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The US House of Representatives has advanced its central bank digital currency (CBDC) bill with support from the American Bankers Association (ABA), meaning it will now move to the Senate.

The passed through the US House of Representatives on Thursday (May 23), with a vote in favour of 216 to 192. Backed by key sponsor Ted Cruz, the bill made it through the first of three congressional branches and will now move on to the Senate floor.��

Earlier this week, the ABA urged Congress to support the bill that would prevent the Federal Reserve from issuing a CBDC without specific legislative approval.

The CBDC Anti-Surveillance State Act seeks to protect the US against the “unacceptable risks and costs to the financial system” associated with a CBDC, the industry group said in a  this week.��

“The risks associated with issuing a CBDC are real and likely to undermine any possible benefit that a CBDC would offer,” wrote Kirsten Sutton, ABA’s vice president of congressional relations and legislative affairs.��

“For example, a CBDC would be an advantaged competitor to retail bank deposits that would move money away from banks and into accounts at the Federal Reserve, severely limiting the ability of commercial banks to make loans that power economic growth in communities across the country.”

The lobbyist has previously not taken a public stance on digital forms of central bank money. The letter said that the dollar is “already digital” in its present form and that it is not clear what benefits a CBDC would bring.

Others offered support for the CBDC Anti-Surveillance State Act, including  president and CEO Jim Nussle and Brent Gardner, chief government affairs officer at .��

The draft law would offer broad amendments to the existing Federal Reserve Act. The first would prevent the Fed from offering services or maintaining accounts for individuals, or a retail CBDC. The second states that a CBDC cannot be used for monetary policy purposes and prohibits a CBDC from being offered by the Federal Reserve to an individual through a financial institution or other intermediary.

The third amendment would prevent aspects of the amendment from being applied “to prohibit any dollar-denominated currency that is open, permissionless, private, and fully preserves the privacy protections of United States coins and physical currency”.��

Opposing voices

By contrast, there have been calls to reject the bill, which would see the US become the first country to ban outright the use of a state-level digital currency.��

Jennifer Lassiter, executive director at The Digital Dollar Project, a non-profit that is focused on the introduction of a CBDC in the US, had concerns with the language of the proposed legislation, which she suggested to 91����ԭ�� is too broad and could “have a ripple effect” on how the US moves forward.��

She added that these debates are somewhat premature in the US, pointing to  that suggested the country was nowhere near being able to recommend, let alone adopt, a CBDC in any form, and even if it did, this would already require Congressional legislation.��

“The language and definitions around CBDC as outlined in this legislation are quite broad, and therefore could even prohibit through this amendment existing forms of central bank reserves and limit the Fed’s current ability to conduct monetary policy,” said Lassiter.��

This could mean restriction of tokenised bank deposits and create prohibitions on cryptocurrency implementation, including permissioned stablecoins.��