IT Pro is supported by its audience. When you purchase through links on our site, we may earn an affiliate commission. Learn more

Democrats propose privacy-focused digital dollar

The dollar would have to be able to make offline transactions and preserve anonymity

Five US democrats have proposed a bill that would develop an electronic version of the US dollar for use by the public.

The bill, the Electronic Currency and Secure Hardware (ECASH) Act, would promote greater financial inclusion, maximise consumer protection and data privacy, and advance US efforts to develop and regulate digital assets, said US representative Stephen Lynch, chairman of the task force on Financial Technology.

US representatives Jesús García, Rashida Tlaib, Ayanna Pressley, and Alma Adams are the other cosponsors of the bill, and are also part of the Committee on Financial Services.

The ECASH Act would establish a two-stage pilot programme led by the Treasury to develop and issue an electronic version of the US dollar that promotes consumer safety and privacy, financial inclusion and equity, and anti-money laundering and counterterrorism compliance.

The bill also requires the 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. 

It must also 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. E-cash would also be regulated similar to physical currency and subject to existing anti-money laundering, counterterrorism, and transaction reporting requirements and regulation.

“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,” said Rep. Lynch.

“By establishing a pilot programme within the 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."

Lynch added that the pilot programme will also preserve a role in the US's financial system for smaller anonymous cash-like transactions which are currently transacted in physical dollars and which have seen a rapid decline in use.

Related Resource

The new normal: The future role of finance

The changing role of the finance function during business disruption

Whitepaper cover with title on blue background split with grey triangle bottom right with other whitepaper coversFree Download

"As of this writing in fact, no less than 81 identifiable central banks have launched, piloted or are performing CBDC research, with many more in stealth mode," Jens Seidl, CEO of Currency Research told IT Pro. "It was expected that the US would not shy away from this either, however, we cannot comment on the likelihood of the legislation passing. We do believe it is clear that the Federal Reserve and the payments industry at large will form a view on the potential benefits and risks of a digital dollar. We also don’t expect that such an instrument would replace physical cash in the near future, as there are still important questions to resolve, such as accessibility, resilience and privacy."

The ECASH Act has been designed to be in line with guidance and directives from the US government, including president Biden’s executive order on Ensuring Responsible Development of Digital Assets announced earlier in March. The administration placed the highest urgency on research and development efforts into digital dollar design, including assessments of financial inclusion, possible benefits and risk for consumers, existing payment systems, and national security.

Similarly, the Federal Reserve released a whitepaper in January, warning that the introduction of new centralised digital currencies in other countries could lead to a decrease in the use of the US dollar if they are deemed more attractive.

Featured Resources

Accelerating AI modernisation with data infrastructure

Generate business value from your AI initiatives

Free Download

Recommendations for managing AI risks

Integrate your external AI tool findings into your broader security programs

Free Download

Modernise your legacy databases in the cloud

An introduction to cloud databases

Free Download

Powering through to innovation

IT agility drive digital transformation

Free Download

Recommended

Costa Rica declares state of emergency following Conti ransomware attack
ransomware

Costa Rica declares state of emergency following Conti ransomware attack

10 May 2022
LinkedIn to pay $1.8 million to employees after settling gender discrimination charges
Careers & training

LinkedIn to pay $1.8 million to employees after settling gender discrimination charges

4 May 2022
Google claims US government is too reliant on unsecure Microsoft products
cyber security

Google claims US government is too reliant on unsecure Microsoft products

1 Apr 2022
Biden urges US businesses to prepare for Russian cyber attacks
cyber warfare

Biden urges US businesses to prepare for Russian cyber attacks

22 Mar 2022

Most Popular

Salaries for the least popular programming languages surge as much as 44%
Development

Salaries for the least popular programming languages surge as much as 44%

23 Jun 2022
The UK's best cities for tech workers in 2022
Business strategy

The UK's best cities for tech workers in 2022

24 Jun 2022
LockBit 2.0 ransomware disguised as PDFs distributed in email attacks
Security

LockBit 2.0 ransomware disguised as PDFs distributed in email attacks

27 Jun 2022