In what is considered a knee-jerk reaction to Facebook’s Libra and China’s stated intent to deploy a digital currency, the Senate Banking Committee had hearings to ponder a U.S. response. This comes after a stimulus proposal called the Automatic BOOST to Communities Act (ABC Act) proposed the Federal Reserve create “FedAccounts,” or “Digital Dollar Account Wallets,” to deploy $2,000 per month to U.S. residents. The June 30th, 2020 Senate Banking Committee discussions included these comments, as reported in a Forbes article:
Some highlights from the hearing include:
• Senator Tom Cotton (R-Ark.) stated, “The U.S. needs a digital dollar…The U.S. dollar has to keep earning that place in the global payments system. It has to be better than bitcoin … it has to be better than a digital yuan.”
• Chairman Mike Crapo (R-Idaho) expressed concerns of regulator oversight for stable-coins.
• Charles Cascarilla of Paxos testified advocating for stable-coins, stating that they address the “antiquated plumbing” of our financial system as well as financial inclusion. “Blockchain based stable-coins allow everyone access”.
• Nakita Cuttino, visiting assistant professor of law at Duke University, discussed the friction in the current payday cycle and the rising demand for costly advanced-payment apps which could be resolved with digital currencies. “In the absence of public policy addressing open access payments and real-time payments, low-income and moderate-income Americans will continue to have limited resources needed, whether by traditional fringe services like payday loans or some novel fringe service.”
• Former CFTC Chairman Chris Giancarlo and head of the Digital Dollar Project, emphasized the “social and national” benefits such as increased speed, lower costs and issues of financial inclusion. “Darwin said the most adaptable survive. And I think that is true when we transition to a new architecture. To adapt to it, will help bring benefits to the society at large.”
It is unclear how soon the digital dollar will come into existence, although increasing competition from China may be the push U.S. regulators needed.”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
