The US House Moves to Ban CBDCs in Defense Policy Bill
The United States House of Representatives has introduced a significant amendment to the national defense policy that could have substantial implications for the future of digital currency within the country. In a decisive move, a provision has been added to a nearly 1,300-page bill, which aims to prevent the Federal Reserve from issuing a central bank digital currency (CBDC). This measure has been incorporated into the House’s version of the National Defense Authorization Act (HR 3838) for the fiscal year 2026.
On Thursday, the House Rules Committee shared the revised bill, which now includes comprehensive language prohibiting the Federal Reserve from researching or creating a digital currency. This action follows the passage of a similar Republican-backed bill, the Anti-CBDC Surveillance State Act, in July, which narrowly passed with a vote of 219 to 210. However, the bill’s fate remains uncertain in the Senate.
The Importance of the National Defense Authorization Act
The National Defense Authorization Act, along with related appropriations bills, is crucial national security legislation. These bills are deemed “must-pass” as they outline the funding and expenditure plans for the military. It is not uncommon for lawmakers to attach non-defense-related provisions to such essential legislation, as these measures might otherwise face delays or significant modifications if presented as standalone bills.
House Leaders Uphold Promise to Include CBDC Ban
In a strategic maneuver, prominent House Republicans vowed to integrate a CBDC ban within the must-pass military spending bill, fulfilling a promise made to conservative hardliners in July. A faction of Republican holdouts had previously obstructed the progression of three crypto-related bills, demanding a guaranteed passage of the CBDC ban. This standoff resulted in a historic nine-hour delay in setting up floor debate on these bills.
At that time, the likelihood of the House passing the CBDC-banning bill independently was considered low due to insufficient support. Eventually, progress was made when House Majority Leader Steve Scalise assured that the CBDC ban would be appended to the National Defense Authorization Act. The House subsequently passed the CBDC ban bill independently by a narrow margin, although its future in the Senate remains uncertain.
Key Provisions of the CBDC Ban
The new provision within the defense policy bill specifically prohibits the Federal Reserve from issuing any digital currency or asset. Additionally, it restricts the central bank from offering financial products or services directly to individuals. The bill explicitly states that the Federal Reserve may not “test, study, develop, create, or implement” a digital currency or asset. However, there is an exception for stablecoins, as the bill does not preclude “any dollar-denominated currency that is open, permissionless, and private.”
A Historical Perspective on CBDC Legislation
Efforts to ban CBDCs are not new among House Republicans. The party’s leaders have been advocating for such a ban for some time. During the last Congressional session, a similar bill known as the CBDC Anti-Surveillance State Act was introduced by Representative Tom Emmer in early 2023. Despite these efforts, the bill did not advance and ultimately expired with the last Congress.
Tom Emmer has reintroduced a version of the bill in the current Congressional session, with Republicans supporting the initiative as being consistent with former President Donald Trump’s executive order issued in January, which prohibited CBDCs.
Source: Tom Emmer
The House’s latest move to incorporate the CBDC ban within the National Defense Authorization Act underscores the ongoing debates and legislative efforts surrounding digital currency regulation in the United States. As these discussions continue, the outcome of the Senate’s response to the bill will be closely watched by stakeholders and observers alike.
For more detailed information, visit the original article at Cointelegraph.
