U.S. House of Representatives Embeds CBDC Ban into Defense Spending Bill

In the United States, opposition to central bank digital currencies (CBDCs) is gaining momentum. Republicans in the House of Representatives have inserted a provision into the massive 1,300-page National Defense Authorization Act (NDAA) that would prohibit the Federal Reserve from testing, developing, or implementing a CBDC in any form.

An exception for “open” digital dollars The amendment to bill HR 3838 includes one carve-out: the ban would not apply to dollar-denominated digital currencies that are open, permissionless, and preserve the same level of privacy as U.S. cash and coins. Republican Congressman Tom Emmer, a longtime critic of CBDCs, welcomed the move: “By tying our anti-CBDC surveillance bill to the NDAA, we ensure that unelected bureaucrats will NEVER be able to trade away Americans’ financial privacy for a surveillance tool modeled after the Chinese Communist Party,” he said. Emmer had already tried to push through similar legislation in 2023 without success. After Donald Trump took office, the bill was revived and is now under Senate consideration.

CBDCs worldwide: rapid growth, U.S. stays behind While CBDCs face strong resistance in the U.S., they are accelerating globally. According to the Atlantic Council, 137 countries are now exploring digital versions of their currencies, compared to just 35 in 2020. Of those, 72 countries are in advanced stages of development. The U.S. has taken a different path. Earlier this year, President Trump issued an executive order halting all work on retail CBDCs.

Critics warn of surveillance and banking disruption Opponents argue CBDCs pose major risks. The American Bankers Association (ABA) warned that their introduction could:

🔹 alter the relationship between citizens and the Federal Reserve

🔹 undermine the role of banks in lending

🔹 worsen liquidity crises

🔹 limit effective monetary policy transmission Tech experts share similar concerns. Nanak Nihal Khalsa, co-founder of human.tech by Holonym, cautioned: “CBDCs are programmable money controlled by the state. Once every transaction passes through a government ledger, privacy is automatically gone. The question isn’t if it will be abused, but when.” Khalsa argued that rejecting CBDCs in the U.S. would create room for alternative digital money that remains open, permissionless, and private – in line with the original vision of cryptocurrencies. Still, he acknowledged that privately issued stablecoins carry similar risks. “Private companies have the same incentives to surveil, exclude, and monetize,” he said. “The only difference is whether you’re forced to trust the state or a corporation.”

A different perspective from Europe The European nonprofit Finance Watch offered a contrasting view. According to the group, the problem isn’t with CBDCs as a concept, but with their design. “It is entirely possible to create a CBDC that is open, permissionless, and preserves privacy just like cash,” a spokesperson said. The key, they added, is privacy by design, strict limits on data collection, and offline functionality for small payments. This is the approach behind the digital euro, which the EU is currently developing as a public alternative to privately controlled payment systems, aimed at reaffirming citizens’ control over money and transactions.

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