Fed CBDC Ban Gains Momentum In US Congress

A permanent ban on a Federal Reserve digital dollar is gaining traction in Washington. The proposal could remove a major uncertainty for stablecoin issuers while complicating broader cryptocurrency legislation.

The shift follows a new amendment from Ted Cruz targeting the Federal Reserve’s ability to issue a central bank digital currency (CBDC). The measure would permanently prohibit the Fed from launching a digital dollar through language attached to the 21st Century ROAD to Housing Act. According to research from TD Cowen, the Senate housing bill could reach a vote as soon as this week.

The amendment would replace an existing temporary restriction scheduled to expire in 2030. Analysts at TD Cowen’s Washington Research Group say the legislative path now favors a permanent prohibition.

Could A CBDC Ban Reshape US Crypto Policy?

Central bank digital currencies remain a contentious topic across global markets. More than 130 countries are exploring or developing CBDCs, according to data from the Atlantic Council, representing over 98% of global GDP.

But the United States has moved cautiously. The Federal Reserve has repeatedly stated it would not issue a digital dollar without explicit authorization from Congress. Yet lawmakers continue debating whether the technology could expand government oversight of financial activity.

Supporters of a ban argue a CBDC could enable direct monitoring of consumer spending. Congressman Ralph Norman warned that a government-issued digital currency could track transactions in ways physical cash cannot.

“A permanent prohibition is the only way to protect Americans’ privacy and liberty,” Norman said in a public statement urging stronger language in the housing legislation.

Analysts say the proposal largely codifies the Fed’s existing position rather than altering current policy. Still, TD Cowen managing director Jaret Seiberg noted that political leadership changes after the 2028 U.S. election could otherwise revive the digital dollar debate.

The policy shift may also reshape competition in digital payments. A permanent ban would remove the possibility that a government-issued digital dollar could compete directly with private stablecoins.

But the legislative strategy carries tradeoffs. Seiberg warned that progress on CBDC restrictions and stablecoin legislation could reduce momentum for broader crypto market structure reform, including the proposed Clarity Act.

The next signal will likely emerge from the Senate vote on the housing package, which could send the CBDC ban to the President’s desk as early as next month.