US lawmakers propose 'ECASH' bill in push to create token-based electronic dollar

• Electronic dollar would be hardware-secured and anonymous form of greenback

• ECASH Act can fast-track CBDC adoption in US

U.S. lawmakers on Monday said the Treasury Department should create a digital dollar – not the Federal Reserve and introduced the “Electronic Currency and Secure Hardware Act” (ECASH Act).

The legislation by the Reps. Stephen Lynch, Jesús Chuy Garcia, Ayanna Pressley and Rashida Tlaib called for the Treasury to develop and pilot a hardware-secured electronic version of the U.S. dollar, emphasizing privacy and anonymity in transactions.

Moreover, the new proposal suggests that the e-cash would technically not be a central bank digital currency (CBDC), as the Fed will not issue it, nor would it be built on a blockchain or require an internet connection for a transaction.

It is designed to “replicate the privacy-respecting features of physical cash,” such as coins and notes.

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Although the initiative isn’t meant to preclude a Fed-issued CBDC, the electronic dollar will “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.

As defined in the bill, the electronic dollar would be a bearer instrument that Americans could hold on their phone or a card and would support peer-to-peer transactions

It would be deemed legal tender and be functionally identical to a physical greenback.

The system would be token-based, not account-based, meaning a person would lose the funds if the phone or card is lost.

Picture Credit: Bloomberg