Fed's CBDC dreams put on ice until 2030 🧊

The US Senate voted 85-5 on Monday to pass the 21st Century Road to Housing Act, sending to the House legislation that bars the Federal Reserve from issuing or developing a central bank digital currency until 2030. The bill, which is aimed at expanding the housing supply, includes a CBDC prohibition that has been attached since the Senate first passed a version of the package in March.

The provision states the Fed may not, directly or indirectly, "issue or create a central bank digital currency or any digital asset that is substantially similar to a central bank digital currency." It also carves out stablecoins, defined as any "dollar-denominated currency that is open, permissionless, and private," and requires explicit congressional authorization before the Fed can pursue a CBDC even after the 2030 moratorium expires.

The CBDC clause was folded into the housing bill as a political concession to secure Republican and administration support for faster passage, following a deal struck last week by a bipartisan group of House and Senate leaders. The legislation now heads to the House, where it is expected to clear quickly before going to the president's desk.

The Senate action comes as other governments accelerate their own digital currency programs. Reuters reported on June 16 that China signed up 26 financial institutions to its digital yuan (e-CNY) cross-border payment platform. According to the Atlantic Council, three countries have officially launched a CBDC, 41 are in the pilot phase, 33 are in development, and 40 are still in the research stage. South Carolina Governor Henry McMaster separately signed legislation protecting Bitcoin ($BTC) miners and banning a state-level CBDC, underscoring the partisan alignment around restricting government-issued digital currency at both the state and federal level.