The United States Senate Committee on Banking, Housing, and Urban Affairs has added a provision to temporarily block the Federal Reserve from issuing a central bank digital currency (CBDC) as part of a broader bipartisan housing reform bill.
The measure is included in the “21st Century ROAD to Housing Act,” introduced by Committee Chairman Tim Scott and Ranking Member Elizabeth Warren.
Although the main goal of the legislation is to make housing construction easier throughout the United States, ensuring that housing shortages are alleviated, the inclusion of the CBDC restriction indicates that the debate about the potential for a digital dollar continues.
By preventing the Fed from issuing a digital dollar, at least for the short term, politicians are sending a message about the direction that digital currency will take, even as they advance the housing legislation.
Tim Scott frames housing bill as path to fair shot at homeownership
Senator Tim Scott introduced the housing legislation on a personal level, saying that the legislation is not just about reducing regulation and saving builders money, but about providing families with a fair shot at homeownership.
Drawing from his own upbringing by a single mother in North Charleston, he said the legislation is meant to expand opportunity without adding new government spending.
Elizabeth Warren focused on the broader coalition behind the bill, noting that it builds on housing proposals that already received unanimous Senate support and includes bipartisan ideas from the House.
She also emphasized efforts to rein in large corporate landlords that she argues are pricing families out of the market.
Interestingly, neither senator mentioned the temporary ban on a central bank digital currency, even though it is included in the bill.
CBDC ban provision remains stalled despite past appearances in congress
The provision is relatively small compared to the overall package and has appeared in past legislation, but has yet to make it through Congress.
The bill essentially tells the Federal Reserve that it cannot create or issue a digital dollar, at least for now.
The language makes it clear that neither the Fed’s main board nor its regional banks can roll out a central bank digital currency (CBDC), whether directly to people or indirectly through commercial banks.
It also blocks the creation of any digital asset that closely resembles a CBDC.
That said, the restriction isn’t forever. It comes with an expiration date of Dec. 31, 2030, meaning Congress would need to revisit the issue before then if it wants the ban to continue.
The measure also draws a line between government-issued digital money and private innovation. It allows permissionless, privately issued dollar-backed digital currencies to function, as long as they offer privacy protections comparable to cash.
The White House signaled clear support for this strategy, stating that a government-issued digital currency could threaten privacy and individual freedoms, which are ongoing issues in the discussion of a digital dollar.