TD Cowen, the U.S. Congress is close to permanently banning the Federal Reserve from issuing CBDC

Investment bank TD Cowen stated that the U.S. Congress may be close to passing legislation to permanently prohibit the Federal Reserve from issuing a central bank digital currency (CBDC). This move could benefit stablecoin issuers but may also introduce new complexities for legislative frameworks surrounding the crypto market.

Last week, U.S. Senator Ted Cruz proposed an amendment to the housing bill, the "21st Century ROAD to Housing Act," calling for a permanent ban on the Federal Reserve issuing a CBDC. The amendment aims to convert the currently effective temporary ban, which lasts until 2030, into a permanent provision. The housing bill is expected to be submitted for a Senate vote as early as this week.

Jaret Seiberg, Managing Director of Washington Research at TD Cowen, indicated that the housing bill ultimately submitted for the President's signature is likely to include this ban, and the possibility of a permanent ban is higher than that of a temporary one. Seiberg pointed out that the amendment is primarily aimed at solidifying the current policy stance.

The Federal Reserve has previously stated multiple times that it will not issue a digital dollar without explicit authorization from Congress. Meanwhile, several U.S. lawmakers have recently co-signed a letter to congressional leadership urging a permanent ban on CBDCs. Congressman Ralph Norman noted that unlike cash, CBDCs could allow the government to track transactions and monitor individual spending behaviors, thus necessitating a permanent ban to protect the privacy and freedom of Americans.

It is worth noting that the U.S. House of Representatives passed the "Anti-CBDC Surveillance State Act" last year, prohibiting the Federal Reserve from directly issuing CBDCs to individuals. Cruz has also been actively pushing for similar legislation in the Senate.