An arcane financial policy idea that conservatives love to hate has become a perpetual nightmare for House Speaker Mike Johnson.
House Republicans have been pushing legislation for years that would ban the Federal Reserve from creating a central bank digital currency. Republican hardliners have repeatedly pushed to ban a CBDC in key bills that require Democratic support in the Senate to pass, imperiling their path forward.
Conservatives secured their biggest victory on the issue yet Wednesday after convincing GOP leaders to combine the digital currency ban with a bill reauthorizing government spy powers set to expire Thursday. That’s setting up a major clash with the Senate, where Democrats oppose a CBDC ban and Majority Leader John Thune has warned that a combined bill is “dead on arrival.”
House hardliners’ anti-CBDC crusade has contributed to the growing dysfunction among House Republicans. The issue is also bewildering to Senate Republicans, who don’t want the push to imperil other legislation.
“I understand if there is a fear out there on it, but right now we’ve got some other fish to fry, and we need their help to get these other issues done,” said Sen. Mike Rounds (R-S.D.), a senior member of the Senate Banking Committee. “Let’s take the wins that we can get.”
The House on Wednesday approved an extension of a key section of the Foreign Intelligence Surveillance Act that will be combined with a CBDC ban before being sent to the Senate. The combined measure is unlikely to clear the upper chamber, and it’s unclear how lawmakers will extend the spy powers before they expire at the end of the month.
Conservative hardliners say a CBDC would lead to government financial surveillance and suffocate private-sector innovation in the crypto industry. The ban has been a priority of the House Freedom Caucus this congress.
“It’s a worthwhile cause,” Rep. Warren Davidson (R-Ohio) said of the ban. “It’s the creepiest surveillance tool ever developed.”
The trouble for Johnson started last July when conservative hardliners froze the House floor, demanding that the CBDC ban be included as part of a larger crypto measure. To resolve a standoff over the demand, Johnson promised the House Freedom Caucus that the ban would be attached to a must-pass defense authorization bill later that year — a pledge he later broke.
The issue created another snag when GOP hardliners said a temporary ban included in a now-stalled Senate housing package didn’t go far enough, threatening to tank the bill if it came to the floor. Now FISA’s fate is wrapped up in the issue.
Johnson told reporters Wednesday that “the Senate knows exactly what we’re doing, of course.”
“They’re watching this very closely, and hopefully they can process what we send them,” Johnson said.
The vast majority of Republicans support the CBDC ban. However, most don’t think the issue should hold up other major legislative party priorities.
Rep. Andy Barr (R-Ky.), a senior House Financial Services Committee member, said the ban was an “important issue” but “shouldn’t prevent us from making progress in other areas.”
Another senior House Financial Services Committee member, Bill Huizenga (R-Mich.), said that he wants a ban “probably more than a lot of folks do” but that “people are not necessarily using the proper time, proper place” to push the policy.
