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Republican Senator Ted Cruz proposed legislation late Tuesday to block a central bank digital currency (CBDC) from being issued in the United States, joining a growing chorus of prominent GOP politicians pushing back against the idea.
In a statement Tuesday, the Texas lawmaker said that the U.S. government had “no authority to unilaterally establish a central bank currency.” CBDCs are a digital version of a state’s fiat currency—like the U.S. dollar or the euro—backed by a central bank.
Co-sponsored by Senators Mike Braun (R-Ind) and Charles E. Grassley (R-Iowa), Senator Cruz argued that having a CBDC in the States, controlled by the Federal Reserve, would jeopardize Americans citizens’ financial information and pave the way to a potential surveillance state.
“Unlike decentralized digital currencies like Bitcoin, CBDCs are issued and backed by a government entity and transact on a centralized, permissioned blockchain,” Cruz’s statement reads.
“Not only would this CBDC model centralize Americans’ financial information, leaving it vulnerable to attack,” Cruz added, “it could be used as [a] direct surveillance tool into the private transactions of Americans.”
Senator Cruz’s proposal comes days after Florida Governor Ron DeSantis similarly proposed legislation wanting to ban CBDCs from the southern state, claiming that such a technology would be used for “surveilling Americans and controlling Americans.”
CBDCs are digital assets different from the likes of Bitcoin, Ethereum, or Dogecoin, as Cruz noted. Unlike such decentralized cryptocurrencies, CBDCs are overseen and operated by a centralized entity—a central power like the government controls them.
Countries around the world are in different stages of researching them. China is more advanced in the CBDC game than other nations—some citizens are already able to use the digital yuan. Senator Cruz’s statement today specifically mentioned China, claiming its CBDC strategy was omitting “the benefits and protections of cash.”
However, Senator Cruz is enthusiastic about decentralized cryptocurrencies: the lawmaker previously proposed legislation that would let politicians spend their Bitcoin on Capitol Hill.