Cbdc Anti-Surveillance State Act

Floor Speech

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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 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.

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