US diverges from Europe as Senate reaches deal on bill banning CBDCs

The restriction widens the policy gap between Washington and the European Central Bank, which is actively building a digital euro.

Has the U.S. banned CBDCs?

U.S. lawmakers have agreed to ban the Federal Reserve from creating a central bank digital currency (CBDC) or anything similar to one, either directly or through financial intermediaries, as part of a larger housing bill called the 21st Century ROAD to Housing Act. The restriction will last until December 31, 2030.

Lawmakers added the CBDC ban to the housing bill after the Senate passed its version in March and the House passed its version in May. Senate Banking Chair Tim Scott negotiated with ranking member Elizabeth Warren and coordinated with House Financial Services members on both sides of the aisle before reaching this new agreement. 

If the bill is passed in its current form, alongside the CBDC ban, several housing provisions will take effect, like large institutional investors being restricted from buying single-family homes, brokered deposit rules, and de novo bank formation. 

President Donald Trump issued an executive order in January 2025, instructing federal agencies to stop work on government-controlled digital money. 

The White House said CBDCs threaten “the stability of the financial system, individual privacy, and the sovereignty of the United States.” The order also said the U.S. should focus on supporting dollar-backed stablecoins instead. 

Representative Tom Emmer (R-Minn.), who pushed for the ban, said that CBDCs stand against privacy, freedom, and free market competition. He called them a “weaponized surveillance tool” that should never be adopted. Some privacy advocates in Congress have even pushed for a permanent ban.

The ban also removes the government as a competitor to companies like Circle (USDC) and Tether (USDT). The Senate is expected to hold procedural votes this week, and a House vote is planned after June 23.

What is Europe doing differently from the U.S.?

Unlike in the U.S., the European Central Bank is moving forward with plans for a digital euro and considers it to be a way to protect Europe’s monetary independence. 

The timeline for the digital euro depends on lawmakers passing the necessary laws. If the legislation passes in 2026, a pilot program could start in 2027, and the first digital euro could be issued in 2029. 

The ECB is working to make the digital euro easy for everyone to use, including people with disabilities. They have signed agreements with organizations to test accessibility features like voice commands and large text. 

ECB officials worry about the dominance of dollar-backed stablecoins as nearly all in circulation are tied to the dollar, which gives the U.S. more influence over global payments. Cryptopolitan previously reported that dollar stablecoins hold a combined market capitalization of roughly $317 billion, while euro-denominated stablecoins account for less than $1 billion.

The digital euro would also give European payment companies a way to compete with big international card schemes like Visa and Mastercard. The ECB is setting up open standards that European companies can use to build their own payment services.