Mishi Choudhary, legal director of the Software Freedom Law Center, supported efforts by some US lawmakers to develop an electronic version of the US dollar.
In written testimony for a Thursday House Financial Services Committee hearing on digital wallets, Choudhary said the United States needs “an electronic currency or token that is equivalent in functionality to cash, offers all of its benefits including anonymity, privacy, autonomy, no transaction fees and fixes all of its flaws Its description suggested a token with many of the benefits of a digital currency and crypto – central bank currencies, but without traceability – similar to the electronic money proposed by Representative Stephen Lynch in a March bill.
“The unique element of the ECASH idea is hardware wallets containing the equivalent of coins created and managed by the US Treasury, which is a means of universal access as close as cash is,” Choudhary said. “This idea imagines how everyone can have, store and pay with money without the banking system being involved in any way. One idea is to have electronic tokens whose functionality is equivalent to that cash and which are no longer traceable.
Choudhary added that the goal of this e-money proposal would be to maintain privacy and improve financial inclusion while allowing the public to access the software underlying the transparency technology. Raúl Carrillo, deputy director of the Law and Political Economy Project and one of the witnesses at the hearing, said that unlike cryptocurrency, electronic money would not be used for online payments and could potentially be lost. with missing material.
The proposed e-money would not be built on a blockchain or require the internet to operate, but Illinois Representative Bill Foster pointed to lack of ownership information as a potential concern over illicit transactions – i.e., Know Your Customer, or KYC, requirements. Choudhary suggested that a lack of regulatory clarity could prevent the United States from being a leader in digital transactions as other jurisdictions have attempted to address issues in the space.
“The European Union has taken a very different approach to crypto transactions to include information about the parties involved and describe anonymous crypto transactions for now,” Choudhary said during the hearing. “It obviously raised concerns about the amount of innovation that will come out of [the] the European Union if the same type of KYC problems are superimposed on it. Major crypto companies have now, at least, unveiled initiatives that improve the industry’s KYC and anti-money laundering practices.
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Many U.S. lawmakers have come out in favor of the Federal Reserve issuing a central bank digital currency or embracing crypto at the state level. In January, the Fed released a discussion paper on the benefits and risks of a digital dollar while in November 2021, the President’s Financial Markets Task Force urged lawmakers to consider coin legislation stable to deal with potential risks.