Washington, D.C. – Today, U.S. Representative Stephen F. Lynch (MA-08), Ranking Member of the Financial Service’s Subcommittee on Digital Assets, Financial Technology and Inclusion, reintroduced H.R. 5410, the Electronic Currency and Secure Hardware (ECASH) Act, which would develop an electronic version of the U.S. Dollar for use by the American public. This innovative legislation would promote greater financial inclusion, maximize consumer protection and data privacy, and advance U.S. efforts to develop and regulate digital assets. In addition, Rep. Lynch announced the creation of the Digital Dollar Caucus to keep Congress updated on critical issues related to the digital dollar including its development, role in promoting financial inclusion, privacy and data security, fraud prevention, payment system efficiency, and other factors.
“As digital payment and currency technologies continue to rapidly expand and with Russia, China, and nearly 130 countries worldwide already researching and launching some form of Central Bank Digital Currency, it is absolutely critical for the U.S. to remain a world leader in the development and regulation of digital currency and other digital assets,” said Rep. Lynch. “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. 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.
“Additionally, I am creating the Congressional Digital Dollar Caucus so my colleauges and I can examine the critical issues we face relating to the development, design and potential implementation of a digital dollar,” Rep. Lynch continued. “I plan to invite innovators, technologists, academics and other experts to share their findings and developments on the subject. I hope my colleagues will join me in this exploration so we may be better prepared as our country moves forward in the digital financial space.”
In January of 2022, the Federal Reserve released its white paper on a potential U.S. central bank digital currency and other digital payment methods – underscoring the importance of exploring a wide variety of design options. More recently, President Biden issued his Executive Order on Ensuring Responsible Development of Digital Assets – providing that the Administration places the “highest urgency on research and development efforts” into digital dollar design, including assessments of financial inclusion, possible benefits and risks for consumers, existing payment systems, and national security.
In line with these guidance and directives, the ECASH Act would establish a two-stage pilot program led by the U.S. Department of the Treasury to develop and issue an electronic version of the U.S. Dollar that promotes consumer safety and privacy, financial inclusion and equity, and anti-money laundering and counterterrorism compliance. In order to maximize consumer protection and data privacy, the bill requires Treasury to incorporate key security and functionality safeguards into e-cash that are generally associated with the use of physical currency – including anonymity, privacy, and minimal generation of data from transactions. In the interest of expanding financial inclusion, e-cash must also be interoperable with existing financial institution and payment provider systems, capable of executing peer-to-peer offline transactions, and distributed directly to the public via secured hardware devices. Moreover, the bill specifies that e-cash would be regulated similar to physical currency and subject to existing anti-money laundering, counterterrorism, Know Your Customer, and transaction reporting requirements and regulation.