Republican senators introduced legislation on Monday to ban official cryptocurrencies backed by central banks, citing concerns over privacy and regulatory access to individuals' spending habits. Cryptocurrency stablecoins, known as Central Bank Digital Currencies (CBDCs) have been of interest to the Biden administration and the Federal Reserve for study.

GOP senators argue that Fed-backed digital currencies could provide the government with transaction-level data on individual users, compromising privacy. Senator Ted Cruz described CBDCs as "programmable money" that, if not designed to emulate cash, could give the federal government significant insight into users' financial activities.

The Biden administration has been studying the use of cryptocurrencies since 2022, with reports outlining their potential benefits and risks. While the administration supports ongoing research and evaluation of CBDCs, it has not explicitly endorsed their creation without an act of Congress.

Both the Federal Reserve and the Treasury Department have explored the potential uses and structures of CBDCs. They believe that CBDCs could lead to a more efficient and inclusive payment system. The Federal Reserve highlights the safety of CBDCs, as they are liabilities of the central bank without associated credit or liquidity risks.

The Republican legislation would prevent the Federal Reserve from authorizing the use of Fed-backed stablecoins by individuals and third-party institutions such as banks and credit unions.

Central bank digital currencies have gained international attention, with advocates touting their benefits and authorities raising concerns about operational consequences. The Bank for International Settlements (BIS) warns about the potential risks associated with providing the general public access to central bank money through CBDCs.