BitOoda Regulatory Analysis, 3/30/2020: A New Pathway for the Digital Dollar
This is the ultimate digital currency use case, an answer to those who claimed there is no near-term need for a digital dollar, and a chance to help the U.S. leap ahead with the integration of digital assets into the mainstream economy — with the immediate benefit being the rapid and cost-effective dissemination of much-needed economic relief to millions of Americans. The proposal — introduced in the House and Senate as part of the COVID-19 response bill — envisions the creation of a system of digital dollar wallets accessible to any U.S. citizen and managed by the Federal Reserve that would enable direct payments to citizens affected by the COVID-19 pandemic. It was ultimately omitted from the final version of the CARES Act, but there are some on Capitol Hill who believe the proposal may still be on the table as part of the implementation plan.
We have previously written about the push for the digital dollar, opining that the evolution of the CBDC debate will help shape the future of U.S. policy on digital assets. We are heartened to see that national leaders are familiar enough with the concept and technology behind a Fed-managed digital currency that the idea gained at least some traction in the midst of this crisis.
Former CFTC Chair Chris Giancarlo, who started a non-profit foundation in January to promote the digital dollar, was not involved in drafting the COVID-19 proposal, but is “heartened” that the digital dollar is part of the current discussion. He envisions that a public-private partnership would need more time to thoughtfully develop the dollar as a CBDC, but agreed this type of crisis response is an ideal use case for a digital dollar.
From our perspective, we see the consideration of this proposal as part of the COVID-19 response as a new way of thinking by Congress about the potential integration of digital currencies into U.S. economic policy. We agree with Mr. Giancarlo that more time is needed to develop the policy, technology and infrastructure for a full-fledged CBDC, but assess this use case could be a catalyst for progress among political leaders, which could go a long way toward getting financial regulators onto the same page when it comes to digital asset governance.