- Stephen F. Lynch Chairman of the Task Force on Financial Technology has proposed Electronic Currency and Secure Hardware (ECASH) Act.
- Currency will be a sort of digital cash issued by the Treasury, secured by hardware, and will be anonymous in nature and may not be based on Blockchain technology.
- Within 90 days of enactment, the bill calls for the implementation of a two-phase e-cash pilot programme, followed by e-cash deployment to the general population.
Stephen F. Lynch Chairman of the Task Force on Financial Technology has introduced Electronic Currency and Secure Hardware (ECASH) Act. The proposed legislation would allow for the creation of an electronic version of the US dollar for usage by the people of the United States. This ground-breaking legislation would expand financial inclusion, improve consumer protection and data privacy, and strengthen the United States’ efforts to develop and regulate digital assets. The bill’s original cosponsors are U.S. Representatives Jess G. “Chuy” Garca, Rashida Tlaib, Ayanna Pressley, and Alma Adams of the Committee on Financial Services.
CBDC is being explored by 87 countries, representing for more than 90% of global GDP, according to an Atlantic Council research paper. According to Atlantic Council during 2020, numbers were limited to 35 countries, considering adoption of CBDC. Digital currency is currently fully operational in nine countries. Nigeria, with its e-Naira CBDC, is the most recent country to do so. The architecture of cross-border payments is changing and becoming more decentralised. The most recent cross-border payment test is Project Dunbar, a collaboration involving South Africa, Singapore, Malaysia, and Australia. Fourteen countries, including China and South Korea, are now in the pilot stage of their CBDC and are planning to launch it fully.
Among the four largest central banks in the World, the US, the Euro Area, Japan, and the UK, only United States is furthest behind in the process of adoption of Digital Currency.
The Federal Reserve produced a White Paper in January 2022 on a possible US central bank digital currency and other digital payment mechanisms, emphasising the significance of considering a wide range of design alternatives. President Biden recently signed an Executive Order on Ensuring Responsible Development of Digital Assets, which states that the Administration will prioritise research and development efforts in digital currency design, including focussing on financial inclusion and assessment of potential benefits and risks that it brings to consumers, assessing existing payment systems, and issues related with national security.
The ECASH Act would establish a two-stage pilot programme led by the US Department of 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, in accordance with these guidance and directives. The bill mandates Treasury to implement important security and operational precautions into e-cash that are normally associated with the usage of physical currency, such as anonymity, privacy, and limited data production from transactions, in order to optimise consumer protection and data privacy.
E-cash must also be interoperable with existing financial institution and payment provider systems, capable of completing peer-to-peer offline transactions, and supplied directly to the public via secured hardware devices in order to increase financial inclusion. Furthermore, the bill says that e-cash will be controlled in the same way as physical currency is, and will be subject to existing anti-money laundering, anti-terrorism, Know Your Customer, and transaction reporting standards and regulations.
Rep. Lynch believes that the United States must continue to be a world leader in the development and regulation of digital currency and other digital assets.
The ECASH Act will considerably complement and accelerate ongoing work by the Federal Reserve and President Biden to study potential design and deployment options for a digital currency by establishing a pilot programme within Treasury for the development of an electronic U.S. Dollar.
Staff Galactik Views