CryptoSlate
Congress passed a four-year ban on a Federal Reserve-issued CBDC as part of the 21st Century ROAD to Housing Act, clearing the Senate 85-5 on June 22 and the House 358-32 the next day. The provision freezes a retail digital dollar through the end of 2030 and bars the Fed from reviving the project without fresh congressional authorization. The bill also carves out an explicit exemption ensuring private dollar tokens stay outside the ban, a clean win for stablecoin issuers Circle and Tether, whose USDC and USDT together hold more than 80% of a roughly $320 billion market.
Why it matters
The political case was already closed before the vote. Fed Chair Kevin Warsh called a US CBDC a "bad policy choice" at his confirmation hearing, Treasury Secretary Scott Bessent said a digital dollar was "off the table," and President Trump signed an executive order against it in January 2025. The housing bill turns that consensus into binding law. But the Fed had no retail CBDC in the pipeline beyond research papers and a small Boston Fed pilot, so the ban removed a threat that lived mostly on paper. For Circle and Tether, the value is regulatory certainty rather than new market share.
Market impact
The contest that counts is already running through the commercial banks. JPMorgan, Citigroup, Bank of America, Wells Fargo, and more than a dozen other lenders are building a shared network for tokenized deposits through The Clearing House, targeting the first half of 2027. A tokenized deposit is an ordinary bank liability recorded on a blockchain, FDIC-eligible, and outside the GENIUS Act's definition of a payment stablecoin. US banking groups warned Congress last year that the wrong rules could push up to $6.6 trillion out of the deposit system. Bank of England official Megan Greene framed the race as a tortoise, a hare, and a rhino, betting on bank-issued tokenized deposits to overtake stablecoins within five years. Fed Governor Christopher Waller pushed back at the same event, defending stablecoins as healthy competition. With a 2027 launch still more than a year out and no blockchain vendor selected, stablecoin firms have a real runway to lock in merchants, fintech apps, and payroll rails first.
Frequently asked questions
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What did Congress actually ban with the CBDC provision?
The 21st Century ROAD to Housing Act bars the Federal Reserve from issuing a retail central bank digital currency through the end of 2030, and the Fed would need fresh congressional authorization to revive the project after that. The bill also explicitly exempts private dollar tokens from the ban.
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Why is this a win for Circle and Tether if no CBDC was actually launching?
The ban removes a theoretical competitor with the Fed's full balance sheet behind it, which is the one rival no private issuer could match. Circle and Tether, which together hold more than 80% of the roughly $320B stablecoin market, also gain regulatory certainty that the political consensus against a digital dollar…
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What is the bank-led alternative to stablecoins that the bill does not address?
JPMorgan, Citigroup, Bank of America, Wells Fargo, and more than a dozen other lenders are building a shared network for tokenized deposits through The Clearing House, targeting the first half of 2027. A tokenized deposit is an ordinary bank liability recorded on a blockchain and is explicitly excluded from the GENIUS…
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How much deposit funding could actually move to stablecoins if rules go the wrong way?
US banking groups warned Congress last year that the wrong rules could push up to $6.6 trillion out of the deposit system, shrinking lending capacity and raising borrowing costs. JPMorgan CEO Jamie Dimon has fought hard against letting stablecoin platforms pay anything resembling yield for the same reason.
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Who is betting on tokenized deposits winning over stablecoins?
Bank of England official Megan Greene argued at a late-May conference that tokenized deposits will probably overtake stablecoins within five years, calling them the 'rhino' in a race with a CBDC tortoise and a stablecoin hare. Fed Governor Christopher Waller pushed back at the same event, defending stablecoins as…
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