By Joe Light
Congress is poised to pass a bill that would ban the Federal Reserve from issuing a digital dollar, which would compete with privately-issued competitors. It's a win for companies including Circle Internet Group and Coinbase Global, but other threats to stablecoin businesses loom.
On Monday evening, the Senate plans to vote on the 21st Century Road to Housing Act, a bill meant to improve home affordability that among other provisions makes it easier to build manufactured homes and partially bans institutional investors from buying homes to rent out. To win support from some conservatives, the bill writers included a provision to ban the Fed from issuing a central bank digital currency, or CBDC, until 2031.
The bill is expected to pass with wide bipartisan support on Monday. The House of Representatives could take up the bill later this week, and President Donald Trump could sign it into law before the end of the month.
The CBDC ban has been a longtime goal of conservatives and some advocates in the crypto industry who don't want to see the government issue a cryptocurrency that competes with stablecoins.
Stablecoins, such as Circle's USDC, are pegged to the dollar and backed by safe assets such as Treasury bills. Eventually, Circle and other companies say the coins could be used for everyday transactions, and a federally backed CBDC could have killed that use case.
In reality, the federal ban doesn't change much. The Federal Reserve Board and several regional Fed banks for years have studied what a U.S. CBDC might look like but under former Fed Chair Jerome Powell wasn't close to issuing one. Powell in testimony to Congress consistently said that the Fed would likely need explicit authorization from Congress before issuing a digital substitute for paper banknotes.
New Fed Chairman Kevin Warsh, whose term as chair ends only a few months before the ban sunsets, similarly said issuing a CBDC won't happen on his watch.
The biggest near-term threat to stablecoins' investment case might not come from the federal government at all but from traditional finance. A group of banks including Bank of America, Citi, JPMorgan Chase and Wells Fargo earlier this month announced they are launching a digital payments network with tokenized deposits as soon as next year. Payments companies such as Visa, Mastercard and Stripe have also looked into launching their own competing platform.
Many bank executives see stablecoins as a direct threat to deposits and have fought for a pending crypto regulatory bill to include a ban on companies paying a yield on stablecoin holdings. A tokenized deposits network could carry many of the same benefits as stablecoins do without cutting banks out of the process.
Circle shares have dropped about 28% in the past month to $80.69.
A CBDC ban might take one threat off the table for stablecoins, but there are plenty of others on the horizon.
Write to Joe Light at joe.light@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 22, 2026 12:37 ET (16:37 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments