For years, U.S. policymakers have debated the merits of a central bank digital currency (CBDC)—a “digital dollar”—but have failed to reach a definitive course of action. While other countries push forward with CBDC initiatives, the U.S. has chosen a different path, with the current administration outright banning the development of a national digital currency.
The Case for CBDCs
CBDCs are digital versions of fiat currencies issued and backed by governments. Their primary objectives include improving monetary policy, enhancing financial inclusion, and increasing efficiency in payment systems. As cash usage declines and tokenized digital payments rise, CBDCs offer a way to maintain government control over financial stability and reduce reliance on private digital assets such as stablecoins and altcoins.
CBDCs come in two forms:
- Retail CBDCs: Available for public use, functioning like digital cash.
- Wholesale CBDCs: Designed for interbank transactions and financial institutions.
Many global economies, including China and the European Union, are actively advancing their CBDC development. However, the U.S. has taken a starkly different approach under President Donald Trump.
The U.S. CBDC Ban
On January 16, 2025, Scott Bessent, Trump’s nominee for Treasury Secretary, testified before the Senate Finance Committee, strongly opposing a U.S. CBDC. Days later, on January 23, President Trump signed an executive order officially prohibiting the establishment, issuance, circulation, and use of CBDCs in the U.S.
Trump’s decision aligns with concerns from financial and crypto industry leaders. Vivek Raman, CEO of Etherealize.io, stated:
“We don’t believe a CBDC will happen in the U.S. under the new administration. A CBDC goes against the principles of decentralization and freedom. It is better to have a marketplace of stablecoins and tokenized assets.”
Similarly, Rhett Shipp, CEO of stablecoin provider Avant, argues that CBDCs would harm the U.S. economy by increasing censorship and reducing privacy. He advocates for stablecoins as a better alternative.
CBDC Development Around the World
The Atlantic Council’s CBDC Tracker monitors developments in 134 countries, accounting for 98% of global GDP. Currently, 66 countries are exploring CBDCs, with China leading the way. Only three countries—Nigeria, Jamaica, and the Bahamas—have officially launched CBDCs.
China’s e-CNY: The Most Used CBDC
China has taken a dominant role in global CBDC development, launching the e-CNY pilot in 2019. The digital yuan now has 260 million users and has processed $982 billion in transactions as of June 2024.
China’s efforts go beyond domestic adoption. Asian countries such as India, Indonesia, Thailand, Singapore, Japan, and South Korea are also piloting CBDCs. Meanwhile, China has expanded the e-CNY for public transport payments, tax collection, and digital red packets (Hongbao), further integrating its use into daily life.
The Global Impact of Trump’s Ban
Trump’s move to ban CBDCs in the U.S. is expected to stall any retail CBDC projects for at least the next four years. However, some experts argue that CBDCs are still at least a decade away from full implementation.
Yifan He, founder of Red Date Technology, states:
“I don’t think any country can develop a real retail CBDC in the next 10 years.”
Red Date Technology is behind two of the most advanced blockchain-based payment infrastructure projects:
- China’s Blockchain-Based Service Network (BSN) – A government-backed network integrating different digital payment systems.
- The Universal Digital Payments Network (UDPN) – A decentralized messaging system facilitating cross-border digital currency transactions.
Through UDPN, financial institutions such as Standard Chartered and Deutsche Bank are testing cross-border CBDC and stablecoin transactions to understand their feasibility for mainstream adoption.
The EU’s Wholesale CBDC Initiative
While the U.S. has dismissed CBDCs, the European Central Bank (ECB) is taking steps to launch a wholesale CBDC for cross-border settlements. On February 20, 2025, the ECB announced an expansion of its CBDC development in two phases:
- Building a wholesale CBDC platform for interbank transactions.
- Integrating CBDCs with global financial systems to enable cross-currency payments using tokenized deposits and assets.
This initiative seeks to unify Eurozone financial infrastructure and potentially influence broader global CBDC adoption.
Is a Digital Dollar Inevitable?
Despite the U.S. government’s current stance, experts believe tokenization of the financial sector is inevitable.
William Quigley, co-founder of WAX.io blockchain and stablecoin issuer Tether, explains:
“Each country will adopt tokenization of the financial sector at its own pace. It’s unfortunate that in the U.S., CBDCs face criticism over privacy concerns, but as digital assets grow, central banks will have to adapt.”
While the U.S. remains opposed to CBDCs, 19 of the G20 nations, including China, the EU, India, and Brazil, are actively developing CBDC programs. As more countries shift toward digitized finance, the U.S. risks falling behind in financial innovation and digital payments infrastructure.
For now, the market for paper money and ancient coins remains intact, but the question remains: How long can the U.S. resist the push toward a digital currency future?
