Senator Ted Cruz, a Republican from Texas and Ranking Member of the Senate Committee on Commerce, Science, and Transportation, recently proposed legislation to prevent the Federal Reserve from creating a central bank digital currency (CBDC) for consumer use.
Co-sponsored by Senators Braun (R-Ind.) and Grassley (R-Iowa), the legislation is designed to safeguard financial privacy by limiting the government’s ability to monitor individual transactions, according to Cruz and his supporters.
The introduction of this bill comes in response to concerns raised by Senator Cruz and others regarding CBDCs. Cruz’s proposed legislation aims to ensure that any U.S. digital currency policies prioritize financial privacy, uphold the dominance of the U.S. dollar, and encourage innovation.
According to the press release, Cruz and his supporters argue that if CBDCs were to bypass these basic principles, the Federal Reserve could transform into a retail bank, gather sensitive user data, and indefinitely track individual transactions. Although the Fed currently does not have the authority to offer retail banking services, it is already considering establishing a digital currency.
According to Senator Cruz, CBDCs, which are issued and backed by a government entity and transact on a centralized, permissioned blockchain, pose the risk of centralizing Americans’ financial information and making it susceptible to cyberattacks. Furthermore, Cruz suggests that CBDCs could be used as a surveillance tool, allowing the government to monitor private transactions.
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Senator Cruz expressed his belief that the federal government should not have the power to create a central bank currency unilaterally. He emphasized that the bill would promote entrepreneurship, innovation, and individual freedom while preventing the centralization and control of cryptocurrencies.
Both Senators Braun and Grassley have voiced their support for the legislation, highlighting the importance of financial privacy and individual liberty from their perspective.
In November 2022, Senator Cruz, while speaking at the Texas Blockchain Summit 2022, argued that crypto could be a strategic industry for the United States to develop.
Cruz claimed that Bitcoin offered the country’s energy supply advantages and represented an “enormous reservoir” of excess energy.
As reported by Cointelegraph, the Senator said,
“The beauty of it [Bitcoin mining] is when you’ve got substantial investment, as we do in Texas and Bitcoin mining when you have an extreme weather event, either extreme heat, which is frequent in the state of Texas or extreme cold, which sometimes happens here, Bitcoin mining can be shut off in a fraction of a second. Making that electricity immediately available to the grid to heat or cool people’s homes to keep businesses running. That is an enormous reservoir of excess capacity.“
Cruz called crypto mining supply excess “very beneficial” and noted that Texas’s abundant and low-cost energy makes it an attractive location for the crypto industry. The Texas Senator continued, saying he was a Bitcoin fan because “the government can’t control it.”
Senator Cruz claimed that Bitcoin was the only cryptocurrency he owns, revealing that he makes weekly investments in BTC.
“I think Bitcoin means investment. It means opportunity. It means prosperity. It means financial independence.“
The Senator also claimed that the rise of Bitcoin mining in Texas had “enormous positive benefits” for the resiliency of the state’s electricity grid.
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