U.S. Rep. Stephen Lynch (D-MA) introduced a bill that would develop an electronic version of the U.S. Dollar for use by the American public.
The Electronic Currency and Secure Hardware (ECASH) Act (H.R. 7231) would establish a two-stage pilot program led by the U.S. Department of the Treasury to develop and issue an electronic version of the U.S. Dollar that promotes consumer safety and privacy, financial inclusion and equity, and anti-money laundering and counterterrorism compliance.
“As digital payment and currency technologies continue to rapidly expand and with Russia, China, and over 90 countries worldwide already researching and launching some form of Central Bank Digital Currency, it is absolutely critical for the U.S. to remain a world leader in the development and regulation of digital currency and other digital assets,” Lynch, chairman of the Task Force on Financial Technology, said. “By establishing a pilot program within Treasury for the development of an electronic U.S. Dollar, the ECASH Act will greatly complement and advance ongoing efforts undertaken by the Federal Reserve and President Biden to examine potential design and deployment options for a digital dollar. Importantly, this pilot program will also preserve a role in our financial system for smaller anonymous cash-like transactions, which are currently transacted in physical dollars and which have seen a rapid decline in use.”
To maximize consumer protection and data privacy, the bill requires Treasury to incorporate key security and functionality safeguards into e-cash that are generally associated with the use of physical currency — including anonymity, privacy, and minimal generation of data from transactions. Additionally, e-cash must be interoperable with existing financial institution and payment provider systems, capable of executing peer-to-peer offline transactions, and distributed directly to the public via secured hardware devices. Further, e-cash would be regulated similar to physical currency and subject to existing anti-money laundering, counterterrorism, Know Your Customer, and transaction reporting requirements and regulation.
“Cash remains our strongest tool to promote financial inclusion while preserving privacy and security, and new digital tools should emulate it– not replace it. Our government can provide digital assets that are both secure and accessible, and this bill is an important step in that direction,” Rep. Jesús “Chuy” García (D-IL), a cosponsor of the bill, said.
The legislation is also cosponsored by Reps. Rashida Tlaib (D-MI), Ayanna Pressley (D-MA), and Alma Adams (D-NC).
“Our current financial system has too often served as a barrier for Black, brown, and low-income communities to build and sustain wealth,” Pressley, vice chair for the Subcommittee on Consumer Protection and Financial Institutions, said. “Ensuring economic justice means advancing innovative solutions that will promote financial inclusion and trustworthiness while protecting consumer safety and privacy.”
The ECASH Act has been endorsed by several groups and experts, including Americans for Financial Reform/Demand Progress.