US Introduces ‘ECASH’ Bill in New Bid to Create Electronic Cash

The US Federal Reserve in January released the long-awaited report highlighting the costs and benefits of digital cash and made way for public contributions. This implementation has been a motion in floor debates for some time now. On Monday, a group of lawmakers namely: Reps. Stephen Lynch (D-Mass.), Jesús Chuy Garcia (D-Ill.), Ayanna Pressley (D-Mass.), and Rashida Tlaib (D-Mich.) came out with the Electronic Currency And Secure Hardware (ECASH ACT) to provide a framework for this much-anticipated project.

The lawmakers made several proposals including the suggestion that the US Treasury Department should be the government entity to lead this project rather than the Federal Reserve. The Bill charges the Treasury Secretary to create and issue the digital dollar with a focus on privacy preservations and anonymity in transactions. 

The bill highlights a two-phase ECASH pilot program within 90 days of enactment. Also, it is expected to be deployed to the American public no later than 48 hours after enactment. Apart from the Central Bank, the project does not also involve the Digital Ledger Technology (DLT) and has been said to have better anonymity and privacy than any other government-sponsored currency to date.

“We’re proposing to have a genuine cash-like bearer instrument, a token-based system that doesn’t have either a centralized ledger or distributed ledger because it had no ledger whatsoever. It uses secured hardware software and it’s issued by the Treasury,” said Rohan Grey, an assistant professor at Willamette University who consulted on the bill.

The proposed electronic cash would be token-based rather than account-based and can be held on a phone or card. 

Lynch, in his ECASH proposal stated that currency would not be subjected to strict Know-Your-Customer rules. Users would be able to acquire digital cash through stores, peer-to-peer transactions, and banks, and would have the free will to subject it to whatever use they want. With the rising number of unbanked adults across the globe, this digital cash has been designed to offset the challenges that hinder people from accessing these traditional Banks.

Lynch also responded to the growing pressure for the US to rise to the occasion as China and Russia advance in their Central Bank Digital Currency (CBDC) implementations. 

“As digital payment and currency technologies continue to rapidly expand with Russia, China, and over 90 countries worldwide already researching and launching some form of Central Bank Digital Currencies, it is absolutely critical for the US to remain a world leader in the development and regulation of digital currency and other digital assets,” he said.

Grey mentioned that people who do not trust banks because of high charges and fund freezes, and those who have been left out of creating bank accounts due to the difficulties in meeting the minimum requirements would be perfectly served by this project.