While almost all of the legislation regarding cryptocurrency has dealt with regulation today a group of Democratic lawmakers announced the introduction of a new bill called "Electronic Currency And Secure Hardware Act" (ECASH Act) that actually seems to be getting some positive feedback. The idea may seem great at the surface but peeling back the layers is leading to some critical questions and some concerning issues.
Unlike all of the previous discussions about a digital dollar, this act would put the Department of Treasury and not the Federal Reserve in charge of it. This e-cash as it would be called would not be a CBDC since it is not under the Federal Reserve and would not be on the blockchain at all. The logic behind this is to keep privacy intact and not require the internet to use it. Immediately upon reading the release though all I could think of is all of the ways that this could go so very wrong.
Starting with the obvious at least to me.... this system does kind of already exist... its Venmo, Cashapp, PayPal, etc. It strikes me as odd that the comment has been made that this is done so that no fees are charged in peer-to-peer payments. If you use one of the services I mentioned above you would know that you just click you are sending money to friends or family and the fees all go away so why would this be needed? We also have another issue in that the Treasury Department has not been the area of the government that has been receiving funding for and focusing on digital currency. That has been the Federal Reserve so how they expect a safe pilot program to be rolled out in 90 days is very confusing.
Another huge issue that well they stated would be the case is that if you kept your e-cash on your phone and you lost your phone or it was stolen well you have lost your money. With the services, I mentioned above and in most crypto wallet cases if you lost your phone you would not lose your money! I just see this as a regression back to the 20th century and throwing a bunch of progress we have made away.
For years now cryptos especially Bitcoin have had to deal with the accusations that it was only used for illicit uses. This was easily combated with the public ledger though and it allowed for transparency. However, now we are taking away this transparency that I like in crypto. If/when the US releases a digital dollar I expect it to be an improvement on the dollar which is notorious for being used in illicit activities. The improvement is found in transparency which the physical dollar lacks.
With what has been released it stands to reason what this bill really is trying to do. Since the text is not available yet I have had to rely on the press releases about the bill both in support and against. I really do not see the need for this legislation especially when you take into account the murky waters that crypto is in. Congress should address this issue rather than continue to avoid it and issue clear rules and regulations like government agencies have asked for, for years now!
Please know I am not a financial advisor I am just someone who picked up on a trend and wanted to express it! Makes sure you always do your own research and never invest money you cannot afford to lose! If you enjoyed this article and would like to further support me below are a couple of referral links that if you used when signing up I would appreciate it! Also, follow me on Twitter @Cje95_
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