New Senate housing bill may put a four-year brake on a U.S. digital dollar

Lawmakers have advanced the digital dollar debate into legislation by adding a four-year prohibition on CBDCs to a Senate-passed housing affordability package, despite no active plans for a U.S. virtual currency.

According to legislative summaries and committee releases, the bill would prevent the Federal Reserve from issuing, creating, or indirectly distributing any central bank digital currency “widely available to the general public” until at least December 31, 2030.

Seeking to prevent the U.S. from replicating European and Chinese CBDC frameworks, GOP politicians have mobilized against the concept, branding it an intrusive tool for state surveillance.

They successfully advocated for its inclusion in the 21st Century ROAD to Housing Act, which secured overwhelming passage in the Senate Monday night by an 85-5 margin.

Should the House of Representatives vote in favor of the bill and President Donald Trump later approve it, the CBDC provision will be written into federal law.

The CBDC ban would only be temporary if the bill is signed into law

Earlier in January, President Donald Trump had also formally directed his administration not to pursue a CBDC, arguing that it could jeopardize privacy rights and the stability of the U.S. financial system.

Trumps allies in Congress successfully added an amendment to an unrelated housing package that legally bars the Federal Reserve System from creating a CBDC or any similar digital asset via financial intermediaries. Even if approved, the CBDC ban would remain in effect only until the close of 2030.

The Federal Reserve has maintained that a U.S. digital currency remains in its theoretical research phase, in contrast to Europe and China, where development of these government-backed digital assets is much further along.

Europe is already preparing to test a digital euro next year, ahead of a full launch in 2029, while China has been developing its own digital yuan under the Peoples Bank of China.

Before stepping down, former Fed Chair Jerome Powell noted that a digital dollar would be issued by private banks, pushing back against Republican fears of a government financial dictatorship. The new Fed Chair, Kevin Warsh, however, stated during his nomination hearing that he does not support a U.S. CBDC, characterizing it as a “bad policy choice.”

Lawmakers in the House are also reportedly looking to accelerate consideration of the housing bill and could approve it as early as Tuesday. If Trump signs it, the CBDC provision would be enacted along with the rest of the legislation.

South Korea and Europe are advancing their CBDC projects

South Korea has been pursuing a CBDC. The Bank of Korea has advanced its central bank digital currency pilot to a second phase focused on integrating deposit tokens into established banking frameworks, moving beyond initial retail-level testing.

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-guided digital tokens can process payments and settlements while remaining part of the formal banking infrastructure.

This development pushes the project beyond theoretical testing and toward real-world application. Banks are expected to assess how tokenized funds interact with core banking functions and regulatory controls.

Meanwhile, in February, the European Parliament gave the green light to the Digital Euro, saying it is absolutely necessary to boost monetary independence and smooth retail payments across the region.

The ECB spent March and April doing the heavy technical lifting for both the Digital Euro and the systems that will handle tokenized cash in Europe. It‘s moved beyond the design phase and is now focused on implementation planning, though the digital euro’s launch ultimately hinges on new legislation.