The US Senate on Monday approved a sweeping bipartisan housing bill with an 85-5 vote. Tucked into the legislation is a provision that would bar the Federal Reserve from issuing a central bank digital dollar — a CBDC — for the next six years, through 2030.
What the provision does
The measure prohibits the Fed from launching a digital version of the dollar, often referred to as a CBDC. Supporters of the block argue that a government-issued digital currency could allow unprecedented surveillance of Americans' spending. Critics say the restriction stifles innovation and leaves the U.S. behind other countries already piloting digital currencies.
The bill itself is primarily focused on housing policy. It includes funding for affordable housing programs, rental assistance, and grants for first-time homebuyers. But the digital dollar language has drawn the most attention from financial and tech circles.
Why now?
The vote comes as the Fed has been researching a digital dollar for years but has not committed to issuing one. The central bank has said it would only proceed with congressional approval. The Senate's action would effectively lock that door until the end of the decade.
Opponents of the ban argue that it could hamper the U.S. ability to compete with China's digital yuan or the European Central Bank's digital euro project. They also point out that private stablecoins already exist and are less regulated than a Fed-issued CBDC would be.
What happens next
The housing bill now heads to the House of Representatives. Its fate there is uncertain. The House has its own versions of housing legislation, and the digital dollar ban could be a sticking point. Some House members have expressed support for a CBDC as a way to modernize the financial system.
If the House passes a different version, the two chambers would need to reconcile the differences in a conference committee. The provision blocking the digital dollar could survive — or be stripped out.
For now, the Fed is still barred from moving forward. But that could change if the House rejects the ban or if a final compromise drops it.
