The US House included a clause prohibiting the Federal Reserve from introducing a central bank digital currency (CBDC) within an extensive 1,300-page legislation that outlines the nation’s defense strategy for the 2026 fiscal year.
An amendment to HR 3838, which is the House’s rendition of the National Defense Authorization Act, was released on Thursday by the House Rules Committee to encompass comprehensive language that forbids the Federal Reserve from examining or developing digital currency.
The House approved a comparable Republican-supported measure, the Anti-CBDC Surveillance State Act, in July with a narrow margin of 219 – 210, which now faces an ambiguous outlook in the Senate.
The National Defense Authorization Act and related funding bills are regarded as “essential” national security measures since they delineate how military funding will be allocated and expended.
It is common for legislators to incorporate unrelated provisions that might be otherwise delayed or significantly modified if they were enacted as independent bills.
House leaders committed to CBDC prohibition in defense bill
Leading House Republicans had assured the inclusion of a CBDC prohibition in the military expenditure bill as part of an agreement with conservative factions in July.
A bloc of Republican dissenters had declined to advance three cryptocurrency bills unless a CBDC prohibition was assured, delaying a vote to initiate floor discussion on the proposals for over nine hours, marking the longest stalemate in the House’s history.
At that moment, the House’s passage of a standalone CBDC-banning bill appeared improbable due to insufficient support. Discussions on the bills eventually progressed after House Majority Leader Steve Scalise indicated the CBDC ban would be incorporated into the National Defense Authorization Act.
Clause would prevent Fed-issued digital currency
The clause in the defense policy legislation would prohibit the Fed from issuing any digital currency or asset and would prevent the central bank from providing financial products or services directly to individuals.
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The clause further states that the central bank cannot “test, study, develop, create, or implement” a digital currency or asset, but permits an exception for stablecoins, asserting that the legislation does not prohibit “any dollar-denominated currency that is open, permissionless, and private.”
A CBDC bill failed in the last Congress
House Republicans have been striving to prohibit CBDCs for quite some time.
The party’s House leaders had aimed to enact a version of the CBDC-prohibiting bill during the previous congressional session.
A similarly titled bill, known as the CBDC Anti-Surveillance State Act, was proposed by Representative Tom Emmer in early 2023, but it did not advance and perished with the last Congress.
Emmer has since reintroduced a version of the bill in the current Congress, and Republicans have endorsed the effort as consistent with President Donald Trump’s executive directive in January banning CBDCs.
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