US lawmaker urges ban on CBDCs, says technology 'corrupts money'

Central bank digital currencies have come under renewed criticism as the Federal Reserve under Jerome H. Powell considers potential CBDC designs.

In a July 23 tweet, Republican Representative Warren Davidson condemned any potential move to introduce a CBDC, noting that digital currencies undermine the spirit of money. Davidson urged Congress to ban and criminalize any attempt to create a central bank digital currency.

Congressman Davidson Says CBDC Equivalent to Financial 'Death Star'

Warren Davidson, the representative for Ohio's 8th Congressional District, emphasized that currencies should not be programmed by a central authority. He said the Fed's move to develop a CBDC is like "building the financial equivalent of the Death Star."

He added that a CBDC reduces money to a tool of coercion and control in the hands of a central authority (the Federal Reserve). “Congress must swiftly prohibit and then criminalize any attempt to design, build, develop, test, or establish a CBDC.”

It’s worth noting that Warren Davidson’s remarks came in response to a job ad from the Federal Reserve Bank of San Francisco for a senior cryptocurrency architect to work on its CBDC project.

Responding to the Twitter user's comments, Davidson also pointed out that money should remain a stable store of value and that sound money should facilitate permissionless peer-to-peer transactions.

While CBDCs continue to gain attention globally, the Federal Reserve has been exploring the appropriate design of a potential digital dollar. However, the central bank has not yet decided whether to issue it.

The current total market capitalization of cryptocurrencies on the daily chart is $1.13 trillion. | Source: TOTAL chart from TradingView.com

Prominent American politician says CBDC violates financial privacy rights

The question of establishing a digital dollar has drawn mixed reactions in the United States, especially with the launch of the new instant payment system FedNow service.

Additionally, some speculate that the possibility of issuing a digital dollar will be a key point of contention in the upcoming presidential election.

Meanwhile, Congressman Davidson isn't the only high-profile figure expressing disdain for the Fed-controlled issuance of a digital dollar.

On July 14, Florida Governor and U.S. presidential candidate Ron DeSantis said that if elected president, he would ban any central bank digital currency. In May 2023, Governor DeSantis signed a bill banning the use of CBDCs in Florida.

Another Republican, Tom Emmer, has repeatedly expressed his misgivings about a potential state-controlled digital dollar. Speaking at the Cato Institute, a libertarian think tank in Washington, on March 9, Emmer said authorities could weaponize a programmable CBDC as an espionage tool to stop “politically unpopular activities.”

In February of this year, Emmer proposed the "CBDC Anti-Surveillance State Act", claiming to protect Americans' right to financial privacy. Emmer’s bill is backed by Texas Sen. Ted Cruz, who introduced an anti-CBDC bill in March that also claims to protect Americans’ financial privacy.