No Digital Dollar: Congress Acts

When "the left and right agree" means stopping government surveillance.

State of Surveillance Editorial Team

TL;DR: The House of Representatives has now passed the Anti-CBDC Surveillance State Act twice, in May 2024 and again in 2025 during "Crypto Week." The bill would prohibit the Federal Reserve from issuing a central bank digital currency (CBDC) directly to consumers. Supporters say it protects financial privacy from government surveillance. Critics say it's blocking financial innovation. The bill codifies Trump's executive order banning CBDC development and faces uncertain prospects in the Senate.

What Is a CBDC?

A Central Bank Digital Currency (CBDC) is government-issued digital money, essentially a digital version of cash, created and backed by the central bank.

How a CBDC would differ from:

  • Physical cash: CBDCs are purely digital, existing only as entries in a central bank database
  • Bank deposits: CBDCs would be a direct liability of the Federal Reserve, not commercial banks
  • Cryptocurrency: CBDCs are centralized and controlled by government, not decentralized networks
  • Credit cards: CBDCs would be programmable, meaning the government could set rules on how they're used

Over 130 countries are exploring CBDCs. China has already deployed a digital yuan. The European Central Bank is developing a digital euro. The question isn't whether CBDCs exist, it's whether the United States will create one.

What the Anti-CBDC Act Does

The CBDC Anti-Surveillance State Act, sponsored by House Majority Whip Tom Emmer (R-MN), would [1]:

  • Prohibit the Federal Reserve from issuing a CBDC directly to individuals
  • Prohibit the Fed from using a CBDC to implement monetary policy
  • Prohibit the Fed from offering products or services directly to individuals (the Fed currently only serves banks)
  • Codify the Executive Order that already forbids federal agencies from exploring CBDC development

The bill doesn't prohibit all digital dollar research, only direct-to-consumer issuance. An "intermediated" model where banks distribute digital dollars might still be possible under the legislation.

The Surveillance Argument

Supporters of the bill focus on one core concern: a government-controlled digital currency would enable unprecedented financial surveillance.

What a CBDC could enable:

  • Transaction tracking: Every purchase visible to the government in real-time
  • Programmable restrictions: Money that can't be spent on certain goods or in certain locations
  • Expiration dates: Currency that must be spent by a certain time or becomes worthless
  • Account freezing: Instant ability to block individuals from all financial activity
  • Social scoring: Access to money tied to behavior or political compliance

Rep. Emmer stated: "If not designed to emulate cash, a CBDC would give the federal government the ability to surveil Americans' transactions and directly control their access to money" [2].

International examples cited:

  • China's digital yuan includes "controllable anonymity", the government can see transactions when it wants
  • Nigeria's eNaira has been used to limit cash withdrawals and push citizens toward traceable digital payments
  • The Canadian government froze bank accounts of Freedom Convoy protestors, a CBDC would make this even easier

The Other Side

Not everyone sees CBDCs as surveillance tools. Critics of the ban argue:

Financial innovation:

  • CBDCs could make payments faster and cheaper
  • They could extend banking services to the unbanked
  • They could reduce reliance on private payment networks like Visa and Mastercard
  • They could maintain dollar dominance as other countries launch digital currencies

Privacy can be designed in:

  • CBDCs don't have to track every transaction
  • Privacy-preserving designs exist (like small-value anonymous transactions)
  • Congress could mandate privacy protections in any CBDC legislation

The surveillance already exists:

  • Banks already report suspicious transactions
  • Credit card companies track all purchases
  • The government can subpoena financial records
  • Cash is already declining, digital surveillance is the status quo

Critics note that blocking CBDCs doesn't protect privacy from existing surveillance, it just prevents potential competition to private payment networks that already track users.

Legislative History

May 23, 2024: The House passed H.R. 5403 by a vote of 216-192 [3]. The bill passed largely along party lines, with Republicans supporting and most Democrats opposing. The Senate never voted on the bill, and it died when the 118th Congress ended.

2025 (119th Congress): The bill was reintroduced as H.R. 1919 and passed again during what supporters called "Crypto Week" [4]. The vote was 219-210, tighter than the previous year.

The companion bills:

  • CBDC Anti-Surveillance State Act (banning CBDC)
  • CLARITY Act (stablecoin regulation)
  • GENIUS Act (broader crypto framework)

All three passed the House in the same week, representing a coordinated push for crypto-friendly legislation.

The Executive Order

Before Congress acted again, President Trump signed an executive order prohibiting federal agencies from developing or promoting a CBDC [5].

What the EO does:

  • Forbids agencies from taking steps to establish a CBDC
  • Prohibits research or pilots aimed at creating a digital dollar
  • Applies to all federal agencies, not just the Fed

Why legislation still matters:

  • Executive orders can be reversed by the next president
  • Legislation provides permanent protection
  • The bill would codify the EO into law

What Happens in the Senate

A companion bill (S.1124) has been introduced in the Senate, but prospects are uncertain [6].

Challenges:

  • The Senate is more closely divided than the House
  • Some senators prefer a "wait and see" approach to CBDCs
  • Banking committee politics complicate crypto legislation
  • Competing priorities may delay floor votes

Support:

  • Senator Ted Cruz is a lead sponsor in the Senate
  • Growing Republican unity on crypto issues
  • Executive order creates political momentum

Even if the Senate passes the bill, the margin matters. A close vote could be revisited under a future administration.

A Privacy Analysis

From a surveillance perspective, this bill represents a genuine, if incomplete, privacy protection.

What the bill protects against:

  • Government-controlled programmable money
  • Direct Federal Reserve access to individual transactions
  • Future expansion of financial surveillance through new infrastructure

What the bill doesn't address:

  • Existing bank surveillance and reporting requirements
  • Private payment processor data collection
  • Third-party data brokers selling financial information
  • Government purchases of financial data from commercial sources

The bill stops one specific surveillance threat without addressing the surveillance that already exists. It's a defensive action, not a comprehensive privacy reform.

Global Context

While the US debates banning CBDCs, the rest of the world is building them.

Countries with active CBDCs:

  • China: Digital yuan in circulation, used at 2022 Olympics
  • Bahamas: Sand Dollar fully operational
  • Nigeria: eNaira launched 2021
  • Jamaica: JAM-DEX operational

Countries actively developing:

  • European Union: Digital euro expected 2028
  • United Kingdom: Digital pound in research phase
  • India: Digital rupee pilots ongoing
  • Brazil: Drex in development

If the Anti-CBDC Act becomes law, the United States would be an outlier, intentionally rejecting technology other major economies are adopting. Whether that's wise depends on whether you trust your government with programmable money.

The Bottom Line

The Anti-CBDC Surveillance State Act addresses a real threat: government-controlled digital currency that could enable unprecedented financial surveillance and control.

The bill has passed the House twice. It has executive order backing. It may eventually become law.

But blocking CBDCs doesn't fix financial privacy. The surveillance infrastructure already exists through banks, payment processors, and data brokers. A digital dollar would add a new surveillance vector, but it's not the only one.

If you're concerned about financial privacy, the CBDC fight is one front in a much larger battle. Winning this fight doesn't mean financial privacy is protected. It means one specific threat is blocked while others continue growing.

References

  1. Congress.gov - S.1124: Anti-CBDC Surveillance State Act (119th Congress)
  2. Rep. Tom Emmer - Anti-CBDC Surveillance State Act Passes House (2024)
  3. GovTrack - H.R.5403: CBDC Anti-Surveillance State Act (118th Congress)
  4. House Financial Services Committee - House Passes CBDC Anti-Surveillance State Act
  5. Yahoo Finance - House passes Anti-CBDC Surveillance State Act, blocks digital dollar rollout
  6. Congress.gov - H.R.5403 Bill Text (118th Congress)