million of Treasury bills from a large bank, 
do you think that they put it all in armored cars and send it to J.P. 
Morgan? No, it is electronic. They are paying for it with a digital 
liability, a direct liability of the Federal Reserve system.
  This bill, as it is written, not as it is oratorically described, 
would require hundreds of thousands of armored cars if we are going to 
do the business that we have been doing since the 20th century.
  I would ask any judge interpreting this bill to keep in mind not the 
words in the bill, because that would stop 20th century technology and 
all of our major financial transactions, but the purposes of the 
authors.
  What is the purpose? The purpose is that we should not have an 
electronic payment system that does not achieve two purposes: Number 
one, the crypto bros must make a profit; and number two, it has to be a 
system that is effective for drug dealers and tax evaders.

                              {time}  1200

  Judges interpreting this word salad that calls itself a bill should 
keep those two objectives in mind.
  Then we are told that we need a new payment system in this country so 
the government cannot freeze bank accounts because Canada froze bank 
accounts of anti-vax truckers. I have no

[[Page H3500]]

idea whether Canada should have frozen those bank accounts, but I do 
know this: If because Canada froze bank accounts of anti-vax truckers, 
we should have a payment system that makes it impossible for the 
American Government to freeze the bank accounts of convicted tax 
evaders, convicted drug dealers, and convicted charlatans. Then we 
enter into a new world that I call patriotic anarchism, the folks who 
demand that America be strong and that the government be totally 
defanged and inept and unable to do anything.
  It is a wonderful world. You can believe in a strong America without 
an American Government or an American Government unable to freeze the 
bank accounts of convicted murderers. You want a strong America but not 
a government that is able to do that.
  Now, this world of a surveillance state if we had a central bank 
digital currency, keep in mind the use of that currency is entirely 
voluntarily just as the use of a credit card is voluntary. If you use a 
credit card to buy a gun and then you kill somebody, there is a record. 
You are also free to use cash.
  Cash has some disadvantages. In the example I just gave, those 
disadvantages are not apparent, but those disadvantages include that it 
is not electronic, that it is bulky, and that if you have over $10,000 
you want to deposit in bank, a report is made.
  The Acting CHAIR (Ms. Maloy). The time of the gentleman has expired.
  Ms. WATERS. Madam Chair, I yield the gentleman from California an 
additional 1 minute.
  Mr. SHERMAN. Madam Chair, we have a bill, which if it is interpreted 
as written, blocks the American economy the way it operates today and 
has for decades and would create lots of American jobs building those 
armored cars because the Fed would have to deal with nonelectronic 
transactions.
  If it is interpreted as intended, it is designed to create a world in 
which the American Government cannot conduct a criminal investigation 
that follows the money, and if someone is convicted, their bank 
accounts cannot be frozen because we have a new payment system without 
bank accounts that are not subject to being frozen.
  Vote against this bill because of what is in it. Vote against this 
bill because of what they wanted to put in it and hoped to put in it 
but didn't.
  Mr. McHENRY. Madam Chair, in responding to the gentleman's arguments, 
I don't know where to begin. The civil liberties protections in the 
United States are evident. We have a court of law. We have a provision 
for law enforcement to go after bad actors. This bill has nothing to do 
with this. It is a direct question of whether or not the Federal 
Reserve should be able to track your money without having to go to the 
courts, just evident in the technology.
  I yield 2 minutes to the gentleman from Ohio (Mr. Davidson), the vice 
chair of the Digital Assets Subcommittee and the chair of the Housing 
and Insurance Subcommittee on the Financial Services Committee. The 
gentleman is a great leader in digital assets and a thoughtful member 
of the committee.
  Mr. DAVIDSON. Madam Chair, I rise in strong support of banning 
central bank digital currency. Why do we do this? As Congressman Hill 
pointed out, Congress clearly has the Article I authority under the 
United States Constitution over money, and we should exert that.
  In the absence of exerting that with respect to central bank digital 
currency, the Federal Reserve is plowing right ahead. They are actively 
hiring programmers to write code to develop a central bank digital 
currency. To have colleagues say: Oh, well, they won't turn it on, to 
me is equivalent to having the Empire in Star Wars build the Death Star 
but promising not to turn it on.
  Once it exists, it poses a threat, and they are not responding to 
Congress right now. They are not. They are not listening to our values 
that are reflected in our Constitution to protect our civil liberties. 
In fact, our colleagues are encouraging them not to. They are saying in 
their own words: Oh, we have to be more like China.
  The version of central bank digital currency, the version that 
Project Hamilton is embracing, is the same version China is developing, 
and it is being developed all over the world with more than 100 
countries looking at implementing a central bank digital currency all 
under the same model that the Bank for International Settlements, the 
central bank for the central bankers in Switzerland, is proposing, and 
it is the same creepy surveillance tool that the Chinese Communist 
Party is using, which is centrally managed, centrally filtered.
  What definition is used here? Well, I am not sure that we could 
gather that from Mr. Sherman's comments, but it is the same definition 
that was used on March 9 in 2022 when the Biden administration released 
Executive Order 14067. The definition of H.R. 5403, this bill, is the 
same definition that we are addressing chosen by the Biden 
administration.

  We want to ban that.
  The Acting CHAIR. The time of the gentleman has expired.
  Mr. McHENRY. Madam Chair, I yield the gentleman an additional 1 
minute.
  Mr. DAVIDSON. Madam Chair, we don't want to ban that just to 
establish it. We want to ban the development of it.
  Another fallacy that they point out though is that this would turn 
off research. No, by all means, study it, find all the problems with 
it, and make sure that the people know: Don't go down this path.
  That is the point of this bill.
  If Congress uses Article I authority to subsequently set the 
parameters, as is our constitutional obligation, we could do that with 
a subsequent bill. The reality is, the Federal Reserve is not 
responding to dialogue. They need to respond to a law.
  Ms. WATERS. Madam Chair, I yield 1 minute to the gentleman from 
Massachusetts (Mr. Auchincloss).
  Mr. AUCHINCLOSS. Madam Chair, the Framers of the Constitution 
understood the importance of a strong and stable national currency, 
which is why Article I, Section 8, grants Congress the exclusive power 
to coin money and regulate its value.
  Congress must not forfeit this power to the Federal Reserve or the 
Department of Treasury when it comes to issuing a CBDC. CBDCs are 
digital liabilities issued by a central bank and made available to the 
public.
  My bill, the Power of the Mint Act, which I introduced alongside my 
Republican colleague and chair of the Digital Assets Subcommittee, 
Congressman Hill, would prohibit the issuance of a CBDC without 
authorization from Congress. The Rules Committee, though, controlled by 
Republicans, refused to consider my amendment, which would have made 
the text of the Power of the Mint Act the base text of this bill.
  Instead of voting on a bipartisan bill that I am confident would have 
secured a robust majority and achieved functionally similar ends, we 
are voting on one now that was thrown together haphazardly, ignoring 
the advice of legislative counsel, and combining our bills with no 
regard for duplicative sections. It was voted out of committee on a 
party-line vote.
  I urge my colleagues to vote ``no'' on this legislation.
  Mr. McHENRY. Madam Chair, I yield 1 minute to the gentleman from 
Pennsylvania (Mr. Perry).
  Mr. PERRY. Madam Chair, I thank the chairman of the committee for 
yielding. In a rarity of Congress, the title of this bill actually 
reflects both the content and the gravity of the subject at hand.
  Many of my constituents, my bosses, were rightfully concerned when 
the President's administration announced its intention to surveil their 
pocketbooks over transactions as low as $600.
  A central bank digital currency would be infinitely worse. It would 
give the government unprecedented visibility and control into 
Americans' transactions.
  What does that mean in practice?
  It means that it is much easier to track purchases of things that the 
government doesn't like, like firearms or other items disapproved by 
the government. It is much easier for the government to shut down 
dissenting voices, and it is much easier for the government to control 
Americans.
  Now people on the other side say: Well, that would never happen. It 
would never happen that the government would tell you what kind of car 
you have to buy because they are not

[[Page H3501]]

going to make any others. The government would never tell you what kind 
of stove you cannot buy. That would never happen either.
  We should learn the lessons from the oppressed citizens everywhere 
from Canada to the communist Chinese before it is too late. I urge 
adoption.
  Ms. WATERS. Madam Chair, I yield 2 minutes to the gentleman from 
Connecticut (Mr. Himes) who is also the ranking member of the Permanent 
Select Committee on Intelligence.
  Mr. HIMES. Madam Chair, wow, the oppressed citizens of Canada, 
really? We have gone into conspiracy world here in what was otherwise a 
trajectory of remarkable bipartisan work on this new strange world of 
cryptocurrency and crypto assets. Now we are talking about the 
oppressed citizens of Canada, the surveillance state. They are going 
tell you what their cars and appliances are doing.
  I guess we can't do too much bipartisanship before we have to revert 
to the madness of conspiracy theories.
  Madam Chair, why did we do what we did yesterday with FIT21? It split 
my party. There were people of good will on both sides of that.
  The reason a number of Democrats, including myself, supported FIT21, 
which was not our preferred bill, was because in the context of the 
possibility of innovation, you open options. We don't know what this 
stuff is going to look like 5 or 10 years from now, so we open options. 
That is why we did what we did yesterday.
  Today, because of conspiracy world, we are closing options.
  Now I don't know what a CBDC might look like 5 or 10 years from now. 
I suspect having written a white paper on it, that there might be a 
portion of the population that instead of using Joe's stablecoin might 
actually value a stablecoin that was backed by the full faith and 
credit.
  I don't know and you don't know, so let's keep our options open. 
Let's allow for the possibility and research that, by the way, every 
other country out there, like the United Kingdom--not China but the 
United Kingdom--is doing, to see if we can open the path for 
innovation. Let's not close it.
  I hear China, China, China. Guess what, we do contract law and police 
services and public safety radically different than China does, so 
don't scare us with China.
  We can do this right. Let's just not in the context of innovation 
foreclose an option. Please vote against this bill, which is an anti-
innovation bill.
  Mr. McHENRY. Mr. Chair, I yield 2 minutes to the gentleman from Texas 
(Mr. Self).
  Mr. SELF. Mr. Chair, I rise in support of the CBDC Anti-Surveillance 
State Act.
  We must prohibit the Federal Reserve from issuing this currency. If 
you don't want to talk about China, let's talk about the United States. 
Mr. Chair, we just spent months debating the Fourth Amendment is Not 
for Sale Act and the FISA reauthorization. The central debate 
surrounding these two bills was government surveillance of our 
citizens.
  Throughout my time in Congress, I have fought to protect Americans 
from unconstitutional surveillance right here in America. This bill is 
another tool to protect our citizens' rights.
  Mr. Chair, we don't have to guess what would be the use of this CBDC. 
We have witnessed various United States Government agencies from the 
IRS to the FBI targeting conservatives for their beliefs. Do you want 
your Buc-ee's coffee or your monthly mortgage payment or the ammo you 
purchase for your hunting trip to be visible to the Federal Government? 
I suggest not.
  We must continue to fight back against the continuing and obvious 
weaponization of the Federal Government and prevent the creation of a 
central bank digital currency.
  Mr. Chair, this could be the final step toward absolute and total 
surveillance by the Federal Government.
  I urge my colleagues to support the freedom of Americans and vote for 
the underlying bill.
  Ms. WATERS. Mr. Chair, the bill's sponsor has warned that a U.S. CBDC 
would mirror the surveillance tactics that are baked into the Chinese 
CBDC without explaining why the United States would ever choose to 
design its CBDC in a manner that mimics Chinese surveillance.
  Privacy protections can be incorporated from the earliest development 
stages of a CBDC. This is what other privacy-focused jurisdictions have 
been doing with their CBDC development, like the European Union, 
because their constituents care about privacy, too.

                              {time}  1215

  In fact, research from the Atlantic Council has noted that CBDCs can 
be designed in a way that offer cash-like privacy through the use of 
zero-knowledge proofs, encryption, and other design features where a 
payment validator processes transactions but does not learn the 
identities of those involved without the permission of the parties.
  Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, may I inquire as to the time remaining on 
both sides.
  The Acting CHAIR (Mr. Perry). The gentleman from North Carolina has 
14\1/2\ minutes remaining. The gentlewoman from California has 6 
minutes remaining.
  Mr. McHENRY. Mr. Chair, I yield 1\1/2\ minutes to the gentlewoman 
from Georgia (Ms. Greene).
  Ms. GREENE of Georgia. Mr. Chair, I rise in support of the CBDC Anti-
Surveillance State Act. This would prohibit unelected bureaucrats at 
the Federal Reserve from issuing a central bank digital currency that 
would destroy Americans' rights to financial privacy.
  CBDCs are a digital form of sovereign currency designed and issued by 
the Federal Government and recorded on a ledger controlled by the 
Federal Government. In other words, if a political enemy of the deep 
state or, say, a Democratic regime says or does something that is not 
approved, the government could prohibit them from using their digital 
government-controlled financial assets or simply take them away. We are 
talking about Americans' money.
  Never forget that, in the past few years, we just lived through a 
time--and Americans are very aware of it--where the government forced 
social media to censor Americans for their statements about the 2020 
election, unconstitutional COVID lockdowns, and violations of 
Americans' medical freedoms, forcing them to take an experimental 
vaccine in order to work, go to school, shop, go to restaurants, and 
live.
  Government tracking Americans on keywords like ``MAGA'' or ``Trump'' 
or Americans who care about their Second Amendment rights has also been 
something that has happened in the past few years and is still 
happening.
  The very idea of our government controlling our money with the 
ability to turn it off whenever they see fit is terrifying.
  Mr. Chair, I support this bill, and I urge my colleagues to support 
it.
  Ms. WATERS. Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, I yield 1 minute to the gentlewoman from Utah 
(Ms. Maloy).
  Ms. MALOY. Mr. Chair, I rise to support the passage of H.R. 5403, the 
CBDC Anti-Surveillance State Act, which I cosponsor.
  If improperly implemented, a CBDC can compete with private financial 
intermediaries, undermine long-term investment, invite more regulation 
into nearly every economic institution, and open the American people to 
Chinese-style government surveillance.
  This is one of the reasons that the Utah Legislature this year passed 
a bill to block CBDC from being recognized as legal tender.
  This is an issue that Americans are concerned about, particularly 
people in my State that I represent. We don't need to be more like 
China. Americans demand the right to participate in the economy without 
giving up our privacy.
  We have to protect Americans' right to financial privacy. That is why 
this bill forbids the Federal Reserve from issuing CBDCs without 
specific congressional authorization. That is us protecting our own 
authority. It prohibits the Federal Reserve from using a CBDC as a tool 
to take full control of the U.S. economy through monetary policy, 
something Americans won't stand for. Finally, it protects the privacy 
of coins and bills, ensuring that

[[Page H3502]]

they remain open, permissionless, and private. Those three things are 
essential.
  Rarely do the credit unions, banks, and Utah Legislature agree on 
anything. That is a sign that we should support this.
  Ms. WATERS. Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, I yield 1 minute to the gentleman from Texas 
(Mr. Williams), the chair of the Small Business Committee and a great 
leader for business in America, capitalism, and freedom.
  Mr. WILLIAMS of Texas. Mr. Chair, I rise today in support of H.R. 
5403, the CBDC Anti-Surveillance State Act.
  This necessary legislation would prevent the Federal Reserve from 
issuing a central bank digital currency to individuals directly or 
indirectly through a financial institution. This bill also prohibits 
the Fed from using a CBDC as a tool to implement monetary policy and 
control the economy.
  Around the world, governments have weaponized central bank digital 
currencies to track the spending habits of their citizens. In China, 
the CCP uses CBDC to track spending of their citizens and created a 
social credit system, which punishes individuals based on their 
spending and behavior. We cannot allow this kind of surveillance to be 
imposed on American citizens.
  The issuance of a CBDC by the Federal Government would lead to 
decreased competition as the Federal Government would then be in direct 
competition with banks. This is antibusiness for the benefit of Big 
Government. A government-controlled CBDC is an attack on Americans' 
privacy and free-market competitiveness.
  Mr. Chair, I urge all of my colleagues to support H.R. 5403. In God 
we trust.
  Ms. WATERS. Mr. Chair, I yield myself such time as I may consume.
  Mr. Chair, I am struck by the way Republicans have so quickly changed 
their tune on how we should be promoting innovation. Here are just a 
couple of quotes from Republicans from the debate just yesterday.
  Representative Davidson: ``For too long, we have pushed innovation 
and investment in digital asset projects overseas. . . . We finally 
have the chance to end this trend and solidify ourselves as the leaders 
in this industry.''

  Mr. McHenry: ``We are falling behind Europe. This bill catches us up 
so that we do not lose out on innovation policy to the Europeans, to 
the folks in the U.K., to Singapore, to Japan, to Hong Kong, that all 
have regimes similar to what we are doing in this bill. . . . The next 
generation of internet technology is being written. It should be 
written by American innovators here in the United States. We can allow 
that innovation to pass us by, or we can seize the opportunity.''
  The double standard is simply stunning.
  Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, I will note for the record a couple of key 
things.
  Number one, this is private-sector innovation. That was yesterday's 
bill. Two-thirds of the House spoke in favor of private-sector 
innovation for digital assets. I know the ranking member of the 
committee did not, but we had 71 of her Democratic colleagues vote with 
almost all the Republicans yesterday for private-sector innovation on 
digital assets. I know she did not.
  Today, what they want to do is have public-sector innovation. The 
regimes I spoke of yesterday, fostering private-sector innovation, are 
not going down the route of central bank digital currency. I want to 
note that for the record.
  Mr. Chair, I yield 1 minute to the gentleman from Oklahoma (Mr. 
Lucas), the chair of the Science Committee and a great leader on the 
Financial Services Committee.
  Mr. LUCAS. Mr. Chair, I thank Chairman McHenry and Whip Emmer for 
being leaders on digital asset policy and specifically for this 
legislation preventing a Federal Reserve bank from offering central 
bank digital currency to an individual.
  As advances in technology drive changes in the payments landscape, it 
is the responsibility of Congress to foster innovations while 
protecting consumers. Today, a Federal Reserve note, physical currency, 
is the only kind of central bank money available to the public, but a 
CBDC would be a new form of money, a digital dollar, which raises 
significant financial stability, privacy, and consumer protection 
concerns.
  This legislation clarifies that the Fed cannot offer direct products 
or services, or maintain accounts on behalf of an individual, and 
specifies the congressional authorities needed for the Fed to set up a 
CBDC.
  During the past 15 years, Congress has transferred a significant 
amount of authority to the Federal Reserve. In the case of a CBDC, 
congressional approval is essential before embarking on transformative 
policy changes with broad implications.
  Mr. Chair, I thank Mr. Emmer and Mr. McHenry for offering this 
legislation.
  Ms. WATERS. Mr. Chair, I yield myself such time as I may consume.
  Mr. Chair, if privacy is the main concern motivating the supporters 
of this bill, then it is wholly unclear why the bill would ban 
wholesale CBDCs, which do not pose privacy concerns because they would 
not be used by consumers at all. They would be used by banks and other 
institutions to reduce transaction costs and improve payment speed in 
cross-border transactions with other institutions.
  For these reasons, it was the American Bankers Association that 
advocated for the exclusion of wholesale CBDCs from this bill when it 
was marked up by our committee.
  Supporters of this bill can't explain to the American people why a 
prohibition on a wholesale CBDC would protect their privacy so they 
resort to baseless fearmongering.
  Mr. Chair, I yield 30 seconds to the gentleman from California (Mr. 
Sherman).
  Mr. SHERMAN. Mr. Chair, we are told to reject this because China is 
doing this. In China, they drink orange juice. Should we prohibit 
orange juice? Not everything that happens in China needs to be banned 
by statute in this Congress.
  We are told we need to protect privacy, but this bill does not 
require anybody to use a digital currency. You are still going to have 
cash. You are still going to have a credit card. It is just one more 
option.
  You may say the use of the credit card doesn't give you privacy 
because my wife then finds out I spent too much on a tie. So what do I 
do? I spend cash. You are going to have debit cards, credit cards, 
cash, and maybe a digital currency. If you want it to be private, don't 
use it. It is not mandatory.
  Mr. McHENRY. Mr. Chair, I would note for the record that bow ties are 
cheaper than the long ties. I suggest the same to the gentleman.
  Mr. Chair, I yield 1 minute to the gentleman from Michigan (Mr. 
Huizenga), the chair of the Oversight and Investigations Subcommittee 
of the Financial Services Committee.
  Mr. HUIZENGA. Mr. Chair, last Congress, as a member of the Digital 
Assets Working Group, we established clear principles on how any 
proposed CBDC proposal should be evaluated.
  First, the U.S. dollar must remain the world's reserve currency, and 
our payment systems must continue to be the envy of the world. American 
taxpayers should benefit, not be disadvantaged, by any legislation that 
Congress enacts.
  Second, the private sector must lead the way. Digital asset policies 
must promote private-sector innovation and foster competition. That is 
what the bill was about yesterday, Mr. Chair.
  Further, we must maintain privacy and security protections consistent 
with other currency transactions utilized today. That is in danger, 
based on what the Fed is proposing.
  Lastly, it should come as no surprise that many Americans view a Fed-
developed central bank digital currency with great skepticism, and I 
include myself in that category. Congress has not granted the Fed this 
authority, nor should it.
  Ms. WATERS. Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, I yield 1 minute to the gentleman from 
Nebraska (Mr. Flood), a leader in digital assets.
  Mr. FLOOD. Mr. Chair, this bill is necessary because a retail central 
bank digital currency would be a terrifying and powerful tool in the 
hands of any government entity.
  I would like everybody in this Chamber to think and picture the 
politician

[[Page H3503]]

they dislike the most in their mind. Now, imagine that person and all 
the ill intentions you ascribe to them with the power to monitor, 
restrict, or even halt the financial transactions of their political 
opponents.
  It is actually a horrifying thought, and it cuts to the core of why 
we need to reject a retail CBDC in this country.
  Some of my colleagues across the aisle claim that arguments like this 
are alarmist. However, they fail to realize that once a CBDC is built, 
even if it was built with good intentions, it will endure through every 
political twist and turn our country has ahead, for better or for 
worse.
  President Reagan famously said, freedom ``is never more than one 
generation away from extinction.'' If we issue a retail CBDC in this 
country, freedom would never be more than one election away from 
extinction.
  Mr. Chair, I urge my colleagues to support this bill.

                              {time}  1230

  Ms. WATERS. Mr. Chair, according to an analysis written by Jaret 
Seiberg with TD Cowen, published today, May 23, 2024:

       We do see risk in the House looking today to pass a related 
     bill that would ban the United States from launching a 
     digital dollar.
       We view such a ban as negative for the global dominance of 
     U.S. banks and for the global role of the U.S. dollar. This 
     is because the ban would apply to wholesale, as well as 
     consumer use. That could give the euro or other currencies 
     that are digitized an edge in being used for global trade as 
     stablecoin digital dollars could lose value if there is a 
     redemption run, while a digital euro would not face that 
     threat.

  Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, I am prepared to close, and I reserve the 
balance of my time.
  Ms. WATERS. Mr. Chair, I yield myself the balance of my time to 
close.
  Mr. Chair, yesterday, we debated a Republican bill that would 
substantially deregulate the crypto industry, allowing most crypto to 
operate without a primary regulator and with virtually no regulation. 
Where was the concern about a consumer's privacy then?
  Just yesterday, Republicans threw all of the existing protections for 
consumers, including privacy, out the window in the name of so-called 
crypto innovation and U.S. competitiveness. When it comes to the one 
crypto innovation that could impact our national security interests and 
economy, my colleagues want to stop that innovation in its tracks.
  There is simply no reason to unilaterally tie our own hands in this 
respect and risk undermining the primacy of the U.S. dollar in the 
process, and it would be harmful to every American to make it harder 
for the Federal Reserve to combat inflation.
  The stakes with this bill are incredibly high. The strength of the 
United States dollar, our ability to innovate and compete globally, our 
ability to impose sanctions and protect our interests abroad, and our 
ability to stop inflation are all well on the line.
  Mr. Chair, I certainly urge a ``no'' vote on this bill, H.R. 5403, 
and I yield back the balance of my time.
  Mr. McHENRY. Mr. Chairman, I yield myself the balance of my time to 
close.
  Mr. Chairman, I want to reiterate that this bill protects Americans' 
rights to financial privacy. That is the core of this.
  It was my hope that this bill would be the base text for an amendment 
process by which we get my Democratic colleagues and committee to agree 
with that principle. Nonetheless, we have brought this bill to the 
floor. It ensures Congress, not the current or future administration, 
retains authority over any potential central bank digital currency.
  This is Congress making a statement. We have the commitment. The 
current chair of the Federal Reserve says we will not have a consumer-
facing central bank digital currency under his tenure in the Federal 
Reserve. That is the commitment of the current chair. That is not a 
commitment from the Federal Reserve.
  We have a legal ruling that says that, for this to be a consumer-
facing central bank digital currency, the Fed would have to come back 
to Congress to ask for those authorities.
  Secretary Yellen, today, in news reports, says that it is indeed the 
case, in her view, that the Fed would have to come back to Congress to 
ask for authorities for central bank digital currency.
  We are making an affirmative stance and statement as a Congress that 
that is not just the opinion of the current chair of the Federal 
Reserve and the current Secretary of the Treasury, but the stance of 
the United States Government and the United States Congress.
  It is important that we recognize civil liberties are highly 
important, and our system in the United States is different than every 
system around the globe in protecting individuals' civil liberties from 
governmental encroachment. We should all agree that a central bank 
digital currency should reflect American values of privacy, individual 
sovereignty, and free market competitiveness.
  Mr. Chair, I urge my colleagues to support this bill. It is a very 
important statement for us, just like the important statement we made 
yesterday when 71 of my Democratic colleagues voted with almost all the 
Republicans to put forward a regulatory framework for digital assets 
and cryptocurrency.
  It was a great bipartisan outcome with a huge number of Democratic 
support, even though the administration said they don't want the bill, 
and even though the minority leader voted against us, and even though 
the ranking member on Financial Services whipped hard against the bill. 
We had 71 of my Democratic colleagues who saw innovation and consumer 
protection were at the core of that piece of legislation, and my 
colleagues voted in favor of it.
  It is my hope today that the minority will see that we need civil 
liberties protections from any governmental encroachment in the 
financial realm, and I hope we can make a nice bipartisan statement 
today, as well.
  Mr. Chair, I urge the adoption of this bill, and I yield back the 
balance of my time.
  The Acting CHAIR (Mr. Weber of Texas). All time for general debate 
has expired.
  Pursuant to the rule, the bill shall be considered for amendment 
under the 5-minute rule.
  The amendment in the nature of a substitute recommended by the 
Committee on Financial Services, printed in the bill, shall be 
considered as adopted. The bill, as amended, shall be considered as the 
original bill for the purpose of further amendment under the 5-minute 
rule, and shall be considered as read.
  The text of the bill, as amended, is as follows:

                               H.R. 5403

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``CBDC Anti-Surveillance State 
     Act''.

     SEC. 2. PROHIBITION ON FEDERAL RESERVE BANKS RELATING TO 
                   CERTAIN PRODUCTS OR SERVICES FOR INDIVIDUALS 
                   AND PROHIBITION ON DIRECTLY ISSUING A CENTRAL 
                   BANK DIGITAL CURRENCY.

       Section 16 of the Federal Reserve Act is amended by adding 
     at the end the following new paragraph:
       ``(18) A Federal reserve bank shall not--
       ``(A) offer products or services directly to an individual;
       ``(B) maintain an account on behalf of an individual; or
       ``(C) issue a central bank digital currency, or any digital 
     asset that is substantially similar under any other name or 
     label, directly to an individual.''.

     SEC. 3. PROHIBITION ON FEDERAL RESERVE BANKS INDIRECTLY 
                   ISSUING A CENTRAL BANK DIGITAL CURRENCY.

       Section 16 of the Federal Reserve Act, as amended by 
     section 2, is further amended by adding at the end the 
     following new paragraph:
       ``(19)(A) 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.
       ``(B) Subparagraph (A) may not be construed to prohibit any 
     dollar-denominated currency that is open, permissionless, and 
     private, and fully preserves the privacy protections of 
     United States coins and physical currency.''.

     SEC. 4. PROHIBITION ON THE USE OF CENTRAL BANK DIGITAL 
                   CURRENCY FOR MONETARY POLICY.

       Section 16 of the Federal Reserve Act, as amended by 
     section 3, is further amended by adding at the end the 
     following new paragraph:
       ``(20) Prohibition on the use of central bank digital 
     currency for monetary policy.--The Board of Governors of the 
     Federal Reserve System and the Federal Open Market

[[Page H3504]]

     Committee shall not use any central bank digital currency, or 
     any digital asset that is substantially similar under any 
     other name or label, to implement monetary policy.''.

     SEC. 5. CENTRAL BANK DIGITAL CURRENCY.

       (a) In General.--The Federal Reserve Act (12 U.S.C. 221 et 
     seq.) is amended by inserting after section 16 the following:

     ``SEC. 16A. CENTRAL BANK DIGITAL CURRENCY.

       ``(a) In General.--The Board of Governors of the Federal 
     Reserve System may not, absent Congressional authorization, 
     issue a central bank digital currency.
       ``(b) Central Bank Digital Currency Defined.--In this 
     section, the term `central bank digital currency' means a 
     form of digital money or monetary value, denominated in the 
     national unit of account, that is a direct liability of the 
     Federal Reserve System.''.
       (b) Treasury.--Chapter 3 of subtitle I of title 31 of the 
     United States Code is amended by inserting after section 316 
     the following:

     ``SEC. 317. CENTRAL BANK DIGITAL CURRENCY.

       ``(a) In General.--The Secretary of the Treasury may not, 
     absent Congressional authorization, direct the Board of 
     Governors of the Federal Reserve System to issue a central 
     bank digital currency.
       ``(b) Central Bank Digital Currency Defined.--In this 
     section, the term `central bank digital currency' means a 
     form of digital money or monetary value, denominated in the 
     national unit of account, that is a direct liability of the 
     central bank.''.

     SEC. 6. PROTECTION FOR OPEN, PERMISSIONLESS, AND PRIVATE 
                   CURRENCY.

       This Act and the amendments made by this Act shall not 
     apply to any dollar-denominated currency that is open, 
     permissionless, and private, and fully preserves the privacy 
     protections of United States coins and physical currency.''

  The Acting CHAIR. No further amendment to the bill, as amended, shall 
be in order except those printed in part C of House Report 118-516. 
Each such further amendment may be offered only in the order printed in 
the report, by a Member designated in the report, shall be considered 
read, shall be debatable for the time specified in the report, equally 
divided and controlled by the proponent and an opponent, shall not be 
subject to amendment, and shall not be subject to a demand for division 
of the question.


                  Amendment No. 1 Offered by Mr. Ogles

  The Acting CHAIR. It is now in order to consider amendment No. 1 
printed in part C of House Report 118-516.
  Mr. OGLES. Mr. Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Add at the end the following:

     SEC. 7. SENSE OF CONGRESS.

       It is the sense of Congress that the Board of Governors of 
     the Federal Reserve System should not be permitted to 
     develop, create, or implement a central bank digital 
     currency, or use any such tool to implement monetary policy.

  The Acting CHAIR. Pursuant to House Resolution 1243, the gentleman 
from Tennessee (Mr. Ogles) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Tennessee.
  Mr. OGLES. Mr. Chair, my amendment adds the sense of Congress that 
the Board of Governors of the Federal Reserve System should not be 
permitted to develop, create, or implement a central bank digital 
currency or use any such tool to implement monetary policy.
  A major concern surrounding a government-run CBDC is the potential 
for the government to block transactions and exert control over 
people's finances. Not only that, but it would give the Federal 
Government unprecedented power to intervene in private transactions, 
deciding who can buy and sell and what they can buy and sell.
  It would also give the government unprecedented access to information 
about their daily lives. The government could keep a record of every 
transaction.
  Mr. Chairman, I reserve the balance of my time.
  Ms. WATERS. Mr. Chair, I claim the time in opposition.
  The Acting CHAIR. The gentlewoman from California is recognized for 5 
minutes.
  Ms. WATERS. Mr. Chair, I oppose this amendment, which doubles down on 
the Republican efforts to prohibit CBDCs, which, if Republicans read 
their own bill, is already prohibited in the bill.
  This sense of Congress only causes further confusion on how the bill 
should be interpreted as a whole by duplicating things that are already 
in the bill by wording them in a slightly different manner.
  Experts from Atlantic Council have warned that: ``If this bill ever 
became law, the United States would be the only country in the world to 
have banned CBDCs. It would be a self-defeating move in the race for 
the future of money. It would undercut the national security role of 
the dollar as the decision would only accelerate other countries' 
development of alternative payment systems that look to bypass the 
dollar in cross-border transactions. This would make U.S. sanctions 
less effective.''
  Mr. Chairman, I urge Members to oppose this amendment, and I reserve 
the balance of my time.
  Mr. OGLES. Mr. Chairman, I yield 2 minutes to the gentleman from 
Arkansas (Mr. Hill).
  Mr. HILL. Mr. Chairman, I thank the gentleman from Tennessee (Mr. 
Ogles) for yielding the time.
  Mr. Chair, I rise in support of Mr. Ogles' commonsense resolution.
  Yes, it doubles down on the views of Congress in this bill, no doubt. 
The underlying bill already prohibits the use of a central bank digital 
currency to implement monetary policy.
  However, this sense of Congress further clarifies our intent. As 
Chairman McHenry just noted, the Federal Reserve is not permitted to 
develop, create, or implement a CBDC or to use a CBDC to implement 
monetary policy without authorization of Congress. Part of the reason 
we are here is due to the Fed officials having been ambiguous or 
noncommittal as to public statements related to their legal authorities 
under the Federal Reserve Act as it relates to a CBDC.
  I agree with Mr. McHenry that certainly this Chairman, Jay Powell, 
has been quite clear to our committee that issuing a retail CBDC is not 
something he could do without an authorization of Congress.
  That is why I think reiterating it in this resolution is an important 
step. I commend the gentleman from Tennessee for bringing this 
amendment. I hope all our colleagues on both sides of the aisle will 
support it and the underlying bill.
  Ms. WATERS. Mr. Chairman, Republicans are focused on the bill's 
prohibition on CBDCs, but according to the nonpartisan CBO: ``The 
bill's prohibition on the Federal Reserve's use or issuance of a 
central bank digital currency could apply to bank reserves, which are a 
unit of value and a liability of the Federal Reserve.''
  As the CBO also acknowledges, bank reserves are a primary tool for 
the Fed in conducting monetary policy. Prohibiting the Fed from holding 
bank reserves could very well take us backward, erasing all progress 
that the Fed has made so far in reducing inflation and achieving a soft 
landing. A vote for this bill is a vote for higher inflation and 
economic uncertainty.
  Mr. Chairman, I reserve the balance of my time.
  Mr. OGLES. Mr. Chairman, there is a reason that China, under the rule 
of the totalitarian Chinese Communist Party, has the most developed 
CBDC program. It is about control. Their CBDC enables them to combine 
intrusive monitoring of the public and control their lives with their 
Orwellian social credit scores.
  Take what Canada did by cutting off money for the truckers. Look at 
what China is doing. If we go down this path, we are heading toward an 
Orwellian nightmare.
  My sense of Congress doubles down on the fact that the greenback is 
the reserve currency of the world. A CBDC undermines that, and it 
should not be pursued.
  Mr. Chair, I reserve the balance of my time.
  Ms. WATERS. Mr. Chairman, this bill is opposed by the following 
organizations: Americans for Financial Reform, Demand Progress, Public 
Citizen, and Take on Wall Street.
  Mr. Chair, I reserve the balance of my time.
  Mr. OGLES. Mr. Chairman, my amendment is simple, because it 
underscores that the Federal Reserve should not move forward with 
implementing a CBDC or use any policy that would forward that action.
  Mr. Chairman, I am prepared to close, and I reserve the balance of my 
time.
  Ms. WATERS. Mr. Chair, in closing, I urge my colleagues to oppose 
this amendment and the underlying bill,

[[Page H3505]]

and I yield back the balance of my time.
  Mr. OGLES. Mr. Chairman, I urge adoption of my amendment. It is 
clear. It is concise. It is simple. It is just good policy.
  Mr. Chair, I yield back the balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Tennessee (Mr. Ogles).
  The question was taken; and the Acting Chair announced that the ayes 
appeared to have it.
  Ms. WATERS. Mr. Chair, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Tennessee 
will be postponed.

                              {time}  1245


                 Amendment No. 2 Offered by Mr. Mooney

  The Acting CHAIR. It is now in order to consider amendment No. 2 
printed in part C of House Report 118-516.
  Mr. MOONEY. Mr. Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Add at the end the following:

     SEC. 7. PROHIBITION ON CENTRAL BANK DIGITAL CURRENCY TESTING.

       Section 16A of the Federal Reserve Act, as added by section 
     5, is amended by adding at the end the following:
       ``(C) Prohibition on Central Bank Digital Currency 
     Testing.--Unless authorized by an Act of Congress enacted 
     after the date of the enactment of this Act, the Board of 
     Governors of the Federal Reserve System and the Federal 
     reserve banks may not establish, carry out, or approve a 
     program intended to test the practicability of issuing a 
     central bank digital currency, including by partnering or 
     coordinating with a private sector entity to carry out such a 
     program.''.

  The Acting CHAIR. Pursuant to House Resolution 1243, the gentleman 
from West Virginia (Mr. Mooney) and a Member opposed each will control 
5 minutes.
  The Chair recognizes the gentleman from West Virginia.
  Mr. MOONEY. Mr. Chair, I yield myself such time as I may consume.
  Mr. Chair, a central bank digital currency, or digital dollar, 
represents one of the greatest government surveillance threats of our 
time, and I am glad this Republican majority is taking it seriously.
  House Republicans have been clear that the Federal Reserve does not 
have the authority to issue a digital dollar without an act of Congress 
first. It also does not have the ability to build and test one behind 
the scenes.
  My amendment would stop the Federal Reserve's rogue digital dollar 
experimentation, known as the pilot program loophole, dead in its 
tracks.
  Right now, the Federal Reserve is contracting with the private sector 
to build digital dollars for the United States far beyond what could be 
considered traditional research. Essentially, the Federal Reserve is 
creating a central bank digital currency to use at a moment's notice.
  In Communist China, the digital yuan is being used to spy on its 
citizens and crack down on prodemocracy dissent. Soon, Chinese citizens 
will not even have a choice whether or not to use the digital yuan. In 
America, the Biden administration could use the digital dollar to track 
your gun purchases, for example.
  Chairman Jerome Powell has said the Federal Reserve would not issue a 
digital dollar without an act of Congress, but doing so as a so-called 
pilot program is the same thing. That is why my amendment is important, 
because Congress cannot give an inch when it comes to the central bank 
digital currency.
  My amendment would simply block the Federal Reserve from 
establishing, carrying out, or approving any program intended to test 
the feasibility of issuing a digital dollar. If the Federal Government 
wants to experiment with a surveillance tool that the overwhelming 
majority of American citizens oppose, that direction must come from a 
vote in Congress. Make no mistake: Central bank digital currencies are 
not about innovation. They are about control.
  My amendment prevents the Federal Reserve from bypassing the will of 
the legislative branch by closing the pilot program loophole once and 
for all, and I urge my colleagues to support it.
  Mr. Chair, I reserve the balance of my time.
  Ms. WATERS. Mr. Chair, I claim the time in opposition to the 
amendment.
  The Acting CHAIR. The gentlewoman from California is recognized for 5 
minutes.
  Ms. WATERS. Mr. Chair, I urge Members to oppose the Mooney amendment, 
which explicitly bans CBDC pilot programs. Like the last amendment we 
just considered, this amendment bans something that H.R. 5403 already 
bans. Oddly, this amendment would exacerbate the confusing drafting in 
H.R. 5403, by prohibiting something in two places but in slightly 
different ways.
  In fact, all three of these amendments that we are considering for 
this bill overlap with existing provisions in the underlying bill, 
which leads me to believe that Republicans simply don't understand what 
their own bill does.
  Let me again try to explain their own bill. This amendment and the 
bill both prohibit the Fed from conducting a study on how to design a 
central bank digital currency using a pilot program. In case the public 
is wondering, the New York Fed is currently conducting a pilot through 
its New York Innovation Center to test the benefits and drawbacks of a 
wholesale CBDC in collaboration with U.S. banks and the Monetary 
Authority of Singapore.
  This pilot does not mean that at the end the Fed will issue a CBDC or 
that Americans will have one. In fact, the Fed has made it abundantly 
clear that it wants Congress to authorize it to do so, but how is 
Congress going to be able to make this decision if we don't have any 
research as to how a CBDC could be designed that reflects our values?
  Again, importantly, to counter misinformation from the other side of 
the aisle, wholesale CBDCs are not used by individual consumers. They 
are only used by institutions to transfer funds, so there are no 
consumer privacy issues with wholesale CBDCs because consumers are not 
directly involved.
  If the point of this bill is to protect consumer privacy, the sponsor 
should have directed the Fed to ensure that it only tests a CBDC that 
does that.
  Mr. Chair, I urge Members to oppose this harmful amendment and H.R. 
5403, and I reserve the balance of my time.
  Mr. MOONEY. Mr. Chair, I yield such time as he may consume to the 
gentleman from Ohio (Mr. Davidson), my colleague.
  Mr. DAVIDSON. Mr. Chair, I rise to support Mr. Mooney's amendment.
  The CBDC Anti-Surveillance State Act demonstrates House Republicans' 
unwavering and thorough conviction that the Federal Reserve must not 
issue or develop a central bank digital currency without expressed 
authorization from Congress.
  While I support this bill wholeheartedly, I think it can go further 
with this amendment by being clear. Word weasels want to come up with 
phrases like pilot. Oh, we are not really doing that.
  Yes, you are. The pilot project represents a first step that we could 
take, and, as you see, the Federal Reserve is spending time and 
resources building a team, actively hiring and staffing, and 
outsourcing for this. It is logically consistent that this pilot could 
be developed to something further.
  Mr. Mooney's amendment will not only remove the CBDC pipeline the Fed 
is already building, but it will also ensure that any future efforts to 
test or research CBDC are approved by Congress.
  Mr. Chair, I urge all of our colleagues to support this amendment and 
this bill.

  Ms. WATERS. Mr. Chair, it seems that Republicans remain focused on 
CBDCs when, as I have explained, the CBO has pointed out that the 
definition of CBDC in this bill can be interpreted to include bank 
reserves held by the Fed. Bank reserves are used as the settlement 
funds for interbank transactions that are facilitated by the Fed via 
its payment systems. This means that prohibiting the Fed's ability to 
hold bank reserves would make it difficult, if not impossible, to 
administer these payment systems likely causing a massive disruption to 
our banking and payment systems.
  A vote for this bill is a vote to disrupt our banking systems. 
Republicans are refusing to acknowledge the broader impacts of this 
bill to undermine the Fed, disrupt our banking and payment

[[Page H3506]]

systems, and risk higher inflation, but the American people should know 
the truth.
  Mr. Chair, I reserve the balance of my time.
  Mr. MOONEY. Mr. Chair, I yield back the balance of my time.
  Ms. WATERS. Mr. Chair, like the underlying bill, this amendment 
closes off opportunities for innovation and harming our influence 
around the world before we have even had a chance to fully study, test, 
and understand CBDCs.
  This bill and amendment represent the wing of the Republican Party 
that is anti-science and, ironically, scared of the innovation they 
claim to like. Again, this amendment does not prohibit the issuance of 
a CBDC; it is prohibiting the research on how CBDCs work.
  I can't stress how irresponsible it is for Congress to be passing 
blanket prohibitions on research based on unwarranted views. I can 
understand fears about potential outcomes, but I cannot understand fear 
of research.
  Mr. Chair, I urge my colleagues to vote ``no'' on this amendment and 
H.R. 5403, and I yield back the balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from West Virginia (Mr. Mooney).
  The question was taken; and the Acting Chair announced that the ayes 
appeared to have it.
  Ms. WATERS. Mr. Chair, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from West 
Virginia will be postponed.


                Amendment No. 3 Offered by Mr. Davidson

  The Acting CHAIR. It is now in order to consider amendment No. 3 
printed in part C of House Report 118-516.
  Mr. DAVIDSON. Mr. Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 5, line 10, insert ``design, build, develop, 
     establish, or'' before ``issue''.
       Page 5, line 22, insert ``design, build, develop, 
     establish, or'' before ``issue''.

  The Acting CHAIR. Pursuant to House Resolution 1243, the gentleman 
from Ohio (Mr. Davidson) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Ohio.
  Mr. DAVIDSON. Mr. Chair, I applaud Congressman Emmer's hard work on 
getting this important piece of legislation to where it is today. I am 
encouraged that so many of my colleagues like Mr. Hill, Mr. McHenry, 
Mr. Huizenga, Mr. Barr, Mrs. Wagner, and subcommittee chairs on 
Financial Services are united on this. I wish that extended across the 
aisle because central bank digital currency is the creepiest 
surveillance tool known to man.
  Every dystopian fiction out there whether ``Brave New World,'' 
``1984,'' what I consider Scriptures, the ``Book of Revelation,'' shows 
the corruption of money from its proper use as a store of value and a 
means of exchange into a tool for coercion and control, something that 
can filter people's access to their own money and their ability to use 
it in a free society.
  Why would we enable it? Everywhere it is depicted as evil. Why would 
we even tolerate that, but our own government is doing it. Frankly, the 
underlying text prevents the Federal Reserve from establishing a 
central bank digital currency, and this amendment is important because 
we should be clear: We don't want them to design it; we don't want them 
to build it; we don't want them to do development work on it; and we 
certainly don't want them to issue it. That authority is reserved for 
Congress.
  There may come a point where our form of money looks different than 
it does today, but it should always have the characteristics of 
permissionless peer-to-peer payments like cash. Saying: But cash is one 
option in the system, doesn't cut it when the whole underlying 
architecture becomes permissioned, conditioned on your ability to be 
granted access to your own property from a central government.
  This is a bad system, and it is great today for us to have the 
opportunity to ban it.
  Mr. Chair, I reserve the balance of my time.
  Ms. WATERS. Mr. Chair, I claim the time in opposition to the 
amendment.
  The Acting CHAIR (Mr. Moran). The gentlewoman from California is 
recognized for 5 minutes.
  Ms. WATERS. Mr. Chair, with this amendment, my Republican colleagues 
are really piling on to ensure the Fed is prohibited from even thinking 
about CBDCs. Yet again, this amendment is not adding anything 
substantive that isn't already in the bill. Instead, it is making worse 
the internal drafting inconsistencies in H.R. 5403.
  Mr. Chair, I urge Members to oppose this amendment and the underlying 
bill, and I reserve the balance of my time.
  Mr. DAVIDSON. Mr. Chair, the gentlewoman correctly recognizes that we 
are piling on. We want it to be absolutely clear to the word weasels in 
the executive branch that try to find a way to scheme and maneuver and 
even, in spite of Supreme Court rulings, come up with new executive 
orders whether it is forgiving student debt, launching climate change 
initiatives, banning bump stocks, pistol braces, warrantless searches, 
you name it. They have got a way to get past the clear intent of 
Congress. We want to close every possible venue, absolutely.
  Mr. Chair, I reserve the balance of my time.
  Ms. WATERS. Mr. Chair, I reserve the balance of my time.

                              {time}  1300

  Mr. DAVIDSON. Mr. Chair, I think we have made it clear with the 
amendments, with our statements, and with the bill text that we need to 
ban central bank digital currency. Do not let them design, develop, or 
build a death star only to promise not to turn it on.
  We need to prevent the Federal Reserve from doing this. All this 
should make it clear that that is the clear intent of Congress.
  Mr. Chair, I encourage all of our colleagues to unite in support of 
this bill and this amendment, and I yield back the balance of my time.
  Ms. WATERS. Mr. Chair, this amendment, like the underlying bill, is 
dangerous and rash. It would prohibit the U.S. from even training for a 
race that has already begun.
  Mr. Chair, I urge my colleagues not to cave to baseless fear-
mongering. I have already explained in depth how the privacy concerns 
from Republicans do not align with the actual facts. I simply urge my 
colleagues to vote ``no'' on this amendment and the underlying bill, 
and I yield back the balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Ohio (Mr. Davidson).
  The question was taken; and the Acting Chair announced that the ayes 
appeared to have it.
  Ms. WATERS. Mr. Chair, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Ohio will be 
postponed.

                          ____________________