TD Cowen: US Congress nears permanent ban on the Federal Reserve issuing CBDCs

Investment bank TD Cowen suggests that the US Congress may be close to passing legislation permanently banning the Federal Reserve from issuing central bank digital currencies (CBDCs). This move could benefit stablecoin issuers but could also introduce new complexities to legislation governing the crypto market structure. Last week, Senator Ted Cruz introduced an amendment to the 21st Century Road to Housing Act, seeking a permanent ban on the Fed's CBDC issuance. The amendment aims to convert the current temporary ban, effective until 2030, into a permanent provision. The housing bill is expected to be submitted to the Senate for a vote as early as this week. Jaret Seiberg, Managing Director of Research at TD Cowen's Washington division, stated that the final housing bill submitted to the president for signature is likely to include this ban, with a permanent ban being more probable than a temporary one. Seiberg points out that the amendment primarily reinforces the current policy stance. The Federal Reserve has repeatedly stated that it will not issue a digital dollar without explicit congressional authorization. Meanwhile, several US lawmakers have recently co-signed a letter to congressional leadership calling for a permanent ban on CBDCs. Representative Ralph Norman stated that unlike cash, CBDCs could allow the government to track transactions and monitor individual spending, therefore a permanent ban is necessary to protect Americans' privacy and freedom. It's worth noting that the U.S. House of Representatives passed the Anti-CBDC Surveillance State Act last year, prohibiting the Federal Reserve from issuing CBDCs directly to individuals. Cruz has also been pushing the Senate to pass similar legislation.