US House of Representatives Blocks Federal Reserve from Issuing Digital Dollar in NDAA
US House bans Federal Reserve from CBDC rollout, citing privacy and banking risks, while 137 countries are developing or piloting central bank digital currencies.
The U.S. House of Representatives has added a provision to its annual defense spending bill that would prohibit the Federal Reserve from issuing a central bank digital currency (CBDC). The amendment, part of H.R. 3838, the National Defense Authorization Act (NDAA) for the upcoming fiscal year, prohibits the Federal Reserve from testing, developing, or implementing any form of digital dollar.
The legislation includes one exception, allowing the creation of currencies that are fully open, decentralized, and private, with the same privacy protections as physical U.S. cash.
“This amendment protects Americans’ financial privacy from being compromised by a state-controlled digital currency,” said GOP Majority Whip Tom Emmer. A longtime opponent of CBDCs, Emmer called the measure a safeguard against government surveillance and a defense of civil liberties.
Attaching our Anti-CBDC Surveillance State Act to the NDAA will ensure unelected bureaucrats are NEVER allowed to trade Americans’ financial privacy for a CCP-style surveillance tool. @POTUS has made it clear: our legislation is a key piece of our America First agenda, and we… — Tom Emmer (@GOPMajorityWhip) July 17, 2025
Details of the Amendment
The provision was attached as a rider to the NDAA, a 1,300-page bill that primarily outlines defense spending priorities. By embedding the CBDC ban in this widely supported legislation, proponents hope to increase its chances of passage while avoiding prolonged partisan debate on the digital currency issue.
The text explicitly bars the Federal Reserve from issuing any CBDC under any label. However, it allows currencies that are “open, permissionless, and private,” meaning that developers can create digital money that preserves the same privacy protections as coins and paper currency.
Emmer called this the “Anti-CBDC Surveillance State Act,” framing the provision as a preventive measure against what he described as a potential “financial surveillance tool” comparable to the centralized, state-controlled digital currencies emerging elsewhere in the world.
Republican Effort to Block CBDCs
Republican lawmakers are leading efforts to block central bank digital currencies in the U.S. Emmer first introduced the CBDC Anti-Surveillance State Act in 2023, but it failed to advance after not securing enough support in Congress. The legislation has now been reintroduced in the Senate, where Republicans currently hold the majority.
Supporters of the measure argue that a U.S. CBDC could give federal authorities unprecedented access to Americans’ financial transactions, including purchases, transfers, and other account activity. They emphasize that the move is intended to protect civil liberties and prevent the government from gaining the same level of financial visibility as private banks or payment processors.
“Without clear legal safeguards, a digital dollar could be used to monitor, restrict, or even penalize lawful spending,” Emmer said. “This amendment ensures that does not happen.
Financial and Banking Risks of a U.S. CBDC
Opposition to a central bank digital currency in the U.S. extends beyond ideological concerns. Banking industry groups warn that a digital dollar could disrupt financial stability and the traditional lending system.
The American Bankers Association (ABA), which endorsed the House amendment in July, stated that a U.S. CBDC “would fundamentally change the relationship between citizens and the Federal Reserve, undermine the role banks play in providing credit, worsen economic and liquidity crises, and complicate the implementation of sound monetary policy.”
Economists highlight that commercial banks are central to managing the money supply and allocating credit. If individuals could hold deposits directly with the Federal Reserve through a digital dollar, banks could experience a significant reduction in deposits, limiting their ability to lend to consumers and businesses.
Experts also caution that introducing a digital currency requires careful design to avoid unintended consequences, such as rapid withdrawals from commercial banks to digital wallets or the emergence of a parallel financial system that could destabilize the broader economy.
Global CBDC Development
While the U.S. debates whether to adopt a digital dollar, other nations are advancing rapidly with central bank digital currencies. According to recent research, 137 countries are exploring CBDCs, a sharp increase from 35 in 2020. Of these, 72 are in advanced development stages.
China has already piloted its digital yuan in several major cities, integrating it into retail payment systems and testing it for government disbursements. Meanwhile, the European Union is developing a digital euro with privacy protections designed to maintain citizen control over small-value transactions, offline payments, and data collection limits.
“Globally, digital currency is no longer theoretical,” said Maria Lopez, a fintech researcher in Washington. “The U.S. is an outlier in its caution, and lawmakers are aware that policy decisions now could determine whether the country leads or follows in this space.”
Privacy and Surveillance Risks
A central issue in the CBDC debate is the potential for government surveillance. Central bank digital currencies are often referred to as “programmable money,” meaning authorities could, in theory, control where, when, and how funds are spent.
“This is not a theoretical concern,” said Nanak Nihal Khalsa, co-founder of human.tech by Holonym. “If every transaction flows through a state-controlled ledger, privacy is lost by default. The question is not if misuse will happen, but when.”
Khalsa also noted that private stablecoins are not inherently safer. While decentralized digital assets avoid government oversight, private companies can still monitor, monetize, or restrict users’ financial activity. “The choice is whether you trust the government or a corporation with your financial data,” he said.
Privacy advocates argue that a CBDC could be designed to protect confidentiality while allowing for regulatory compliance. Proposed solutions include offline payment capabilities, strict limits on data collection, and open-source verification systems that prevent mass tracking of transactions.
Political Debate and Public Perception
The debate over central bank digital currencies in the U.S. highlights clear partisan and ideological divides. Republican lawmakers focus on privacy and civil liberties, warning that a CBDC could give the federal government unprecedented access to Americans’ financial activity. Meanwhile, Democrats and some technology experts point to potential benefits, such as improving financial inclusion, speeding up payment systems, and reducing the costs associated with handling cash.
Public awareness of CBDCs remains low, as most Americans have had little exposure to digital central bank currencies. Still, surveys indicate widespread concern over privacy and government oversight, factors that appear to shape lawmakers’ positions on the issue.
“The discussion isn’t only about technological innovation; it’s about trust,” said Dr. Alan Kim, a political economist at Georgetown University. “Citizens want assurance that digital dollars won’t be used to monitor or control their everyday financial activities.”
Potential Privacy-Focused Alternatives
Critics of CBDCs argue that privacy-oriented digital currencies could provide a viable alternative. These currencies would be decentralized, open-source, and specifically designed to prevent the tracking of individual transactions.
The European Union’s digital euro is often cited as a model for a privacy-conscious CBDC. Its design includes offline payment functionality, strict limits on data collection, and controls on how transaction information is used. The goal is to offer a public digital currency that preserves user privacy while providing an alternative to private payment networks.
Experts warn that if the U.S. fails to develop a similar privacy-respecting option, private companies could dominate the digital money market. In such a scenario, corporations, rather than the public, would control access to Americans’ financial data.
Senate Consideration of CBDC Amendment
The House amendment now moves to the Senate, where lawmakers will decide whether to enforce a full ban on a U.S. central bank digital currency, approve limited pilot programs, or authorize privacy-focused CBDCs with strict restrictions on government access to transaction data.
Policy analysts say the Senate’s decision will directly affect how Americans interact with digital money and the role of banks in the financial system. A complete ban would maintain the current banking structure, keeping deposits and lending under commercial banks while preserving individual privacy. Approving limited pilots or privacy-focused digital dollars would allow the Federal Reserve to test digital currency technology without compromising confidentiality, potentially shaping the U.S. approach to digital payments for years.
Senate to Decide on CBDC
The U.S. House’s amendment to H.R. 3838 tackles concrete risks posed by central bank digital currencies, including threats to Americans’ financial privacy, potential disruptions to commercial banks, and the risk of government overreach into everyday transactions.
The Senate will now decide the next step. Lawmakers can either block the Federal Reserve from issuing a digital dollar, protecting commercial bank deposits and individual privacy, or allow limited pilot programs with strict safeguards to test digital currency technology without compromising citizen data.
Maria Lopez, a financial analyst, said: “Digital currencies are already in use abroad. The Senate’s decision will determine whether the U.S. sets its own rules for privacy and control or follows standards created by other countries and private corporations.”
