On July 11, the 21st Century ROAD to Housing Act became law without President Trump’s signature. It is the most significant bipartisan housing package in decades. Near the end of its 300-plus pages is a provision that has nothing to do with housing: through December 31, 2030, the Federal Reserve may not issue a central bank digital currency, or any digital asset “substantially similar” to one, directly or through a financial intermediary.
The provision nearly derailed the bill. A group of House Republicans threatened to make the housing package “dead-on-arrival” unless Congress replaced the temporary restriction with a permanent ban and stopped the Fed from even studying a CBDC. Congress, in other words, nearly sacrificed the first major legislative response to the housing affordability crisis in order to prohibit something that does not exist, that no agency was building, and that no statute authorized
To be clear, I am not a CBDC advocate. Federal Reserve Governor Christopher Waller was right to ask what market failure a CBDC would solve. A retail CBDC would raise serious questions about privacy, cybersecurity, bank funding, and the government’s role in payments. On the evidence available today, the case for a U.S. CBDC is weak. But there is a difference between declining to build something and forbidding the country from ever considering it. By prohibiting a CBDC, albeit only until 2031, Congress limited the ability of future policymakers to revisit that judgment should developments in payments, stablecoins, or the international monetary system alter the calculus.
The campaign that produced this result is best understood as a conspiracy theory converted into an interest-group strategy. Crypto advocates turned a remote policy possibility into a story about an imminent surveillance currency. Banking groups joined the opposition because a retail CBDC could compete with deposits. The issue then traveled with legislation protecting stablecoins, self-custody, and crypto mining. By the time the ban reached the President’s desk, the supposed government plot had done useful work for the crypto and banking industries.
CBDC Background
A retail CBDC is a digital liability of the central bank that is available to the public. In that sense, it is digital cash. Of course, most money is already digital. The balance in a checking account is an entry on a commercial bank’s books, while the reserves banks hold at the Federal Reserve are digital central bank money. A CBDC would give households and businesses access to a digital claim backed directly by the Fed.
The design matters. The Federal Reserve’s 2022 discussion paper said that any potential U.S. CBDC would best serve the country if it were “privacy-protected, intermediated, widely transferable, and identity-verified.” Under the intermediated model, banks and regulated payment firms would provide wallets, verify customers, and handle the retail relationship. The Fed would not maintain an account for every American.
One important caveat deserves acknowledgment. During the pandemic, individual members of Congress proposed FedAccounts and digital-dollar wallets in order to get government relief payments to people sooner. Senator Sherrod Brown’s Banking for All Act would have required banks to provide pass-through digital-dollar wallets and directed the Federal Reserve Banks to make digital-dollar wallets available to the public. Representative Maxine Waters introduced similar legislation in the House. Neither proposal became an administration priority, a Federal Reserve implementation program, or legislation with a realistic path to enactment.
Legitimate privacy objections can be made to almost any electronic payment system, and a badly designed CBDC could create genuine risks. The conspiracy theory was more specific. It attributed to federal officials a concealed plan to impose programmable surveillance money despite the absence of an implementation proposal, an authorizing law, a budget, a timetable, or an institution preparing to issue it. The Fed’s own paper contemplated private-sector intermediation and did not propose political controls over lawful purchases or a switch that officials could use to turn off a citizen’s money.
The Program That Never Was
If the federal government truly wanted to impose surveillance money on an unwilling public, one would expect to find a policymaker somewhere in the record straining to impose it. The record contains the opposite.
In June 2021, then-Federal Reserve Vice Chair for Supervision Randal Quarles devoted an entire speech, memorably titled “Parachute Pants and Central Bank Money,” to deflating CBDC enthusiasm. Quarles compared the idea to the fashion fads of the 1980s, warned that America’s “susceptibility to boosterism and the fear of missing out” had at times produced “a mass suspension of our critical thinking,” and concluded that the potential benefits of a Fed CBDC were “unclear” and that the bar for issuing one should be “a high one.” Several weeks later, Governor Waller called a CBDC a “solution in search of a problem” and later rejected the idea that the dollar needed one to preserve its international role.
Former Fed Chair Jerome Powell repeatedly said the Fed would not proceed on a CBDC without congressional approval. In March 2024, he said the Fed was “nowhere near” issuing a CBDC and emphasized that the central bank would not maintain individual accounts that could be used to monitor Americans’ transactions. And in February 2025, asked by Senator Bernie Moreno whether he would commit that the United States would never have a CBDC on his watch, Powell answered with one word: “Yes.” His successor, Kevin Warsh, told the Senate at his April 2026 confirmation hearing that the Fed lacks the authority to issue a CBDC and that doing so would be “a bad policy choice” besides.
Former Fed Governor Lael Brainard was the closest thing the Fed had to an internal advocate. She argued that a CBDC might support financial inclusion, preserve a common form of public money, and reduce fragmentation if stablecoins became widely used. Yet her 2022 testimony framed the issue as preparation for possible future conditions, not a case for issuing a digital dollar then. “No decision has been made,” she told Congress, while stressing the need to be ready if circumstances changed.
The institutional record was equally cautious. The 2022 discussion paper said it was not intended to advance a specific policy outcome and that the Fed would not proceed without support from the executive branch and Congress, ideally through an authorizing law. President Biden’s digital-assets executive order gave CBDC research “the highest urgency,” but it directed agencies to study the subject and assess the legal changes that issuance would require. It did not order anyone to build a digital dollar. Treasury later recommended further exploration and the Boston Fed’s Project Hamilton, a technical research collaboration with MIT, ended in 2022 without becoming a policy pilot.
Taken together, the record tells a remarkably consistent story. Individual officials explored the idea, researchers studied it, and a handful of legislators introduced proposals. What never emerged was a serious institutional effort to create a U.S. CBDC: no administration priority, no authorizing legislation, no implementation plan, no appropriated funding, no launch timetable, and no durable coalition within the federal government pressing to build one. By the time the anti-CBDC campaign became a national political cause, no institution with the legal authority to issue a digital dollar was preparing to do so.
The Curious Silence of Crypto Dad
Ironically, the country’s leading advocate for a U.S. digital dollar was not a Federal Reserve official but Chris Giancarlo, the former chairman of the Commodity Futures Trading Commission. Known throughout the crypto industry as “Crypto Dad” for his early support of digital assets while leading the CFTC, Giancarlo became the most prominent public champion of a U.S. CBDC.
It was Giancarlo who, in an October 2019 Wall Street Journal op-ed, warned that the dollar’s primacy could erode without a digital upgrade. It was Giancarlo who founded the Digital Dollar Project with Accenture in 2020, launched five CBDC pilot programs in 2021, and as late as March 2023 was defending a privacy-protecting digital dollar in the crypto industry’s own trade press, on the theory that “just saying no” to digital dollars would merely cement an already pervasive financial surveillance status quo.
Then the industry that made him famous decided the digital dollar was heresy, and Crypto Dad went quiet. The Digital Dollar Project’s March 2025 “comprehensive review” declined to champion any CBDC and pivoted to a survey of “tokenized deposits, stablecoins, and foreign CBDCs.” Giancarlo himself now sits on the board of the stablecoin issuer Paxos and advises crypto firms full time, and he spent 2025 celebrating the “explosion of competition” among private dollar stablecoins. He has never recanted his support for a digital dollar. He has simply concluded, it would seem, that it is no longer an argument worth making.
Why Crypto and the Banks Agreed
The absence of a concrete government program made the CBDC issuer easier to shape.
For the crypto industry, a Federal Reserve digital dollar would be a public competitor to stablecoins. Stablecoins are privately issued digital claims designed to track the value of the dollar, and the GENIUS Act gave payment stablecoins a federal regulatory framework in 2025. A CBDC that offered the public a risk-free digital dollar could compete with one of the crypto industry’s largest and most profitable businesses.
Banks had a different concern. Deposits are a relatively stable and inexpensive source of funding. If households and businesses moved significant transaction balances into a CBDC, banks could face higher funding costs and greater reliance on wholesale markets. The effect would depend heavily on the CBDC’s design, including holding limits and whether it paid interest, but the concern is legitimate.
The American Bankers Association told the Fed that the benefits of a CBDC were speculative while the risks to bank funding and credit availability were concrete. The Bank Policy Institute and other financial trade groups made the same argument in a letter to the House Financial Services Committee. The ABA then supported Congressman Tom Emmer’s Anti-CBDC Surveillance State Act, which prohibited both direct and intermediated issuance.
None of this proves that every CBDC objection was insincere. Banks can have a commercial interest and a sound policy argument at the same time. Crypto firms can raise valid privacy concerns even while protecting stablecoin issuers from a potential competitor. The alignment does explain why an idea with no implementation plan attracted such disciplined opposition. On this question, the firms that promised to replace banks and the banks they promised to replace wanted the same thing.
From Model Bills to Federal Law
The campaign succeeded because it attached itself to a familiar American suspicion of central banking. By 2023, politicians and commentators were portraying a U.S. CBDC as a tool for programmable control, social-credit scoring, and real-time government surveillance. Ron DeSantis and Robert F. Kennedy Jr. both confused FedNow, an ordinary interbank instant-payment service, with the first stage of a digital dollar.
The rhetoric soon found a legislative vehicle. A 2025 survey identified sixteen states that had enacted some form of anti-CBDC legislation, generally taking one or more of four approaches: excluding CBDCs from state definitions of money, prohibiting state agencies from accepting them, barring participation in Federal Reserve pilot programs, or denying them legal-tender status. The similarities among many of these bills were no accident.
Florida moved first in 2023, with Governor DeSantis staging a bill-signing ceremony warning against “Big Brother’s digital dollar.” More than a dozen states eventually followed.
The campaign’s legislative infrastructure was hiding in plain sight. In August 2023, the American Legislative Exchange Council finalized its model “Reject CBDCs and Protect Financial Privacy Act,” providing state lawmakers with ready-made anti-CBDC legislation. The Heartland Institute complemented that effort by circulating guidance urging legislators to treat routine Uniform Commercial Code modernization as a potential CBDC Trojan horse. Opposition to a hypothetical public digital dollar was transformed into a coordinated legislative campaign.
The campaign’s signature episode deserves retelling. In March 2023, South Dakota Governor Kristi Noem vetoed legislation adopting the Uniform Law Commission’s 2022 amendments to the Uniform Commercial Code, arguing that they would “open the door” to a CBDC. However, the new Article 12 was in fact drafted to give crypto assets the commercial-law protections the industry had long sought, as the state bankers association and the bill’s own Republican sponsors pointed out. Noem then went on national television urging other governors to follow her lead. The conspiracy had begun eating its own.
The state laws also illustrate the gap between the campaign’s claims and its legal effect. Excluding a future CBDC from the UCC definition of “money” would not prevent the asset from circulating; it would change how commercial law classified it. A CBDC authorized by Congress would also raise an obvious federal-preemption problem. Even the Cato Institute, which opposes a CBDC, concluded that the UCC amendments were not paving the way for one.
The state campaign soon became a federal one. Donald Trump promised in January 2024 that he would “never allow” a CBDC because it would give the government “absolute control” over Americans’ money. Three days into his second term, Executive Order 14178 prohibited federal agencies from establishing, issuing, or promoting a CBDC and revoked the Biden order that had directed further study. The President’s Working Group on Digital Asset Markets later urged Congress to enact the Anti-CBDC Surveillance State Act. That bill passed the House in 2024, and a successor passed again during the House’s July 2025 “Crypto Week,” alongside stablecoin and market-structure legislation. Anti-CBDC language was then promised for the annual defense bill and dropped in conference. In April 2026, House Republicans then attached the ban to a reauthorization of a foreign-surveillance program, but the Senate rejected the rider and sent back a clean extension. Finally, with the bipartisan housing bill, the anti-CBDC campaign found a vehicle that neither party wanted to lose.
What Congress Enacted
The enacted language is broader than a simple prohibition on the Fed opening retail accounts. It bars the Board and the Reserve Banks from issuing or creating a CBDC, or anything “substantially similar,” either directly or indirectly through a financial institution or other intermediary. The restriction expires at the end of 2030.
But the statutory definition of “CBDC” contains an important limitation. The housing law incorporates the GENIUS Act’s definition of a “digital asset,” which is limited to representations of value recorded on a cryptographically secured distributed ledger. As a result, the prohibition reaches only a distributed-ledger CBDC. A digital dollar issued on a conventional centralized ledger – the architecture used or contemplated by many foreign central banks, including the European Central Bank – would not appear to fall within the statute’s definition at all. The law therefore leaves open the possibility of a centralized digital dollar while prohibiting only one technological design.
The bill’s exception is also revealing. The prohibition does not apply to a dollar-denominated currency that is “open, permissionless, and private” and that preserves the privacy protections of coins and physical currency. That language does not neatly describe every regulated stablecoin in circulation. Many stablecoins are issued on networks with identifiable administrators, compliance controls, and the ability to freeze assets. But the exception speaks in crypto’s preferred design vocabulary and leaves room for privately issued digital dollars while disabling a public alternative.
Skepticism Should Not Lead to a Ban
Foreign experience has so far strengthened the skeptical case. China’s CBDC, the e-CNY, has struggled to displace Alipay and WeChat Pay despite years of promotion. Retail CBDCs launched elsewhere have generally had difficulty attracting sustained use. There is little evidence that the United States is losing a race that consumers are eager to join.
Europe nevertheless continues to pursue a digital euro. European officials have framed the project partly as a matter of monetary sovereignty, arguing that Europe has become overly dependent on foreign payment firms and dollar-denominated stablecoins. Yet, as Quarles and Waller both observed, the dollar’s international dominance has never rested on the technology it runs on. It reflects deeper advantages, including the depth and liquidity of U.S. capital markets, the rule of law, and the credibility of an independent central bank. Europe may therefore be misdiagnosing the problem. But the fact that serious policymakers continue to debate the issue demonstrates why Congress should not foreclose the option altogether based solely on today’s circumstances.
I remain unpersuaded that the United States needs a CBDC. The Federal Reserve has not shown that one would improve the payments system enough to justify the accompanying risks to privacy, cybersecurity, bank funding, and the proper role of government in finance. On the evidence available today, the better course is not to build one.
But that is a different question from whether Congress should prohibit future policymakers from ever reaching a different conclusion. Payment systems evolve. Stablecoins may become systemically important. Other countries may discover uses for CBDCs that have so far proved elusive. The appropriate response to that uncertainty is to preserve policy flexibility, not to legislate against a technology that no institution was preparing to deploy.
Congress did not stop an imminent digital-dollar project. It transformed an industry talking point into federal law. That should concern even those who oppose a U.S. CBDC. Sound financial regulation should be driven by evidence and changing market conditions, not by conspiracy theories amplified to advance private commercial interests.
Lee Reiners is a Lecturing Fellow at Duke University
