House Republicans are making a strategic move to merge two significant pieces of legislation: a ban on the Federal Reserve creating its own digital currency and a comprehensive bill aimed at regulating cryptocurrency markets. This decision follows separate approvals of both bills by the House in July.

The procedural vote set for Tuesday afternoon includes a provision that might not have been initially apparent, aiming to combine the Central Bank Digital Currency (CBDC) ban, championed by House Majority Whip Tom Emmer (R-Minn.), with the bipartisan CLARITY Act, which proposes a new regulatory framework for crypto tokens. While the CBDC ban passed with predominant Republican support, the CLARITY Act saw a notable crossover with 78 Democrats backing the bill.

Earlier attempts to merge these measures on the House floor were met with resistance from Republicans on the Financial Services and Agriculture committees. Concerns were voiced that combining the bills could compromise the bipartisan support essential for the CLARITY Act’s survival in the Senate. However, to placate GOP hard-liners, promises were made to include a CBDC ban in the critical annual defense policy legislation. Despite this inclusion in the House-passed National Defense Authorization Act, it faces potential removal in the Senate, where bipartisan consensus is crucial.

A spokesperson for House Financial Services Chair French Hill emphasized the importance of both the CLARITY Act and the Anti-CBDC bill as top priorities. "By combining both measures and sending them to the Senate, the House continues to advance both priorities," stated Brooke Nethercott, adding readiness to collaborate with Senate Banking Chair Tim Scott and Senator Cynthia Lummis to see both provisions enacted.

However, the Senate appears to be charting its own course. Rather than adopting the House's CLARITY Act, Senate Republicans are preparing to push forward with their version of the legislation, dubbed the Responsible Financial Innovation Act. This move sets the stage for potential conflicts or compromises as both chambers work to reshape the regulatory landscape surrounding emerging digital currencies and blockchain technologies.