Lawmakers turned the debate over a digital dollar into legislation by adding a four-year ban on central bank digital currencies to the housing affordability package passed by the Senate, even though there are no active plans for a US virtual currency.
According to legislative summaries and committee releases, the bill would prohibit the Federal Reserve from issuing, creating, or distributing any central bank digital currency that is “widely available to the general public” until at least December 31, 2030.
Seeking to prevent the United States from replicating the frameworks of European and Chinese central banks, GOP politicians have rallied against the concept, describing it as an intrusive tool for state surveillance.
They successfully advocated for its inclusion in the 21st century route Housing lawwhich won overwhelming approval in the Senate on Monday night by a margin of 85-5.
If the House votes in favor of the bill and President Donald Trump later approves it, the central bank digital currency provision would be written into federal law.
The ban on central bank digital currencies (CBDC) will only be temporary if the bill is signed into law
Earlier in January, President Donald Trump also made the official announcement wave His administration has not pursued a CBDC, arguing that it could jeopardize privacy rights and the stability of the U.S. financial system.
Trump’s allies in Congress successfully added an amendment to an unrelated housing package that legally prohibits the Federal Reserve System from creating a central bank digital currency or any similar digital asset via financial intermediaries. Even if a ban on central bank digital currencies (CBDCs) is approved, it will still be there It remains Valid until the end of 2030 only.
The Federal Reserve emphasized that the US digital currency is still in the theoretical research stage, unlike Europe and China, where these government-backed digital assets are more developed.
Europe is already preparing for the test Digital euro Next year, before a full launch in 2029, as China develops its own digital yuan under the supervision of the People’s Bank of China.
Before stepping down, former Fed Chairman Jerome Powell indicated that the digital dollar would be issued by private banks, running counter to Republican fears of government financial dictatorship. However, new Fed Chairman Kevin Warsh stated during his nomination hearing that he does not support US central bank digital currencies, calling them a “bad policy choice.”
House lawmakers are also reportedly looking to speed up consideration of the housing bill and could approve it as early as Tuesday. If Trump signs it, the central bank digital currency provision would be enacted along with the rest of the legislation.
South Korea and Europe are developing their own CBDC projects
South Korea is seeking a CBDC. The Bank of Korea has advanced its central bank digital currency pilot program to a second phase focused on integrating deposit tokens into existing banking frameworks, moving beyond initial testing at the retail level.
It will have participating banks enhance their core banking operations with e-wallets, voucher tools and blockchain technology that can work alongside existing payment and settlement networks.
Authorities want to test whether central bank-directed digital tokens can process payments and settlements while remaining part of the official banking infrastructure.
This development pushes the project beyond theoretical testing and toward real-world application. Banks are expected to evaluate how token funds interact with core banking functions and regulatory controls.
Meanwhile, in February, the European Parliament gave the green light to a digital euro, saying it was absolutely essential to promote monetary independence and facilitate retail payments across the region.
the European Central Bank I spent March and April doing the heavy technical work for both the digital euro and the systems that will handle tokenized cash in Europe. It has moved beyond the design phase and is now focusing on planning implementation, although the launch of a digital euro ultimately hinges on new legislation.
