Federal Reserve Faces Restrictions on Digital Currency Development
The US House of Representatives has introduced a major provision banning the Federal Reserve from creating or studying a central bank digital currency (CBDC). The measure was added to the National Defense Authorization Act (NDAA) for the 2026 fiscal year—a must-pass bill that sets defense and military policy.
The revised version of HR 3838, shared by the House Rules Committee, includes language that prohibits the Federal Reserve from issuing any form of digital currency. It also blocks the central bank from offering financial products or services directly to individuals.
According to the provision, the Fed may not:
- Test, study, develop, create, or implement a CBDC or similar asset.
- Issue any government-backed digital asset.
However, the bill allows exceptions for dollar-denominated stablecoins that are open, permissionless, and private.
Political Background and Legislative Process
House Republicans had promised to insert a CBDC ban into the NDAA after a deal with conservative hardliners. This came after a standoff where a group of Republican lawmakers refused to advance three crypto-related bills without a guarantee on the CBDC ban.
Previously, the House passed the Anti-CBDC Surveillance State Act in July by a narrow 219-210 vote. That bill now faces an uncertain future in the Senate, but including the CBDC ban in the NDAA increases its chances of passing since the defense bill is considered critical legislation.
What Does This Mean for Digital Currency in the US?
If the provision becomes law, it would:
- Stop the Fed from creating a US CBDC.
- Align with President Donald Trump’s executive order from January that prohibits CBDC development.
- Potentially slow down US involvement in the global digital currency race, especially as countries like China and the EU push forward with their own CBDC programs.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.