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- 1 The regulators around the world are after crypto regulations and the U.S. seems one step ahead.
- 2 CBDCs do not have correlations with cryptocurrencies, yet the legislators are seeking legislation for it.
Given the increased scrutiny, cryptocurrencies are struggling to find their way in the United States. Recent developments in the legislation indicate that CBDCs are about to face the burns of the same heat generated by regulatory actions. Two legislation are supposed to enter the discussion that is likely to make an impact on the journey ahead of central bank digital currency (CBDC) in the U.S.
The agency responsible for overwatching banking along with other economic sectors, the United States House Financial Services Committee is reported to be moving forward with the legislation related to CBDC issuance prevention.
Agency’s chair Patrick McHencry announced that the two said bills will be witnessing markup by the committee. The session on the bills around the digital dollar is scheduled to take place on September 20, 2023.
In the markup sessions, a bill is presented in front of the lawmakers for discussion. Bills moved forward to the House floor after they went through the discussion at markups.
Two Bills Around CBDC Awaits Markup
The Digital Dollar Pilot Prevention Act is one of the notable bills on the legislative horizon. This legislation carries the purpose of preventing the Federal Reserve from commencing pilot programs to experiment with Central Bank Digital Currencies (CBDCs) without prior approval from Congress.
Representative Alex Mooney introduced this bill in May, emphasizing the importance of congressional oversight in the development and testing of CBDCs. The bill reflects concerns about the potential consequences and implications of digital currencies on the U.S. financial system, underlining the need for a structured and transparent approach to their exploration and implementation.
While the Federal Reserve has officially stated that it has not made a decision on whether to issue a Central Bank Digital Currency (CBDC). Clarifying that it would require an authorizing law to proceed, there are indications to the contrary.
The Federal Reserve of San Francisco has been actively seeking technical positions related to a CBDC project in recent months. This recruitment effort suggests that the digital dollar is still under consideration and being actively explored, despite the official stance of awaiting legislative authorization.
The pursuit of technical expertise in this area signals ongoing preparations for potential CBDC development, reflecting the complex and evolving landscape of digital currencies in the United States.
The second piece of legislation involves an amendment to the Federal Reserve Act. This amendment seeks to prohibit Federal Reserve banks from directly offering specific products or services to individuals. Additionally, it aims to restrict the use of Central Bank Digital Currencies (CBDCs) for monetary policy purposes and other specified uses.
The legislative amendment reflects concerns about the potential implications of CBDCs and their role within the financial system. It underscores the need for clear regulations and limitations on the Federal Reserve’s engagement with individuals and the use of CBDCs in the broad monetary policy framework.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
