U.S. Senate approves prohibition of CBDCs in housing legislation that could encounter challenges in the House.

A bipartisan housing bill has gained approval in the Senate, which includes an unrelated prohibition on U.S. central bank digital currencies, but its prospects remain unclear.

The U.S. Senate has voted in favor of a housing bill that includes a ban on CBDCs. (Jesse Hamilton/CoinDesk)

Key points:

• The significant housing legislation recently passed by the U.S. Senate features a provision that prohibits the Federal Reserve from launching central bank digital currencies until the conclusion of 2030.
• The actions of the House of Representatives in response to the Senate’s approved bill remain uncertain, as does whether President Donald Trump will adhere to his assertion that he will not endorse any legislation until a voter-ID law is established.

A proposal to bar the U.S. Federal Reserve from establishing a government-based digital dollar has received overwhelming bipartisan support, passing 89-10 in the Senate. However, it is included in a housing bill that might face challenges in the U.S. House of Representatives.

This initiative to prohibit a central bank digital currency (CBDC) has been a long-standing priority for Republican legislators, although the U.S. government has not progressed beyond the research phase for creating a governmental token that could compete with privately issued stablecoins, as well as other CBDCs being developed by China and other regions. The 21st Century ROAD to Housing Act contained an unrelated clause that forbids U.S. CBDCs until at least the end of 2030.

The relevant section, located in the final pages of the 302-page bill approved by the Senate, states that the Fed “may not issue or create a central bank digital currency or any digital asset that is substantially similar to a central bank digital currency directly or indirectly through a financial institution or other intermediary.”

“Financial privacy is a cornerstone of American freedom, and the authority to endorse a Central Bank Digital Currency must be retained by Congress and the American populace,” stated Digital Chamber CEO Cody Carbone in a statement. “We value the Senate’s commitment to ensuring that digital innovation in the U.S. is driven by the private sector while safeguarding individual liberty.”

However, House lawmakers have indicated they may pursue a second attempt at modifying the Senate’s version, which could hinder the bill’s advancement. A primary concern is the Senate bill’s requirement for large investors in U.S. housing, such as private equity firms, to significantly restrict the number of homes they can own.

President Donald Trump has supported this concept himself, marking one of the few areas of agreement with Democratic lawmakers.

While Trump has backed the initiative to enhance housing availability in the U.S., he recently declared that he will not sign any bills into law until Congress provides legislation mandating that voters present identification and proof of citizenship prior to participating in this year’s pivotal congressional midterm election. The path forward for that initiative is uncertain, adding to the challenges for those advocating the housing bill and other proposals, including the crypto market structure legislation known as the Digital Asset Market Clarity Act.