US House of Representatives Rejects Issuance of Digital Currency by the Federal Reserve

Bittime – The United States House of Representatives in a vote dominated by party lines, rejected the Federal Reserve's (FED) plan to issue a digital currency (CBDC).

CBDC Anti-Surveillance State Act

The bill, named the " CBDC Anti-Surveillance State Act ", was proposed by Tom Emmer (R-Minn.), a member of the Republican party who serves as Majority Whip. This bill aims to stop the US Federal Reserve's efforts to develop a "digital dollar."

Republicans worry that CBDCs could be used to control Americans. Democrats, on the other hand, argue that concerns are overblown and that a ban would stifle public sector innovation and research.

The voting results showed 213 votes in favor of the Republican Party and 3 votes in favor of the Democratic Party. Meanwhile, 192 votes were rejected from the Democratic Party.

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Differences in Previous Voting Results

The results of this vote are in sharp contrast to the vote the day before, where 71 Democratic members joined 208 Republican members to pass the "Financial Innovation and Technology for the 21st Century Act" (FIT21).

The bill focuses on the structure of the crypto market, which would give the US Commodity Futures Trading Commission (CFTC) greater authority over digital assets in the spot market. This bill also regulates how the US Securities and Exchange Commission (SEC) can supervise the crypto sector.

The crypto industry welcomed the FIT21 vote as a sign of recognition and significant progress for their industry.

"The passage of FIT21 by the US House of Representatives is a watershed moment and a validation step by Congress for the crypto industry in the United States," said Kristin Smith, head of the Blockchain Association, a crypto industry lobbying group.

Echoing Smith, Nicole Valentine, Director of FinTech at the Milken Institute, called the passage of FIT21 a "welcome step."

However, the prospect of both bills, both the one related to market structure and the one banning CBDCs, is expected to deadlock in the Senate. This is because there is no counterpart (companion bill) for the two bills, making it difficult to get the required majority approval.

Indonesia's Role in the CBDC Realm

While the United States is still debating about CBDC, some other countries such as China are already one step ahead in developing their digital currencies.

Then, what about Indonesia?

Bank Indonesia and CBDC Research: Bank Indonesia (BI) has expressed interest in exploring the potential of CBDCs. BI has conducted research and internal discussions regarding the benefits and risks of issuing CBDC.

Potential Benefits of CBDC in Indonesia: Issuance of CBDC in Indonesia has the potential to bring several benefits, such as:

• Increasing efficiency and financial inclusion.
• Reduce cash usage and related costs.
• Facilitate faster and cheaper cross-border payments.
• Giving BI greater control over monetary policy.

Also Read: Wholesale CBDC vs Retail CBDC: This is what you need to know!

CBDC Challenges in Indonesia

Apart from the potential benefits, CBDC issuance in Indonesia also faces several challenges, such as:

• The technological infrastructure is not yet fully ready.
• Cyber ​​security risks.
• Accessibility for people who don't have a smartphone or internet connection.
• Potential disruption to the traditional banking sector.

Indonesia and the Future of CBDC

Indonesia needs to continue to monitor the development of CBDC globally and do in-depth research before deciding to issue its own CBDC.

Dialogue and collaboration with various related parties, including the community, industry players, and international regulators, is very important to ensure the issuance of a CBDC that is effective and benefits the Indonesian people.

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Conclusion

The US House of Representatives rejects the Federal Reserve's plan to issue a digital currency. This decision was driven by concerns about excessive control and barriers to innovation.

Although on the other hand, the bill related to crypto market regulation received approval, indicating recognition of the development of the crypto industry.

The fate of both bills remains uncertain in the Senate, and it remains to be seen whether there will be further efforts to regulate and develop digital currencies in the United States.

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