A group of US lawmakers this Monday introduced the “E-CASH” Act, a bill addressed to the US Treasury Department to encourage the entity to develop a digital version of the dollar.
E-Cash is not a CBDC, but a supplement to it
Democratic Representative Stephen Lynch is the lead sponsor of the ECASH Act, a bill sent to the House of Representatives.
Under the bill, the US Treasury Department was selected as the “most appropriate” government agency to develop the pilot e-cash program rather than the Federal Reserve – the US central bank – so it wouldn’t technically be a central bank (digital currency). CBDC).
E-Cash is intended to complement and be developed in parallel with other forms of digital government finance, including CBDCs, FedAccounts, Postal Banking and Public Banking.
Essentially, E-cash would be a “bearer instrument” that replicates the same functionalities of the physical dollar as much as possible.
According to Representative Stephen Lynch, the main idea of the e-cash system is to promote greater financial inclusion for low-income US citizens who cannot afford the minimum threshold to fund a bank account, in addition to maximizing consumer protection and data privacy. .
E-Cash would not use DLT
The proposal proposes to regulate a new way of transacting with digital dollars that would differ from CBDCs, which are based on digital ledger tools that record the transaction details of the sender and recipient.
E-cash would not be built using Distributed Ledger Technology (DLT) like blockchain. Instead, the digital dollar would work with new hardware issued and managed by the US Treasury Department. The bill calls on the entity to design and experiment with “e-cash devices.” They could take the form of a secure chip on their mobile phone or a new payment card that allows users to send e-checkout balances offline and anonymously.
Under this system, the account reads, funds can be verified “through a special or trusted computing environment that resides on the device itself.” Being a bearer instrument means it is unlike account based systems, so if someone loses the device that holds their e-cash balance, they also lose their money, just like losing a wallet with money in it.
An E-Cash transaction works by transferring an e-cash balance, a unique digital representation of value issued and verified by the government, from one secure hardware device to another.
Pressure to digitize the dollar?
The development of the e-cash system could be driven by the rapid growth of digital money worldwide. One of the examples of ‘E-cash devices’ mentioned in the bill is a payment card issued by the Chinese government as part of the Yuan digital rollout, which allows citizens to pay offline.
In light of the above, CryptoPotato reported a few weeks ago that the digital yuan could challenge the dominance of the US dollar internationally, as said by Richard Turrin – a Financial Technology Consultant at CNBC. He stated, “China is ten years ahead of all financial technology.”
While China is openly hostile to crypto assets and crypto-related businesses, it has been working intensively to develop its national CBDC. As CryptoPotato reported, the People’s Bank of China recently launched a trial version of its digital yuan wallet application for iOS and Android users.
SPECIAL OFFER (Sponsored)
Binance Free $100 (Exclusive): Use this link to register and get $100 free and 10% off the fees on Binance Futures in the first month (Terms and Conditions).
Special PrimeXBT Offer: Use this link to register and enter the POTATO50 code to receive up to $7,000 on your deposits.