The intentions of the Federal Reserve to create a Central Bank Digital Currency (CBDC) were deemed unconstitutional by US Senator Warren Davidson in a tweet sent on July 23. This was written in response to a job posting by the Federal Reserve Bank of San Francisco for a Senior Crypto Architect to conduct research and development on blockchain-based distributed ledger technologies (CBDCTs), media reports said.
When the Federal Reserve first hinted at a CBDC, it alarmed Davidson, who compared it to the “financial equivalent of the Death Star.” He pleaded with the authorities to immediately prohibit and punish any and all CBDC-related activities.
The congressman, like Senator Ted Cruz and Representative Tom Emmer, has been a prominent opponent of CBDCs, creating a rift inside Congress with the vast majority of Republicans opposed to the establishment of a digital currency.
CBDC testing or distribution to the general population in the United States has been the subject of many laws submitted this year. The creation or distribution of virtual currency is also prohibited by law in several jurisdictions, including Florida and North Carolina.
The views of politicians on CBDCs are not uniform. Elizabeth Warren, a Democrat in the Senate, has advocated for its adoption because she sees the need for reform in the banking industry. The Bank for International Settlements has shown that CBDCs may increase financial inclusion and payment efficiency, therefore this is in line with their expectations.
Despite the ongoing debate in Congress, the Federal Reserve has not yet decided whether or not to begin issuing digital currency. An enabling legislation is required before construction can begin on a CBDC, according to the agency’s website.
Reflecting the vast discrepancy among policymakers, CBDC proponents highlight their potential advantages, while CBDC opponents warn of the hazards of government-controlled digital currencies.
Central bank digital currencies are a hot topic in Congress right now, and their treatment might have far-reaching consequences for the future of the financial system.
