Technical corrections only. The changes between v2 (Reported in House) and v3 (Engrossed in House) are procedural and formatting, reflecting the bill's passage through the House of Representatives. No substantive policy changes were made to the bill's text.
Anti-CBDC Surveillance State Act
- Sponsor
- Rep. Emmer, Tom [R-MN-6]
- Committees
- Financial Services Committee (primary)
- Last action
- Jul 17, 2025
Bottom line
The bill aims to prevent the Federal Reserve from creating or utilizing a central bank digital currency and from directly engaging with individual consumers, thereby limiting the Fed's role in retail banking and digital currency issuance.
What it actually does
This bill amends the Federal Reserve Act to explicitly prohibit Federal Reserve banks from offering financial products or services directly to individuals, maintaining individual accounts, or issuing a central bank digital currency (CBDC) directly or indirectly. It further bars the Board of Governors of the Federal Reserve System and the Federal Open Market Committee from testing, studying, developing, creating, implementing, or using a CBDC for monetary policy. The bill includes an exception for dollar-denominated digital currencies that are open, permissionless, private, and fully preserve the privacy protections of physical currency.
Proponents argue
Supporters argue the bill is crucial for protecting financial privacy and preventing government overreach into individual financial transactions. They contend that a CBDC could enable surveillance, erode the privacy inherent in physical cash, and grant the Federal Reserve undue power over the financial system, potentially disintermediating commercial banks. They also emphasize that the Fed lacks explicit statutory authority to issue a CBDC, asserting congressional prerogative.
Opponents contend
Opponents might argue that prohibiting the development of a CBDC could hinder the U.S. in the global digital currency race, potentially ceding leadership to other nations like China. They might also contend that a well-designed CBDC could offer benefits such as increased financial inclusion, faster and cheaper payments, and enhanced financial stability, and that the bill prematurely forecloses these potential advantages. Some might also argue that the bill's broad prohibitions could stifle innovation in the digital asset space.
The bill is concise and its core provisions are clearly stated, making it accessible for a quick but informed review.
Section 2, amending Section 16 of the Federal Reserve Act, paragraph (18)(A)(i) and (ii)
Prohibition on Federal Reserve Banks Offering Direct Financial Products or Services to Individuals
This provision explicitly forbids any Federal Reserve bank from offering financial products or services directly to individual citizens or from maintaining accounts on behalf of individuals. This means the Federal Reserve cannot act as a retail bank for the general public, maintaining the traditional two-tiered banking system where commercial banks serve consumers.
Supporters argue
Supporters argue this provision maintains the traditional two-tiered banking system, where commercial banks serve individuals and the Fed serves commercial banks. This prevents the Fed from becoming a 'retail bank' and preserves the role of private financial institutions in the economy.
Critics contend
Some might argue that direct accounts with the Fed could offer benefits like faster payments or financial inclusion for the unbanked, bypassing commercial bank fees. However, this specific prohibition is less controversial than the CBDC aspect, as direct Fed accounts have not been a widely pursued policy.
Tradeoffs
This provision balances the desire to maintain the existing financial structure and the role of private banks against potential arguments for greater financial inclusion or efficiency through direct central bank access.
Section 2, amending Section 16 of the Federal Reserve Act, paragraph (18)(A)(iii)
Prohibition on Federal Reserve Banks Directly Issuing a Central Bank Digital Currency
This provision prohibits Federal Reserve banks from issuing a central bank digital currency (CBDC) or any substantially similar digital asset. This is a direct ban on the Fed creating its own digital currency that would be a direct liability of the Fed and widely available to the public, aiming to prevent a government-controlled digital currency.
Section 3, amending Section 16 of the Federal Reserve Act, paragraph (19)
Prohibition on Federal Reserve Banks Indirectly Issuing a Central Bank Digital Currency
This section extends the prohibition on CBDCs by preventing Federal Reserve banks from offering a CBDC indirectly to individuals through financial institutions or other intermediaries. This closes a potential loophole where the Fed might issue a CBDC to banks, which then distribute it to the public, ensuring a comprehensive ban on Fed-issued CBDCs for individuals.
Section 4, amending Section 10 of the Federal Reserve Act, paragraph (11)(A) and (B)
Prohibition on Federal Reserve Board and FOMC Regarding CBDC Development and Monetary Policy Use
This section broadly prohibits the Board of Governors of the Federal Reserve System from testing, studying, developing, creating, or implementing a CBDC. It also explicitly forbids both the Board and the Federal Open Market Committee (FOMC) from using a CBDC to implement monetary policy, effectively halting all official exploration and application of a CBDC by the Fed.
Section 4, amending Section 10 of the Federal Reserve Act, paragraph (11)(C) and (D)
Definition of Central Bank Digital Currency and Privacy-Preserving Exception
This section defines 'central bank digital currency' as digital money that is denominated in the national unit of account, a direct liability of the Federal Reserve System, and widely available to the general public. Crucially, it includes an exception: the prohibitions do not apply to any dollar-denominated currency that is 'open, permissionless, and private, and fully preserves the privacy protections of United States coins and physical currency,' carving out space for certain private digital assets.
Section 5
Sense of Congress on Federal Reserve Authority to Issue CBDC
This section states that it is the sense of Congress that the Federal Reserve System currently lacks the authority to issue a CBDC and will not have such authority unless explicitly granted by Congress under its Article 1 Section 8 powers. This is a non-binding statement reinforcing Congress's view on its constitutional role in monetary policy.
This section defines 'central bank digital currency' and provides an exception for 'open, permissionless, and private' dollar-denominated digital currencies that fully preserve the privacy protections of United States coins and physical currency.
Section 4, paragraph (11)(C) and (D)
Why it matters:This is standard legislative practice for definitions and exceptions, but the specific phrasing of the exception is highly consequential for the scope of the bill's prohibitions and the future of private digital assets.
Case for: Supporters argue this carve-out demonstrates the bill's targeted approach, aiming to prevent a government-controlled CBDC while explicitly allowing for private sector innovation in digital currencies that prioritize user privacy and decentralization.
Case against: Critics might argue that the terms 'open, permissionless, and private' are vague and could lead to ambiguity in implementation, potentially creating loopholes or unintended consequences for future digital asset development, or that such a currency would not truly be a 'central bank digital currency' if not a direct Fed liability.
Estimated impact: This provision significantly shapes the future landscape of digital currency development in the U.S., potentially encouraging private sector innovation in privacy-focused digital assets while strictly limiting the Fed's role in issuing its own digital currency.