CBDC ban could make Bitcoin and Ethereum benefit from it

Following Cynthia Lummis’ declarations about the creation of a federal Bitcoin Reserve, President Donald Trump signed an executive order banning Central Bank Digital Currencies (CBDCs) in the U.S today, 23rd January aligning with the House-passed “CBDC Anti-Surveillance State Act.” The bill aims to prevent the Federal Reserve from issuing or using CBDCs without Congressional approval, citing privacy and surveillance concerns. While the bill faces uncertainty in the Senate, the Federal Reserve has maintained that no CBDC will proceed without Congressional consent.

The move signals strong support for decentralized cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH), which thrive on privacy and independence from centralized control. Additionally, stablecoins such as USDT and USDC could gain prominence, as they remain key alternatives for digital payments without competition from a U.S. CBDC.

Critics argue the ban could hinder the U.S.’s financial modernization and global competitiveness as nations like China and the EU advance their CBDC projects. However, supporters see this as a boost to crypto innovation and privacy, positioning decentralized assets as vital to the future of money. However, this also comes with a risk of keeping the so-called “mean coins” movement at high RPMs.