Massachusetts members of Congress propose development of digital dollar
New proposed legislation would direct the United States Treasury to develop and issue an electronic version of the U.S. dollar.
Massachusetts Rep. Stephen Lynch, Chairman of the Task Force on Financial Technology, introduced the measure Monday along with another member of the state's delegation, Rep. Ayanna Pressley, and two representatives from other states.
Their proposal, the Electronic Currency and Secure Hardware Act — or ECASH Act — follows a January white paper published by the Federal Reserve about the potential considerations for a national digital currency and President Joe Biden's executive order directing the Treasury Department and other federal agencies to study the impact of cryptocurrency on financial stability and national security.
According to Lynch's office, the legislative proposal would establish a two-stage pilot program for a digital dollar. The first phase would consist of at least three "proof-of-concept" programs testing various technologies while the second phase consists of a least one "large-scale field test" involving members of the American public.
The proposal would require at least some of the evaluated technologies to be fundamentally different than existing cryptocurrencies that use a type of distributed ledger known as the blockchain. It would also require officials to consider using a magnetic or pin card and cell phone technology options for storage and payment.
Lynch said the legislation would require the electronic currency to be interoperable with existing financial institutions, regulated similarly to physical cash and subject to many of the same requirements and regulations.
Those pilot programs would be initiated within 90 days of the bill's enactment, with the goal of deploying digital dollars to the public within four years.
Lynch said Russia, China and at least 90 other nations are already researching or launching some form of digital currency.
"By establishing a pilot program within 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 said in a statement provided by his office. "Importantly, this pilot program will also preserve a role in our financial system for smaller anonymous cash-like transactions which are currently transacted in physical dollars and which have seen a rapid decline in use."
"Our current financial system has too often served as a barrier for Black, brown, and low-income communities to build and sustain wealth," Pressley said in a statement. "Ensuring economic justice means advancing innovative solutions that will promote financial inclusion and trustworthiness while protecting consumer safety and privacy. I am proud to co-sponsor the ECASH Act to ensure we have strong consumer protections and improve financial access and equity."