U.S. House Moves to Ban Federal Reserve's Digital Currency Initiative

According to Cointelegraph, the U.S. House of Representatives has incorporated a provision into a comprehensive bill that prohibits the Federal Reserve from issuing a central bank digital currency (CBDC). This measure is part of a nearly 1,300-page document outlining the nation's defense policy for the fiscal year 2026. The revision of HR 3838, which is the House's version of the National Defense Authorization Act, was shared by the House Rules Committee on Thursday. It includes extensive language that prevents the Federal Reserve from studying or creating digital currency. The House previously passed a similar Republican-backed bill, known as the Anti-CBDC Surveillance State Act, in July with a narrow vote of 219 to 210. However, its future in the Senate remains uncertain. The National Defense Authorization Act and related appropriations bills are considered essential national security legislation, as they determine military funding and budget allocation. It is common for lawmakers to attach non-defense-related provisions to such bills, which might face delays or significant revisions if proposed independently. House leaders had pledged to include the CBDC ban in the defense bill as part of an agreement with conservative hardliners in July. A faction of Republican holdouts had stalled the advancement of three crypto bills, demanding assurance that the CBDC ban would be enacted. This led to a prolonged debate lasting over nine hours, marking the longest in the House's history. Initially, the passage of the CBDC-banning bill on its own seemed improbable due to insufficient support. However, the debate progressed after House Majority Leader Steve Scalise confirmed that the CBDC ban would be incorporated into the National Defense Authorization Act. The provision within the defense policy bill aims to prevent the Federal Reserve from issuing any digital currency or asset and restricts the central bank from offering financial products or services directly to individuals. It specifies that the central bank cannot "test, study, develop, create, or implement" a digital currency or asset, while allowing an exception for stablecoins. The bill does not prohibit "any dollar-denominated currency that is open, permissionless, and private." House Republicans have been advocating for a CBDC ban for some time. The party's leaders attempted to pass a version of the CBDC-banning bill during the previous Congressional session. The similarly named CBDC Anti-Surveillance State Act was introduced by Representative Tom Emmer in early 2023 but did not advance and expired with the last Congress. Emmer has reintroduced a version of the bill in the current Congress, with Republican support aligning with U.S. President Donald Trump's executive order in January prohibiting CBDCs.