FROM LEGAL TENDER TO PROHIBITION: COMPETING PARADIGMS IN CENTRAL BANK DIGITAL CURRENCY LAW

Filippo Zatti

doi:10.56461/SPZ_25402KJ

Authors

Filippo Zatti Department of Economics and Management, University of Florence https://orcid.org/0000-0002-1528-3045

DOI:

https://doi.org/10.56461/SPZ_25402KJ

Keywords:

Central Bank Digital Currency, Legal Tender, Monetary Sovereignty, Financial Privacy, Legal Desirability.

Abstract

Before 2025, legislative intervention regarding central bank digital currencies (CBDCs) worldwide focused predominantly on enabling their issuance through legal tender designation and accompanying regulatory frameworks. The U.S. Anti-CBDC Surveillance State Act (S. 1124) represents a fundamental paradigm shift: legislation oriented towards prohibition rather than enablement. This article examines why the sovereign would legislate against its own monetary prerogative and proposes ‘legal desirability’ as the necessary analytical framework. Legal desirability involves systematic evaluation across five dimensions – legal authority, technological governance, risk management, institutional design, and operational resilience – filtered through jurisdiction-specific variables including payment system context, constitutional traditions, and policy objectives. This framework explains how jurisdictions applying identical analytical criteria may rationally reach opposing conclusions. The U.S. determination that the privacy–AML/CFT trilemma is unresolvable within constitutional constraints did not lead to the rejection of digital money innovation but to an alternative framework championing regulated private stablecoins. The article identifies two competing conceptions of monetary sovereignty underlying this divergence – sovereignty as state capacity versus sovereignty as constitutional restraint – and examines implications for legal tender doctrine, central bank independence, and the emerging multi-form digital money system.

Downloads

Download data is not yet available.

Author Biography

Filippo Zatti, Department of Economics and Management, University of Florence

Associate Professor of Economic Law, Department of Economics and Management, University of Florence; Scientific Coordinator of BABEL (Blockchain and Artificial Intelligence for Business, Economics and Law) and EBI Academic Fellow

References

Avgouleas, E. & Blair, W. 2024. A critical evaluation of Central Bank Digital Currencies (CBDCs): payments’ final frontier?. Capital Markets Law Journal, 19(2), pp. 103–112. https://doi.org/10.1093/cmlj/kmae002.

BoE. 2025. Progress update: The digital pound and the payments landscape. Available at: https://www.bankofengland.co.uk/report/2025/digital-pound-progress-update, 1. 12. 2025.

Bossu, W., Itatani, M. & Rossi, A. D. 2020. Legal Aspects of Central Bank Digital Currency: Central Bank and Monetary Law Considerations. IMF, 20(254), pp. 1-51. Available at: https://www.imf.org/en/Publications/WP/Issues/2020/11/20/Legal-Aspects-of-Central-Bank-Digital-Currency-Central-Bank-and-Monetary-Law-Considerations-49827, 9. 4. 2022. https://doi.org/10.5089/9781513561622.001

Cao, S. 2025. From Regulation to Realisation: How the U.S. Crypto Laws of 2025 Could Redefine Dollar Dominance in a Blockchain Economy. SSRN Electronic Journal [Preprint]. pp. 1-12. https://doi.org/10.2139/ssrn.5364331.

Freiman, O. 2025. CBDC Governance: Programmability, Privacy and Policies. SSRN Electronic Journal [Preprint], pp. 1-22. https://doi.org/10.2139/ssrn.5118025.

Garita, M. 2025. CBDCs and the Free Market: Assessing the Balance Between Regulation and Innovation. SSRN. https://doi.org/10.2139/ssrn.5094711

Gazi, S. 2023. Unlocking the Potential of Central Bank Digital Currencies in Developing Countries. In: Zatti, F. & Barresi, R. G. (eds,), Digital Assets and the Law. 1st edn. London: Routledge, pp. 83-107. https://doi.org/10.4324/9781003258261-7

Jiang, J. 2025. Digital Dollar: Privacy and Transparency Dilemma’, UC L.J., 76(4). pp. 630-678.

Krause, D. 2025a. Do the Anti-CBDC Surveillance State Act and the GENIUS Act Jeopardize U.S. Digital Finance?. CLS Blue Sky Blog, Available at: https://clsbluesky.law.columbia.edu/2025/08/11/do-the-anti-cbdc-surveillance-state-act-and-the-genius-act-jeopardize-u-s-digital-finance/, 30. 11. 2025.

Labonte, M. & Nelson, R. M. 2022. Central Bank Digital Currencies: Policy Issues. legislation R46850. Congress.Gov. Available at: https://www.congress.gov/crs-product/R46850, 1. 12. 2025.

Li, Z. & Li, J. 2025. Architecting Inclusion in e-CNY: Settlement-Upon-Payment, Domestic Interoperability, and User Control. Encyclopedia, 5(4), p. 179. https://doi.org/10.3390/encyclopedia5040179.

Noll, F. 2023. A History of Central Bank Digital Currency and the Money Monopoly’. In: Zatti, F. & Barresi, R. G. (eds,), Digital Assets and the Law. 1st edn. London: Routledge, pp. 3-17. https://doi.org/10.4324/9781003258261-2.

Ozili, P. K. 2025a. 100 Quotes About Central Bank Digital Currencies. In: Baber, H. & Fanea-Ivanovici, M. (eds.), Sustainable Financing—A Contemporary Guide for Green Finance, Crowdfunding and Digital Currencies. Cham: Springer Nature Switzerland (World Sustainability Series), pp. 201-223. https://doi.org/10.1007/978-3-031-80969-9_14.

Ozili, P. K. 2025b. How Politics Hinder Central Bank Digital Currency (CBDC) Development and What to Do about It. Journal of Central Banking Theory and Practice, 14(1), pp. 59-74. https://doi.org/10.2478/jcbtp-2025-0004.

Palá Laguna, R. 2023. The Digital Euro, Stablecoins, and the Banking Sector. In: Zatti, F. & Barresi, R. G. (eds.), Digital Assets and the Law. 1st edn. London: Routledge, pp. 297-308. https://doi.org/10.4324/9781003258261-21.

Palmstorfer, R. & Erbilen, G. 2025. Central Bank Digital Currency: Facilitating its understanding from a comparative global perspective. Zeitschrift für europarechtliche Studien, 28(2), pp. 210-231. https://doi.org/10.5771/1435-439X-2025-2-210.

Pfister, C. 2023. Monetary Sovereignty in the Digital Currency Era’. In: Zatti, F. & Barresi, R. G. (eds.), Digital Assets and the Law. 1st edn. London: Routledge, pp. 35-66. https://doi.org/10.4324/9781003258261-5.

Rossi, A. 2023. Central Bank Digital Currencies. A New Nexus Between Central and Commercial Banks?. In: Zatti, F. & Barresi, R. G. (eds.), Digital Assets and the Law. 1st ed. London: Routledge, pp. 67-82. https://doi.org/10.4324/9781003258261-6.

Sandner, P., Gross, J. & Avdeev, R. 2023. Digital Euro. Issued by Commercial Banks, Digitally Transforming the Industry. In: Zatti, F. & Barresi, R. G. (eds.), Digital Assets and the Law. 1st edn. London: Routledge, pp. 141-156. https://doi.org/10.4324/9781003258261-11.

Sangwa, S. & Mutabazi, P. 2025. Programmable CBDCs, Digital Identity, ISO 20022, and AI: Reconfiguring Power in Payment Infrastructures. Open Journal of Stewardship Economics & Ethical Innovation, 1(2). https://doi.org/10.5281/ZENODO.17179094.

Sanz Bayón, P. 2025. Current and Future Central Bank Digital Currency (CBDC) Projects. In: Pastor Sempere, C. (ed.), Governance and Control of Data and Digital Economy in the European Single Market. Cham: Springer Nature Switzerland (Law, Governance and Technology Series), pp. 309-347. https://doi.org/10.1007/978-3-031-74889-9_14.

Skinner, C. 2024. Central Bank Digital Currency As New Public Money. https://doi.org/10.2139/ssrn.4360665

The Digital Dollar Project. 2021. Privacy Principles for a Digital Dollar. Available at: https://digitaldollarproject.org/wp-content/uploads/2021/10/DDP-Privacy-Principles-10.18.21_Final.pdf, 30. 11. 2025.

Tran, H. 2025. The tokenisation of money: what it means for the international monetary system. Policy Center for the New South [Preprint], 44/25, pp. 1-11. Available at: https://www.policycenter.ma/sites/default/files/2025-09/PB_44-25_Hung%20Tran.pdf, 1. 12. 2025.

Veneris, A. 2025. Decentralisation, assets and privacy in the twenty-first digital century. CIGI https://hdl.handle.net/10419/322470.

Zatti, F. 2022. The economic law of (central bank) digital currency. Law and Financial Markets Review, 16(3), pp. 253-265. https://doi.org/10.1080/17521440.2023.2261668.

Zatti, F. 2023. Legal tender and Central Bank Digital Currency. In: Zatti, F. & Barresi, R. G. (eds.), Digital Assets and the Law. 1st edn. London: Routledge, pp. 197-212. https://doi.org/10.4324/9781003258261-16.

Zatti, F. (forthcoming). The Legal Desirability of Tokenized Money: A Comparative Analytical Framework. In: R. D. Caria et al. (eds), The tokenisation of the economy: an interdisciplinary and comparative regulatory perspective. Torino: Giappichelli (Studies in Market Regulation Series: Economic Realities and Legal Experience).

Zatti, F. 6 Barresi, R. G. 2024. Beyond Digital Assets: What is Next for Money and Payments.in Digital Assets and the Law. Fiat Money in the Era of Digital Currency. Londra: Routledge, pp. 345–358. https://doi.org/10.4324/9781003258261-25.

Internet Sources

Atlantic Council. 2025. Central Bank Digital Currency Tracker. Available at: https://www.atlanticcouncil.org/cbdctracker/, 1. 12. 2025.

Congress.Gov. 2025. Central Bank Digital Currencies | Library of Congress. Available at: https://www.congress.gov/crs-product/IF11471, 30. 11. 2025.

ECB. 2025. Progress on the preparation phase of a digital euro - Closing progress report. Available at: https://www.ecb.europa.eu/euro/digital_euro/progress/html/ecb.deprp202510.en.html, 1. 12. 2025.

Krause, D. 2025b. The Digital Dollar Divide | The Regulatory Review. Available at: https://www.theregreview.org/2025/09/30/krause-the-digital-dollar-divide/, 30. 11. 2025.

U.S. House Committee on Financial Services. 2025. Hearing Entitled: Navigating the Digital Payments Ecosystem: Examining a Federal Framework for Payment Stablecoins and Consequences of a U.S. Central Bank Digital Currency. Available at: https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=409489, 30. 11. 2025.