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The tide in the crypto market has turned.

Today the bitcoin price sank 4%. The price of the second-largest crypto, ethereum, is down 3.5%. Meanwhile, the BNB price slipped 1.9%, cardano 3.3%, XRP 3.4%, and solana 4.9%.

However, a major catalyst is brewing that could turn cryptocurrency prices around.

Bitcoin cryptocurrency coin

As the Fed pushes ahead with its crypto investigation into a digital dollar which would create competition for major cryptocurrencies, such as bitcoin, ethereum, solana, XRP, and BNBone congressman is seeking to ban government-issued digital currencies.

This past Wednesday, Minnesota Republican Representative, Tom Emmer, introduced a bill that would put a damper on the Feds powers in issuing a digital currency directly to American citizens, which he thinks would put the nation on an authoritarian path.

Requiring users to open up an account at the Fed to access a US CBDC would put the Fed on an insidious path akin to China's digital authoritarianism," he said in a statement. "It is important to note that the Fed does not, and should not, have the authority to offer retail bank accounts."

Although Fed Chair Jerome Powell said cryptos could co-exist with central bank-issued cryptocurrencies, the congressman argues a CBCD would allow the Fed to surveil Americans, which defeats the whole purpose of a decentralized cryptocurrency.

"CBDCs that fail to adhere to these three basic principles could enable an entity like the Federal Reserve to mobilize itself into a retail bank, collect personally identifiable information on users, and track their transactions indefinitely," he said.

Zooming out

Last July, the Fed launched an investigation into whether it should introduce its own digital currency.

We think its really important that the central bank maintain a stable currency and payments system for the publics benefit. Thats one of our jobs, Fed Chair Jerome Powell said. Later he noted that involves the transformational innovation in digital payments, referring to the revolution of cryptocurrencies.

The Fed didnt give any timeline and hinted that they wont rush it. I think its important that we get to a place where we can make an informed decision about this and do so expeditiouslyI dont think were behind. I think its more important to do this right than to do it fast, Powell said at his post-meeting news conference.

The Fed hasnt yet made any decision, but this Tuesday Powell told a US Senate committee that theyd release the highly anticipated report on central bank digital currencies within weeks.

Looking ahead

Government-backed cryptocurrencies are picking up steam worldwide.

As of now, 87 countries (which make up over 90% of the worlds GDP) are considering launching their own cryptocurrencies, according to Atlantic Council. 14 are on a test run, including China, and nine have already launched, with Nigeria introducing last.

Meanwhile, the countries with the largest central banksthe US, Japan, the Euro area, and the UKare falling behind.

The adoption of central bank-issued digital currencies among major economies is a closely watched development among crypto investors because its not yet clear how they would affect major cryptocurrencies.

Jerome Powell thinks central bank-issued currencies would render cryptocurrencies useless. You wouldnt need stablecoins; you wouldnt need cryptocurrencies, if you had a digital U.S. currency, Powell said during a congressional hearing last July.

Others believe a digital dollar would have the opposite, counter-intuitive effect. Greg King, the founder and CEO of Osprey, argues it would spark a backlash over privacy concerns and push more people into decentralized cryptocurrencies.

In an interview with CNBC after Powells remarks, King said: Imagine the worlds fiat currencies are digitized. I actually think that pushes more people into something like a bitcoin because, frankly, that would give governments even more control than they already have around their money supply, and a lot of people get into bitcoin for concerns about that type of control.

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Congress Introduces A Game-Changing Crypto Bill As The Price Of Bitcoin, Ethereum, BNB, Solana, Cardano, XRP Sinks - Forbes