House Committee Chair Proposes Privacy-Preserving Digital Currency Bill


The chair of the House Committee on Financial Services’ Task Force on Financial Technology has introduced a bill to create a new type of digital currency. 

The Electronic Currency and Secure Hardware Act directs the U.S. Treasury to “develop and pilot digital dollar technologies that replicate the privacy-respecting features of physical cash.

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Under the bill, the Treasury would create a new form of digital cash, called E-Cash, without the intrusiveness of a Central Bank Digital Currency (CBDC). 

According to the E-Cash website, the currency is “designed and administered to replicate the anonymity and privacy-respecting features of physical cash to the greatest extent reasonably and practically possible.”

“In contrast to ledger-based systems… which prevent double-spending by verifying unspent balances against a common record of all previous transactions, e-cash devices verify funds locally via a dedicated or trusted computing environment located on the device itself,” says E-Cash. “This allows it to facilitate both offline and genuine peer-to-peer transactions without generating transactional data or requiring the approval of third party intermediaries or network validator nodes.”

E-Cash would be issued by the U.S. Treasury directly, not the Federal Reserve Board, and it would be offline-capable, and not require an internet connection to work.

The E-Cash digital dollar would be a digital currency unlike CBDCs, using a different technology stack and solutions. The bill further directs the Treasury to explore the full range of possible designs and to “experiment with multiple pilot designs simultaneously.”

The chair of the House Committee on Financial Services has introduced a bill to create a new type of digital currency. 
Finland’s AVANT stored-value card is one technology the US digital dollar might model itself upon. (Source)

A range of possible solutions

On the E-Cash website, a number of different technologies are discussed as being potential models for the new digital dollar.

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Among them is the Avant stored-value card which was issued by the Bank of Finland in 1992, as well as the more recent offline-capable smart payments card issued in China in 2021.

The bill believes that the most likely form that E-Cash will take, at least initially, is a payment card and a secured chip environment on a cell phone.

Bill receives multiple endorsements

The bill, brought forward by Rep. Stephen Lynch (D-MA) is also endorsed by Americans for Financial Reform, Demand Progress, the Action Center on Race and the Economy (ACRE), and Public Money Action.

According to its proponents, E-Cash will have an impressive number of advantages over other electronic cash systems. These are as follows:

“E-Cash is the only form of digital currency that is simultaneously:

1. Denominated in U.S. dollars;

2. Issued and guaranteed by the U.S. government;

3. Available for retail use by the public;

4. Not reliant on a common ledger or any third-party payments processing intermediary; and

5. Capable of anonymous, offline, peer-to-peer payments.”

The chair of the House Committee on Financial Services has introduced a bill to create a new type of digital currency. 
How E-CASH seeks to distinguish itself from the pack (Source)

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