Senate passes housing bill with 4-year ban on Fed CBDC

The U.S. Senate voted 85-5 to pass a housing affordability bill that includes a four-year ban on the Federal Reserve issuing a central bank digital currency, sending the legislation to the House for a vote as soon as Tuesday.

"The Board of Governors of the Federal Reserve System or a Federal reserve bank may not issue or create a central bank digital currency or any digital asset that is substantially similar to a central bank digital currency," the 21st Century ROAD to Housing Act states. The prohibition runs through the end of 2030.

The CBDC provision was inserted into the broader housing bill by Republican lawmakers who have opposed the concept of a digital dollar as a government surveillance tool, despite the Fed having no active plans to develop one. President Donald Trump signed an executive order in January 2025 prohibiting his administration from pursuing a CBDC, which he said would "threaten the stability of the financial system, individual privacy, and the sovereignty of the United States."

The ban would formally block the Fed from following the European Central Bank, which is developing a digital euro with a pilot program set for 2027 and a full launch targeted for 2029, and China's People's Bank of China, which has already issued a digital yuan. New Fed Chair Kevin Warsh said during his nomination hearing that he fully opposed a U.S. CBDC, calling it a "bad policy choice."

Why the CBDC ban landed in a housing bill

The housing legislation had been stalled for months after the Senate passed its version in March and the House approved a different version in May. The final compromise emerged from negotiations among Sen. Tim Scott, R-S.C., Sen. Elizabeth Warren, D-Mass., Rep. French Hill, R-Ark., and Rep. Maxine Waters, D-Calif. — an ideologically diverse group that agreed to drop a Senate provision requiring large investors to sell single-family homes after seven years while adding House-backed language including the CBDC restriction.

The bill's primary provisions focus on boosting housing supply through streamlined permitting, grant programs for affordable housing, and a restriction barring institutional investors from buying single-family homes if they already own 350 or more properties. Trump championed that investor provision in his State of the Union address this year.

What the ban means for crypto markets

The prohibition removes the threat of a government-issued digital dollar that could compete with private stablecoins and cryptocurrencies, reinforcing the current U.S. regulatory direction under Trump. However, the four-year window means a future administration could revisit the question after 2030. The ECB's digital euro is expected to launch that same year, and China's digital yuan is already operational in cross-border payment pilots involving 26 financial institutions, according to Reuters.

House lawmakers are considering an accelerated process to vote on the bill as soon as Tuesday, according to Politico. Trump's signature would make the CBDC ban law.

This article is for informational purposes only and does not constitute investment advice.