USA: ‘ECASH’ bill seeks the creation of a digital dollar without the need for the FED – DiarioBitcoin

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USA: 'ECASH' bill seeks the creation of a digital dollar without the need for the FED - DiarioBitcoin By Hannah Perez

US legislators presented the ‘ECASH’ bill for the creation of a digital dollar that would be in charge of the Treasury Department and that would not be built on Blockchain.

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A group of legislators in the United States has presented an innovative bill that seeks to create a digital dollar without the need for authorization from the country’s Federal Reserve (FED).

The bill, titled the “Secure Electronic Currency and Hardware Act” or ‘ECASH’ Act, would direct the US Secretary of the Treasury to develop and issue a digital version of the US dollar, which is easy to to use and that preserves the privacy of users and the anonymity of transactions.

Reps. Stephen Lynch (D-Mass.), Jesús Chuy García (D-Ill.), Ayanna Pressley (D-Mass.), and Rashida Tlaib (D-Mich.) introduced the bill in the House on Monday, as reported by the media CoinDesk and Cointelegraph.

ECASH: an electronic analog to the dollar

Among the peculiarities of the proposal, it stands out that the The US Department of the Treasury would be the government entity authorized to create the digital dollar, rather than the Federal Reserve (FED), the country’s central bank. Consequently, said digital dollar would not be a central bank digital currency (CBDC), although it would be considered legal tender.

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The electronic dollar, as the proposal calls it, would be a digital analog to the US dollar that people could operate from their cell phones or through a card. In accordance with CoinDeskthe system would be based on token and not in accounts. This suggests that if someone loses their mobile device or card they could lose their funds.

The electronic version of the national currency would seek a user-friendly design for the economically marginalized and people with technical problems, according to Cointelegraphwhile it will reply “privacy-friendly features” of cash. However, unlike other similar projects, it would not be based on a blockchain or digital ledger technology (DLT).

Rohan Gray, an assistant professor at Willamette University School of Law who consulted on the bill, told CoinDesk:

We propose to have a true bearer instrument similar to cash, a token-based system that has neither a centralized ledger nor a distributed ledger, because it has no ledger. It uses secure hardware software and is issued by the Treasury.

An anonymous and peer-to-peer system, but without Blockchain

In addition to not being in charge of the FED, another outstanding feature of the project that differentiates it from others of its kind is that do not plan to use blockchain, the technology behind cryptocurrencies, or other decentralized accounting tools. Despite this, the system promises to support peer-to-peer transactions that guarantee anonymity.

In fact, avoiding the blockchain could favor this feature. As it explains CoinDeskthe networks blockchain they are designed to track every transaction and therefore any transaction could be linked to the sender and receiver.

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The version of the electronic dollar would be able to “instant, final, direct, peer-to-peer offline transactions using secure hardware devices that do not imply or require subsequent or final settlement in or through a common or distributed ledger, or any additional approval or validation”, according to statements by the professor quoted by the media.

The proposal also states that users would not be subject to more severe know-your-customer (KYC) rules than those already in place for the use of cash, he said. CoinDesk. Electronic dollars would be acquired through a bank account or peer-to-peer transaction, but users could then do whatever they want with them.

Gray told the outlet that such a system could serve people unable to access bank accounts due to minimum balance requirements, or those who don’t trust banks due to high fees or their authority to freeze funds.

Efforts to boost a digital dollar

Despite not being authorized by the FED or being built on blockchain, the proposed system is not intended to necessarily exclude a CBDC. The main sponsor of the ECASH proposal, Stephen Lynch, chairman of the Fintech Task Force in the House Financial Services Committee, told Cointelegraph that the electronic dollar programwill complement and advance ongoing efforts by the Federal Reserve and President Biden to examine possible design and implementation options for a digital dollar“.

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There is nothing stopping the Fed from issuing a CBDC as well“, added Gray in this line. In fact, that would be expected since different layouts serve different functions, like cash and checking accounts today.”.

The US government has been looking at creating a digital dollar for some time. In January of this year, the Fed released a long-awaited report on the matter, addressing the pros and cons of a CBDC. Despite these efforts, the central bank has not yet committed to issuing a digital currency and the development is still uncertain.

The ECASH bill is the latest effort to push for a digital dollar in the US The regulation calls for a two-phase pilot program to launch within 90 days of enactment, with the rollout of electronic cash for American public expected no later than 4 years after enactment.


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Article by Hannah Estefanía Pérez / DailyBitcoin

Unsplash image edited in Canva

WARNING: This is an informative article. DiarioBitcoin is a means of communication, it does not promote, endorse or recommend any investment in particular. It is worth noting that investments in crypto assets are not regulated in some countries. May not be suitable for retail investors as the full amount invested could be lost. Check the laws of your country before investing.

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