Anti-CBDC Surveillance State Act
- Bill Number
- S. 1124
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 1
- Policy Area
- Finance and Financial Sector
- Status
- Introduced
- Latest Action
- 2025-03-25: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- Last Updated
- 2026-05-12T11:03:31Z
AI-Generated Summary
Purpose
The "Anti-CBDC Surveillance State Act" aims to prevent the Federal Reserve from issuing, developing, or using a central bank digital currency (CBDC)—a digital form of money directly backed by the central bank—or any similar digital asset. It seeks to protect individual privacy by prohibiting the Federal Reserve from directly or indirectly offering financial products or services to individuals, emphasizing that such authority must come from Congress under the U.S. Constitution.
Key Provisions
- Prohibitions on Federal Reserve Banks (Section 2): Federal Reserve banks cannot offer products or services directly to individuals, maintain accounts for individuals, or issue a CBDC or any substantially similar digital asset.
- Prohibitions on Indirect Issuance (Section 3): Federal Reserve banks cannot provide a CBDC or similar digital asset indirectly to individuals through financial institutions or other intermediaries.
- Broader Restrictions on the Federal Reserve Board (Section 4): The Board of Governors cannot test, study, develop, create, or implement a CBDC or similar digital asset. It also cannot use such a currency for monetary policy (tools to influence the economy, like setting interest rates). An exception allows dollar-based digital currencies that are open (accessible to anyone), permissionless (no approval needed to use), private (protecting user anonymity), and equivalent to the privacy of physical cash like coins and bills. The bill defines CBDC as digital money denominated in U.S. dollars, a direct liability of the Federal Reserve, and widely available to the public.
- Sense of Congress (Section 5): Congress states that the Federal Reserve lacks inherent authority to issue a CBDC or similar asset without explicit Congressional approval, as required by Article I, Section 8 of the Constitution (which grants Congress power over money).
Significant Changes to Existing Law
- Amends Section 16 of the Federal Reserve Act (governing Federal Reserve bank operations) by adding explicit bans on direct and indirect CBDC issuance and individual-facing services, which were not previously restricted in this way.
- Amends Section 10 of the Federal Reserve Act (outlining Board powers) by inserting a new paragraph prohibiting CBDC activities and defining the term, introducing limits on research and policy use that expand beyond current interpretations of the Fed's mandate.
- These changes clarify and restrict the Federal Reserve's scope, shifting potential digital currency innovations away from central bank control toward privately developed, privacy-focused alternatives.
Potential Impacts
- On Government Agencies: The Federal Reserve System (including its Board and regional banks) would face strict limits on innovation in digital payments, potentially slowing research into modern financial tools but reducing risks of government overreach in tracking transactions.
- On Citizens: Individuals gain protections against potential surveillance through a government-issued digital dollar, preserving privacy similar to cash; however, it may limit access to efficient digital payment options if private alternatives do not emerge quickly.
- On International Relations: Could position the U.S. as resistant to global CBDC trends (e.g., those pursued by other central banks like China's digital yuan), influencing U.S. competitiveness in cross-border payments and digital finance diplomacy.
- Broader Economy: Financial institutions might need to adapt by focusing on private digital assets, potentially fostering innovation in decentralized technologies while avoiding centralized control.
Main Stakeholders Affected
- Federal Reserve System: Directly restricted in operations, research, and policy tools.
- U.S. Citizens and Consumers: Benefit from privacy safeguards but may see indirect effects on payment systems and economic policy.
- Financial Institutions (Banks and Intermediaries): Cannot facilitate Fed-issued CBDCs, prompting shifts to other digital solutions.
- Congress: Reinforces its constitutional oversight of monetary authority.
- Private Sector Innovators (e.g., Fintech Companies): Encouraged to develop alternative digital currencies that meet the bill's privacy criteria.
Notable Legal, Constitutional, or Political Implications
- Legal: Establishes clear statutory prohibitions, potentially leading to legal challenges if the Federal Reserve argues existing powers allow limited CBDC exploration; the definition of CBDC provides a precise boundary to avoid loopholes.
- Constitutional: Highlights Congress's exclusive power to "coin Money" (Article I, Section 8), asserting that the Federal Reserve's delegated authority does not extend to CBDCs without further legislation, reinforcing checks and balances.
- Political: Reflects concerns over government surveillance and loss of financial privacy, introduced by Senators Ted Cruz, Ted Budd, Kevin Cramer, and Thom Tillis; it signals bipartisan skepticism toward CBDCs amid debates on digital innovation versus individual rights, potentially influencing future monetary policy discussions.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (8)
Sen. Budd, Ted [R-NC], Sen. Cramer, Kevin [R-ND], Sen. Tillis, Thomas [R-NC], Sen. Moreno, Bernie [R-OH], Sen. Lummis, Cynthia M. [R-WY], Sen. Husted, Jon [R-OH], Sen. Hagerty, Bill [R-TN], Sen. Scott, Rick [R-FL]
Recent Actions
- 2025-03-25: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- 2025-03-25: Introduced in Senate
Bill Versions
- Anti-CBDC Surveillance State Act — issued 2025-03-25 — PDF (4 pages)