Over the years we have seen and heard about the idea of the United States government create and issue its own native cryptocurrency but never have officially seen support for it until recently during this pandemic of the COVID-19 Coronavirus pandemic. The recent U.S. Stimulus that sent most American individuals $1200 saw an earlier bill that included the U.S. Digital Dollar but was removed as the current stimulus bill progressed across the House and Senate. However, there has been a new bill submitted for another stimulus and includes the digital dollar once again with a bit more new details.
Automatic BOOST to Communities (ABC) Act
Dated April 14, 2020, Representative Rashida Tlaib (D-MI) introduced the ABC Act to help boost the U.S. economy through the COVID-19 pandemic which looks to extend the stimulus for Americans to receive monthly payments of $2000 until March 2021.
Americans will have the option to receive their payments traditionally through either direct deposit, check, or possibly by the new digital dollar.
The U.S. Federal Reserve will essentially manage this digital dollar blockchain but will be part of the ABC Act.
Understanding how the BOOST card works will help better understand the digital dollar system.
BOOST Card (Not Digital Dollar)
(Not Actual Card)
Secretary of Treasury will set up the program with banking institutions to issue an " Interim BOOST Card" which translates to a prepaid debit card issued by the bank.
Banking institutions include:
- National Banking Association
- Credit Unions
- Minority Deposit Institutions
- Community Development Financial Institutions
- And any licensed money transmitter
The BOOST card will have specific rules for it.
The interim BOOST card shall—
(i) have all the functionality and service levels currently available to certain recipients of public benefits through the Treasury Department’s Direct Express program; and(ii) not be subject to any fees or penalty charges, usage restrictions, or data collection practices other than those explicitly authorized by this Act.
The full balance of the BOOST card will be made available for immediate withdrawals into physical currency at any time. Withdrawals can be made at any automated teller machine (ATM) in any country and not be subjected to any usage or withdrawal fees.
Distribution
The BOOST cards will be distributed through the mail via the U.S. Postal Service to individuals with an active address on file. Recipients that don't have an active address on file would have the option to pick up their BOOST card in person through any authorized card distribution station that is set up under the program such as banks.
There will also be a website for allowing recipients to update their information and will also provide information pertaining to the BOOST card and other account information for the card such as:
- Status of delivery
- Account number
- Recipient of allocated funds
- Amount of funds available on the card
- Receive a check in the amount of the funds in the account
Recipients will also be able to access their BOOST card information and services via phone.
The BOOST card will also be distributed through outreach programs to at-risk populations that also include physically disabled, homeless, elderly, or remote areas in need of general wellness.
Digital Dollar
the digital dollar will apparently be backed by a physical asset. The U.S. Treasury will mint and issue two $1 trillion platinum coins and will mint an additional $1 trillion coins on an as-needed basis. The platinum coins will be sold and the funds from the sale will be held by the Treasury in a general fund.
In part to a section in a securities act, to issue the digital dollar it is required to have the number of digital coins up to an amount equivalent to the total face value of all platinum coins issued by the U.S. Treasury and will be held as assets by the Federal Reserve System.
The Federal Reserve will create and distribute a system of digital dollar account wallets.
It is a sense of Congress that at the end of the payment period, the Board of Governors of the Federal Reserve System shall develop and administer a system of Digital Dollar Account Wallets, which shall be branded as ‘‘FedAccounts’’, and made available to all United States citizens, United States residents, and domestically domiciled businesses, along with associated services, including debit cards, online account access, automatic bill-pay, mobile banking, and automatic teller machines maintained in conjunction with the United States Postal Services at its physical locations.
The U.S. Treasury will offer the option for the proposed $2000/month BOOST payments to be recieved in digital dollar wallets. BOOST card recipients will recieve a Federal Reserve Account for debit cards and also an option to sign up online for digital dollar account wallets.
Few of the benefits mentioned:
- No Fees
- No minimum or maximum balances
- Shall not be closed on the basis of profitability
This option to receive BOOST payments in the digital dollar is proposed to be made available no later than January 1, 2021.
The U.S. Postal Service will join the banking services with digital dollar account wallets. The U.S. Treasury and U.S. Federal Reserve are partnering with the U.S. Post Office branches to offer access to application and account services for all U.S. citizens and residents. Along with having ATMs for BOOST card users.
Digital dollar account wallets shall partner with Post Office branches to ensure access and availability to application and account services for all United States citizens and United States residents and domestically domiciled businesses in areas where access to physical member bank branches is limited, in low- or moderate-income geographies; designated disaster areas; distressed or underserved non-metropolitan middle-income geographies as designated by the Federal Financial Institutions Examination Council, Federal Reserve banks
Digital dollar account wallets will be providing insurance or some form of protection against losses caused by security breaches or fraud and will comply with regulations.
A separate system will later be launched by the U.S. Treasury called Digital Dollar Cash Wallets or will be branded and referred to as "eCash Wallets". These will allow any individual to send, receive and store digital coins or other instruments that are issued by the U.S. Treasury.
The U.S. Treasury and Federal reserve will work together to have the digital dollar cash wallets compatible with digital dollar accounts that are maintained by the Federal Reserve. Essentially, digital dollar cash wallets hosting services (nodes) will be offered directly by the U.S. treasury along in coordination with the Federal Reserve and will be considered being part of money transmitting entities that would require a license.
digital dollar cash wallet hosting services shall be offered directly by the Treasury, in coordination with the Federal Reserve and licensed depository and money transmitter entities, to promote integration with and interoperability between Digital Dollar Cash Wallets and Digital Dollar Account Wallets managed by the Federal Reserve, and shall not be subject to any associated administrative fees or minimum or maximum balances, and shall not be closed on the basis of profitability considerations
Digital dollar cash wallets would also be able to self-host on inexpensive devices that include mobile phones with open-source software.
Read the ABC Act for more details.
Exact specifications on how their digital dollar blockchain will work have not been released although since this is a government-controlled system, many parts of how it works will most likely be kept secret for security and government control reasons.
It is important to remember that this is just a proposal for a new bill and will have to pass votes from the House and the Senate and then signed off by President Donald Trump.
This is an interesting way of injecting a government made cryptocurrency into the economy and markets but with its centralized nature, will it have its controversy among the decentralized cryptocurrency community? We have already seen the fallout from the controversial Facebook Libra coin however, Facebook is not the government.
Just over a decade ago, the vision of blockchain being in our daily lives was a long road but here we are today in 2020 and dealing with the COVID-19 pandemic could possibly be the little push needed to move in the direction of paperless and contactless payment system for not only the U.S. but basically all countries as we are seeing China in the start with the launch of their national digital currency and other countries as well.
It's looking to be a blockchain future for the world. First, we have to get through the current pandemic.
