Key facts
- Blockchain Association sent a letter to U.S. Senate leadership opposing a retail CBDC.
- The association argues a retail CBDC would threaten financial privacy through government surveillance.
- The association claims a CBDC would disadvantage the private stablecoin ecosystem.
- The letter supports the Clarity Act, which aims to regulate private stablecoins.
- The association believes a CBDC could become politically viable if Congress fails to act on private stablecoin regulation.
The Blockchain Association, representing over 100 crypto firms, has formally urged U.S. Senate leadership to reject the creation of a retail Central Bank Digital Currency (CBDC). In a letter to Senate Majority Leader Thune and Democratic Leader Schumer, the association argued that a government-issued digital dollar would create an 'institutional surveillance threat' to financial privacy and would unfairly disadvantage the private stablecoin market. The group highlighted that Congress has spent approximately two years attempting to regulate stablecoins through legislation like the GENIUS Act and the Digital Asset Market Clarity Act (CLARITY Act, H.R. 3633). The Blockchain Association believes that by demonstrating progress on regulated private stablecoins, they can preempt the political viability of a retail CBDC. The letter emphasizes that a retail CBDC, directly issued and held by the Federal Reserve, would record every transaction on a government-controlled ledger, offering federal agencies direct access to complete financial histories. This contrasts with commercial bank transactions, which have procedural friction for government access due to Fourth Amendment protections and Bank Secrecy Act requirements. The association characterizes the CBDC architecture as a surveillance tool, regardless of initial privacy protections, as these can be amended. The Blockchain Association's stance aligns with the Federal Reserve's acknowledgment in its January 2022 discussion paper that it would require clear support from Congress and the executive branch before proceeding with a retail CBDC. This action comes after President Biden's March 2022 Executive Order 14067 directed assessments on digital assets, and in a political climate where the White House has shown a preference for private-sector stablecoin solutions. The CLARITY Act, which aims to regulate private stablecoins, has gained support from 160 former national security, intelligence, and law enforcement officials.