Housing bill with CBDC ban becomes law without Trump’s signature

A bipartisan measure relating to housing that includes a ban on a US central bank digital currency (CBDC) was enacted into law on Friday (July 10) after US President Donald Trump refrained from signing it. This brings a significant victory for supporters of cryptocurrency and advocates of privacy, who have been pushing for it for more than a year already.

The 21st Century ROAD to Housing Act reached the White House after passing Congress with overwhelming bipartisan support in votes of 358-32 in the House and 85-5 in the Senate. Those margins proved decisive. Under the Constitution, a bill becomes law without any signature or veto from the President after 10 days while Congress is still in session, and that’s exactly what happened here.

Why Trump didn’t sign

On Thursday, Trump said he would not put his name on the Housing Bill, saying the refusal was tied to another election proposal and not to the legislation itself.

“I will not sign the Housing Bill, which has been fully approved by Congress and sent to the White House, in PROTEST over the fact that the United States Senate is not capable of passing THE SAVE AMERICA ACT,” he said on Truth Social.

Trump has consistently pleaded with Congress to approve the SAVE America Act, requiring proof of citizenship to vote in federal elections.

Trump’s only chance to prevent the act would have been to use a veto before Friday’s deadline, but even then, it was impossible to shift the results since everyone had already voted for it in both the Houses with margins large enough to override a presidential veto.

What the ban actually does

Although the legislation is centered on housing affordability, one provision has drawn particular attention from the crypto industry.

The law bars the Board of Governors of the Federal Reserve System and the regional Federal Reserve banks from issuing or creating a central bank digital currency, either directly or indirectly through an intermediary. At the same time, it makes clear that nothing in the legislation should prevent an “open, permissionless, and private United States dollar-denominated currency” designed to preserve privacy protections similar to those of physical cash.

The restriction will continue until the end of 2030. This ban is not permanent; however, it is the first time that Congress has made it illegal for the Federal Reserve to issue a retail digital currency. If policymakers are keen to pursue a digital dollar before the ban comes to an end, the law must first be amended or repealed.

This considerably alters the political scenario. For many years, the Federal Reserve has held the position that it will not issue a CBDC unless it is authorized by Congress. Now, Congress has taken the matter a step further by completely taking that option away from them. This means that the lawmakers–not the Fed–will be the source of any future discussions regarding a digital dollar.

In fact, the Federal Reserve was not even close to introducing a retail CBDC. The discussion paper released by the Fed in 2022 covered the pros and cons of a digital dollar, and their officials have repeatedly said that no decision would be made without first securing the backing of both Congress and the executive branch.  According to PYMNTS, neither the Fed nor Congress had made any real progress in advancing a CBDC before the lawmakers added the limitation to the housing package.

The road to the CBDC ban

The idea of a CBDC provision did not arise from housing legislation.

For over a year, Republican lawmakers pushed for laws that would stop the Federal Reserve from adopting a digital version of the dollar. The debate gained traction during deliberations over the GENIUS Act, which would create a regulatory environment for payment stablecoins. Several of the Republican legislators argued that encouraging the use of privately issued dollar-backed stablecoins while allowing the federal government to issue its own version creates contradictory policy incentives.

The difference of opinion succeeded in bringing those negotiations to a halt, but it did not bring that matter to a close. Legislators were able to find other terrain in which they could work by passing the CBDC provision in the bipartisan housing bill. In this way, we can say that one of the most important decisions of Congress in relation to cryptocurrencies took place via legislation that was primarily intended to facilitate affordable housing.

Besides the crypto provision, the ROAD to Housing Act aims to reduce regulatory hurdles for home construction, improve access to financing, and limit large-scale institutional ownership of residential real estate.

Industry groups welcomed the inclusion of the CBDC language. After the Senate approved the measure in March, Digital Chamber CEO Cody Carbone said any decision to authorize a central bank digital currency should remain with Congress and the American people because of the implications for financial privacy.

The backing of legislation reached far beyond the digital asset space. Senate Banking Committee chair Tim Scott called the package a product of negotiations undertaken by bipartisan teams involving both Ranking Member Elizabeth Warren and House members, while organizations involved in housing, banking and community development commended the bill as an important step in dealing with many existing problems of affordability.

The CBDC restriction will be void after 2030 unless action is taken by Congress. Nevertheless, the housing bill changes the discourse regarding a digital dollar in the USA. Any US administration or Federal Reserve leadership that wants to discuss the topic of a digital dollar before Congress lifts the ban must convince Congress to reopen the issue.

The case shows how intertwined the issues of regulation of stablecoins and usage of CBDCs are now in Washington. An argument about the regulation of stablecoins resulted in the adoption of the first law of the country that prohibits the use of CBDCs, which indicates that the questions of CBDC and stablecoin regulation will be increasingly discussed together.