The Civic Node

CBDC

5 min read

Definition

A Central Bank Digital Currency (CBDC) is a digital form of a nation’s fiat currency, issued as a direct liability of the central bank — as opposed to commercial bank deposits (liabilities of private banks) or private stablecoins (liabilities of private issuers). A U.S. retail CBDC would be a Federal Reserve liability held directly by consumers, the digital analog of physical cash. During U.S. “Crypto Week” in July 2025, the Anti-CBDC Surveillance State Act was passed by the House, explicitly blocking the Federal Reserve from issuing a retail CBDC.

Terminology note: A CBDC, a stablecoin, and a bank deposit are all payment instruments denominated in dollars, but they differ in who is liable for redemption. A CBDC is direct central-bank money. A stablecoin is a redemption claim on dollar money issued by a private firm. A bank deposit is a claim on a commercial bank. None of these is “currency” in the legal-tender sense — currency is the legal status of a payment medium, not its technical form. The Anti-CBDC vs. GENIUS choice is a choice between two private-issuer models of digital dollar payment instruments, not a choice about the dollar itself.

Why It Matters

A U.S. CBDC would give the federal government unprecedented visibility into every transaction by every American — and potentially the ability to program money (expire it, restrict where it can be spent, freeze accounts without court orders). This is the “surveillance state” fear that drove the Anti-CBDC Act. At the same time, China’s digital yuan (e-CNY) is a functioning CBDC, and the U.S. blocking its own CBDC may cede ground in the global digital currency race. The choice between a CBDC and regulated private stablecoins (the GENIUS Act path) is a fundamental policy fork.

The Surveillance Concern

Critics of CBDCs — primarily from the libertarian right and privacy advocates — argue:

  • Programmable money enables governments to restrict spending (e.g., can’t spend on “unapproved” goods)
  • Real-time transaction surveillance goes far beyond what banks currently report
  • No equivalent of cash anonymity
  • Vulnerable to weaponization by authoritarian governments or hacked systems

The Counter-Argument (Pro-CBDC)

  • Would improve financial inclusion (unbanked populations)
  • Faster, cheaper payments vs. current bank-wire infrastructure
  • Could reduce reliance on private payment rails (Visa, Mastercard) that also surveil users
  • Allows direct monetary policy transmission (e.g., helicopter money in crisis)
  • Global competition: China, EU, 100+ countries have CBDC programs

U.S. Legislative History

  • Anti-CBDC Surveillance State Act: Sponsored by House Majority Whip Tom Emmer; passed House in 2025 as part of “Crypto Week” package. Blocks the Fed from issuing a retail CBDC.
  • The same legislative package that blocked CBDCs (government-issued digital dollars) enabled private stablecoins (the GENIUS Act) — a telling asymmetry.

International Context

  • Over 130 countries are in some stage of CBDC research, development, or deployment (Central Bank Digital Currency Tracker, Atlantic Council).
  • China’s digital yuan (e-CNY) is the most advanced major-economy CBDC.
  • The European Central Bank is piloting a digital euro.
  • The U.S. now has explicit legislative prohibition on a retail CBDC.

Tensions & Counterarguments

The U.S. has simultaneously blocked a government digital dollar while enabling dollar-pegged private stablecoins. This means the U.S. dollar’s digital future is being privatized — companies like Circle and Tether will issue the digital dollars that circulate globally, with reserve requirements enforced by banking regulators. Whether this is better for freedom than a government CBDC depends on whether you trust private issuers or the government more.

The Anti-CBDC Act’s privacy framing is applied selectively: private stablecoins also surveil users (issuers must comply with Bank Secrecy Act, know-your-customer rules), but this surveillance is normalized because it’s private.

Anti-CBDC Act Passage Details

The Anti-CBDC Surveillance State Act (H.R. 1919) passed the House on July 17, 2025, by a vote of 219-210. This was the narrowest and most partisan of the three Crypto Week bills:

  • GENIUS Act: 68-30 in Senate (bipartisan)
  • CLARITY Act: 294-134 in House (bipartisan)
  • Anti-CBDC Act: 219-210 (narrow; partisan)

The White House issued a formal Statement of Administration Policy (SAP) supporting the bill, using the word “deplatform” — framing a CBDC as capable of deplatforming Americans from the financial system, linking it to social media censorship debates. The Administration stated: “The United States will never allow the creation of a central bank digital currency.”

Key Framing Moves

Tom Emmer’s floor remarks invoked two international examples to justify the prohibition:

  1. China’s digital yuan (e-CNY): Used to monitor spending and build a social credit system.
  2. Canada 2022: Trudeau administration froze trucker bank accounts during COVID mandate protests.

These examples frame CBDC as a tool of authoritarian financial control — even as critics note U.S. private stablecoins (Circle, Tether) also surveil users via BSA/KYC compliance requirements.

Non-Problem Argument

Multiple sources note the Federal Reserve had not expressed any desire to develop a CBDC. The Anti-CBDC Act codifies a prohibition against something that wasn’t happening. This “solving a non-problem” framing is prominent among critics — while supporters argue codification prevents any future administration from pursuing it.

Key Sources

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