2A US legislator has proposed a large-scale trial of government-backed digital cash. the Electronic Currency and Secure Hardware Act (ECASH), introduced by Rep. Stephen Lynch (D-MA), would direct the Secretary of the Treasury to publicly test an “electronic version” of the US dollar. While the bill’s chances of passage are likely to remain low, it demonstrates the growing interest of governments in launching alternatives to cryptocurrencies.
The ECASH Act would require the Secretary of the Treasury to establish a program called the Electronic Currency Innovation Program (ECIP). ECIP would oversee a series of pilot programs for what the bill calls “electronic cash”: legal tender issued by the Treasury Department that can be used without private intermediaries such as banks or credit card companies. Treasury would start the pilot program within 90 days of the bill’s passage and roll out electronic cash to the public within four years.
While “digital dollars” are often conflated with blockchain-based cryptocurrencies like Bitcoin, the ECASH Act appears to discourage the use of that technology. Electronic cash is supposed to have “minimal transactional data generation properties,” a tall order for cryptocurrency systems that record transactions publicly, and is supposed to allow peer-to-peer transfers that are not validated through a “common” system. or distributed”. The transfers also might not require additional validation by a central government system or payment processing company, though they would have to work with existing institutions like banks. The idea is to mimic the high level of privacy of cash. , ease of use, and lack of processing fees or hurdles, but minus physical invoices.
Lynch’s bill, co-sponsored by Jesus “Chuy” Garcia (D-IL), Rashida Tlaib (D-MI), Ayanna Pressley (D-MA), and Alma Adams (D-NC), would require at least three Early Tests. of concept tests that are executed within 180 days of approval. They would potentially be done in partnership with existing universities or financial institutions, and would be designed to experiment with different technologies. At least one test would need to involve a physical card that can store the cash, while another would need to involve storing funds on a cell phone or SIM card. Those first tests would be followed by a limited public test and “general rollout” within 48 months.
Lynch’s bill builds on existing widespread interest in a US “digital dollar.” the federal reserve published a preliminary report in the digital currency earlier this year, suggesting it could benefit Americans who are not served by the current banking system. More recently, the Biden administration included a central bank digital currency (CBDC) as an action item in your cryptocurrency executive order. Many governments outside of the US were already exploring digital currencies. Among other initiatives, the European Commission plans to propose a “digital euro” in 2023, and China launched a “digital yuan” pilot program in January.
The bill specifies that electronic cash is distinct from CBDCs and would not supplant a potential Federal Reserve program. What CoinTelegraph establishesthere is no center or Distributed ledger that tracks transactions. This preserves anonymity, but also means that users’ digital cash would be lost if the device or card containing it were lost. It would build on existing Treasury cash replacement systems like EagleCash, a digital money storage card for members of the military.
The goal is to “complement and promote” other programs of the Biden administration while getting a simple digital currency system on Americans’ phones and wallets. “Cash remains our strongest tool for promoting financial inclusion while preserving privacy and security,” Rep. Garcia said in a statement. “New digital tools should emulate it, not replace it.”