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

The House Financial Services Committee in the United States is taking steps to regulate the issuance of a digital dollar. Chairman Patrick McHenry recently announced that the Committee has scheduled a markup session for two important bills related to the potential digital dollar. A markup is a crucial stage where lawmakers discuss the intricate details of a bill before it moves forward to the House floor, representing an important milestone in the legislative process.

One of the key bills being considered is the Digital Dollar Pilot Prevention Act, also known as H.R. 3712. This legislation, introduced by Representative Alex Mooney in May, aims to prevent the Federal Reserve from launching pilot programs to test Central Bank Digital Currencies (CBDCs) without prior approval from Congress. This move comes in response to recent developments where the Federal Reserve, although not confirming its decision to issue a CBDC, has indicated its readiness to proceed with the issuance only if authorized by 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 is an amendment to the Federal Reserve Act. This amendment would prohibit Federal Reserve banks from directly offering specific products or services to individuals. It also includes provisions that restrict the use of CBDCs for monetary policy purposes and other objectives that are not specified. According to the proposed amendment, “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.”

The potential implementation of a digital dollar has sparked a range of opinions in the United States. Presidential candidates Robert F. Kennedy Jr. and Ron DeSantis have publicly expressed concerns about the establishment of a CBDC, citing worries about financial privacy. On the other hand, advocates of CBDCs argue that they could strengthen the position of the US dollar on the global stage and promote the adoption of cryptocurrencies. Currently, over 100 countries are working on CBDC projects in some capacity, with China already successfully piloting its digital yuan in several cities.