Electronic Currency And Secure Hardware Act or the ECASH Act
This bill requires the Department of the Treasury to support the development of an electronic dollar.
The electronic dollar must be
The bill also provides for privacy requirements applicable to any hardware device used for electronic dollar transactions.
Merchants who accept physical currency and the federal government must accept electronic dollars as a form of payment.
The bill also establishes
Finally, the bill provides for the establishment of a Treasury Electronic Currency Innovation Fund Account to carry out related programs.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5410 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 5410
To direct the Secretary of the Treasury to develop and pilot digital
dollar technologies that replicate the privacy-respecting features of
physical cash.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 12, 2023
Mr. Lynch (for himself, Ms. Pressley, Ms. Tlaib, and Mr. Garcia of
Illinois) introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To direct the Secretary of the Treasury to develop and pilot digital
dollar technologies that replicate the privacy-respecting features of
physical cash.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Electronic Currency And Secure
Hardware Act'' or the ``ECASH Act''.
SEC. 2. DEFINITIONS.
In this Act:
(1) ECIP.--The term ``ECIP'' means the Electronic Currency
Innovation Program established under section 4.
(2) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
SEC. 3. ELECTRONIC DOLLAR.
(a) Establishment.--The Secretary of the Treasury shall promote and
facilitate the development and deployment of an electronic version of
the United States dollar for use by the general public that replicates
and preserves the privacy, anonymity-respecting, and minimal
transactional data-generating properties of physical currency
instruments such as coins and notes to the greatest extent technically
and practically possible.
(b) Electronic Dollar Requirements.--The electronic dollar
described under subsection (a) shall be--
(1) known as ``e-cash'';
(2) payable to bearer;
(3) legal tender, as described in section 5103 of title 31,
United States Code;
(4) an obligation of the United States, as described in
section 8 of title 18, United States Code;
(5) created and issued into circulation by the Department
of the Treasury, in such quantities, denominations, and
technical forms as the Secretary, in the Secretary's
discretion, determines to be appropriate;
(6) distributed directly to, and capable of being owned,
held, and used directly by, the general public;
(7) capable of instantaneous, final, direct, peer-to-peer,
offline transactions using secured hardware devices that do not
involve or require subsequent or final settlement on or via a
common or distributed ledger, or any other additional approval
or validation by the United States Government or any other
third-party payments processing intermediary;
(8) inter-operable with all existing financial institution
and payment provider systems and generally accepted payments
standards and network protocols, as well as other public
payments programs, including the U.S. Debit Card and Digital
Pay Program and the EagleCash card program of the Department of
the Treasury and any other digital dollar or public banking
products;
(9) classified and regulated in a manner similar to
physical currency for the purposes of anti-money laundering,
know-your-customer, counter-terrorism, and transaction
reporting laws, and thus not subject to third-party exemptions
to a reasonable expectation of privacy;
(10) designed, issued, and administered to be consistent
with--
(A) the statutory objectives articulated in
subsection (c), as well as any rules, standards, and
criteria enacted to further those objectives;
(B) the consumer protections articulated in
subsection (d), as well as any rules, standards, and
criteria enacted to further those protections; and
(C) any and all other technical and policy criteria
established by this Act or by the Secretary or Director
under the authority granted to them under this Act;
(11) distinguishable from other forms of electronic
currency issued by or on behalf of the United States
Government, including any such forms that--
(A) are issued by a department, branch, agency, or
instrumentality of the United States Government other
than the Department of the Treasury, including such
forms of ``central bank digital currency'' as may be
issued by the Board of Governors of the Federal Reserve
System or its designated agents;
(B) are legally classified as an account balance or
any other kind of financial instrument not payable to
bearer or that otherwise require identification and
account or device registration to hold, access, or use;
(C) are not distributed directly to, or otherwise
capable of being owned, held, or used directly by, the
general public; or
(D) fail to replicate and preserve the privacy,
anonymity-respecting, and minimal transactional data-
generating properties of physical currency instruments
such as coins and paper notes to the greatest extent
technically and practically possible; and
(12) not included in calculations of public debt subject to
limit under section 3101 of title 31, United States Code.
(c) Statutory Objectives.--The Secretary shall promulgate and
enforce rules, standards, and criteria pertaining to the development
and implementation of e-cash instruments, devices, technologies,
platforms, and supporting and enabling infrastructure, as well as the
issuance, dissemination, circulation, storage, and use of e-cash
balances, including use in transactions, in such a manner and to such
an extent as the Secretary determines to be necessary or appropriate to
achieve the objectives of this Act, subject to the following
conditions:
(1) Ownership.--The Secretary shall require that any and
all e-cash instruments are capable of being owned, held, and
used directly by the general public via widely available
hardware devices, without the necessary involvement of third-
party custodial or payment processing intermediaries.
(2) Privacy.--The Secretary shall require that any hardware
device authorized to hold or otherwise facilitate transactions
involving e-cash shall be secured locally via cryptographic
encryption and other appropriate technologies, and shall not
contain or be subject to any surveillance, personal
identification or transactional data-gathering, or censorship-
enabling backdoor features.
(3) Universality.--The Secretary shall prioritize wherever
possible technologies, practices, and programs that promote
universal access and usability, particularly for--
(A) individuals with disabilities, including visual
impairment;
(B) low-income individuals; and
(C) communities with limited access to the internet
or telecommunications networks.
(4) Inclusion.--The Secretary shall take into consideration
the unique needs and circumstances of marginalized communities
and populations that have historically been excluded from or
otherwise prevented from taking full advantage of traditional
and current financial institutions and payment services.
(5) Transparency.--The Secretary shall seek out and
prioritize wherever practically feasible the use of hardware
and software technologies issued under open-source licenses,
and shall further require that all publicly funded research and
technology be released under a suitable open-source license and
made available for study and review by the scientific community
and the general public, except to the extent that doing so
would undermine or impair the security and integrity of e-cash
devices or instruments.
(d) Consumer Protections.--
(1) Fees.--The Government may charge reasonable prices when
selling e-cash-compatible hardware (henceforth ``e-cash
devices'') directly to the public, provided such prices are
proportionate to, and not unduly in excess of, actual
production and administration costs, but may in no instance
impose fees or other charges for holding, receiving, sending,
or otherwise transacting with e-cash balances using such
devices.
(2) Solicited issuance of e-cash hardware devices.--The
Government or an authorized e-cash distributor may issue an e-
cash device to a member of the public only in response to an
oral or written request for such device.
(3) Solicited issuance of e-cash balances.--The Government
or an authorized e-cash distributor may issue e-cash
instruments to a user only in response to an oral or written
request to receive funds in the form of e-cash, and any such
requested funds shall be capable of being--
(A) received in the form of an increase in the
available balance of an existing e-cash device or as a
balance on a newly issued e-cash device; and
(B) paid for, to the extent such instruments shall
be paid for, through delivery of physical currency or
demand deposits at an interoperable exchange terminal.
(4) Disclosures by e-cash distributors.--
(A) In general.--Disclosures by the United States
Government and any third-party authorized to distribute
e-cash devices or balances regarding usage, fees,
interoperability, security, privacy, data collection,
error resolution, and any other terms considered
relevant by the Bureau of Consumer Financial Protection
shall be clear and readily understandable, in writing,
and in a form the e-cash instrument bearer can
reasonably maintain.
(B) Form of disclosures.--Disclosures described
under subparagraph (A) may be provided to the consumer
in offline electronic form, subject to compliance with
the consumer-consent and other applicable provisions of
the Electronic Signatures in Global and National
Commerce Act (15 U.S.C. 7001 et seq.).
(5) Liability of issuers for unauthorized transfers.--
Neither the issuing entity nor any other Government agencies or
approved e-cash distributors shall be held liable for
unauthorized transfer of e-cash balances, so long as the
appropriate disclosures and protections described in this Act
are made.
(6) Fees by merchants.--It shall be unlawful for the United
States Government, authorized e-cash distributors, or any other
person to impose a service fee or an interchange fee, or other
processing fee or surcharge, for the use of e-cash in payments
or purchases.
(7) Bankruptcy.--E-cash instruments and balances shall be
considered exempt property equivalent to physical currency for
the purposes of Chapter 7 Bankruptcy proceedings.
(8) Transactional reporting.--Under no circumstance,
regardless of the particular technology involved, shall any
transaction data generated by e-cash payments be collected,
monitored, or retained by the United States Government, an
authorized e-cash distributor, or any other counterparty except
via the exemptions provided by this Act.
(9) Preemption of inconsistent state laws.--State consumer
laws are pre-empted unless the Director of the Bureau of
Consumer Financial Protection determines, upon the Director's
own motion or upon the request of a State government, but
ultimately in the Director's sole discretion, that a State's
consumer protection laws are not pre-empted.
(e) Requirement To Accept E-Cash.--
(1) Federal government.--The Federal Government shall--
(A) accept e-cash for any payment to the Federal
Government, including payments for taxes, fines, and
fees; and
(B) upon request, provide any Federal Government
benefit in the form of e-cash.
(2) Products and services.--Any person selling products or
services that accepts physical currency as a form of payment
shall also accept e-cash as a form of payment to the extent it
is practically feasible and reasonable to do so.
(f) Illicit Flows.--
(1) Presumption of legitimate use.--Under no condition
shall the acquisition, possession, or use of e-cash devices,
instruments, and balances under the parameters established by
this Act be treated as prima facie or intrinsic evidence of
criminal activity or intent, nor be established as a predicate
offense or factor in crimes not specified in or under the
authority established by this Act.
(2) Including under the bank secrecy act.--
(A) In general.--Section 5312(a)(3) of title 31,
United States Code, is amended--
(i) in subparagraph (C), by striking
``and'' at the end;
(ii) by redesignating subparagraph (D) as
subparagraph (E);
(iii) by inserting after subparagraph (C)
the following:
``(D) e-cash, as defined under section 3 of the
ECASH Act; and''; and
(iv) in subparagraph (E), as so
redesignated, by striking ``subparagraph (A),
(B), or (C)'' and inserting ``subparagraph (A),
(B), (C), or (D)''.
(B) Amendments to dollar thresholds.--At any time,
the Director of ECIP may increase the value thresholds
applicable to e-cash for any reporting requirement
under subchapter II of chapter 53 of title 31, United
States Code, but may at no time decrease such value
thresholds.
(g) Systemic Liquidity.--The Board of Governors of the Federal
Reserve System shall take appropriate measures to ensure that the
implementation and adoption of e-cash does not disrupt or substantially
impact the general availability or cost of liquidity for depository
institutions, credit unions, or community development financial
institutions, or their capacity to extend credit and other financial
services to underserved populations, as described under the Community
Reinvestment Act of 1977, and any other applicable Federal and State
laws, however such measures may in no way impair, restrict, or
otherwise limit the ability of the public to access, hold, and use e-
cash.
SEC. 4. ELECTRONIC CURRENCY INNOVATION PROGRAM.
(a) In General.--The Secretary shall establish the Electronic
Currency Innovation Program to direct, oversee, coordinate, and
harmonize the development, implementation, maintenance, and regulation
of e-cash instruments, devices, technologies, platforms, and supporting
and enabling infrastructure in accordance with the technical and policy
criteria established by this Act.
(b) Director.--
(1) Appointment.--
(A) In general.--The head of the ECIP shall be the
Director, who shall be appointed by the President, by
and with the advice and consent of the Senate.
(B) Term.--The term of the Director is 5 years.
(C) Removal.--The President may remove the Director
from office. On removal, the President shall send a
message to the Senate giving the reasons for removal.
(D) Interim director.--When a Director has not yet
been confirmed or appointed, the Secretary may, subject
to the consent of the President, appoint an Interim
Director, who shall enjoy the full powers and
privileges of the Director as established under this
Act until such time as a permanent Director is
confirmed and appointed. In the event neither a
Director or Interim Director is appointed, all
responsibilities and duties assigned to the Director
under this Act shall be assumed by the Secretary.
(2) Duties and powers.--The duties and powers of the
Director are as follows:
(A) Promote innovation in, and ensure the
successful implementation and widespread adoption of,
e-cash instruments, devices, technologies, platforms,
and supporting and enabling infrastructure in
accordance with this Act, by--
(i) directing, conducting, sponsoring, and
publishing research;
(ii) generating, collecting, analyzing, and
publishing data;
(iii) acquiring, developing, disseminating,
and sharing open-access technologies and
technical knowledge;
(iv) developing and administering e-cash
pilot programs, both individually and in
partnership with other actors and entities that
the Secretary determines appropriate;
(v) promulgating, and enforcing rules,
objectives, standards, and criteria pertaining
to the development and implementation of e-cash
instruments, devices, technologies, platforms,
and supporting and enabling infrastructure, as
well as the issuance, dissemination,
circulation, storage, and use of e-cash,
including its use in transactions;
(vi) coordinating with other actors,
including other departments, branches,
agencies, and instrumentalities of the United
States Government, as well as State, local, and
foreign governments and international
regulatory bodies, in furtherance of the
general goals of this Act; and
(vii) developing and disseminating public
educational materials and conducting public
educational campaigns to foster awareness and
understanding of e-cash and its economic and
social significance in the broader monetary
system.
(B) Such other duties and powers as the Secretary
may delegate or prescribe.
(c) Staff, Equipment, and Facilities.--The Director shall be
authorized to hire staff, purchase equipment, and rent or acquire
facilities as the Director determines to be appropriate to achieve the
goals and objectives established under this Act, subject to the
approval of the Secretary.
(d) Pilot Programs.--
(1) Establishment.--
(A) In general.--Not later than 90 days after the
enactment of this Act, the Director shall initiate a
two-phase e-cash pilot program in anticipation of
general deployment of e-cash to the public not later
than forty-eight months after the date of enactment of
this Act.
(B) Phase 1.--Phase 1 of the pilot program shall
consist of not less than three distinct pilots (in this
section referred to as ``Proof-of-Concept Pilots''),
each of which shall launch no later than 180 days after
the date of enactment of this Act, and run for no
longer than 360 days thereafter.
(C) Phase 2.--Phase 2 of the pilot program shall
consist of at least one large-scale deployment to a
segment of the public (in this section referred to as
``Field Test Pilots''), which shall launch no later
than 2 years after the enactment of this Act, and run
for no longer than 2 years thereafter.
(D) Extension of timelines for pilot programs.--The
timelines for the implementation of the two phases of
the e-cash pilot program described in this paragraph
may be extended upon a determination by the Director
that such an extension is necessary to ensure the
security and integrity of the technologies to be
piloted in the program.
(2) Administration.--
(A) In general.--The pilot programs shall be
administered by the Director, in coordination with the
Digital Dollar Council, and subject to the ongoing
oversight and review of the Monetary Privacy Board.
(B) Proof-of-concept pilots.--Proof-of-Concept
Pilots may be conducted--
(i) in partnership with one or more
universities, non-profit entities, insured
financial institutions, non-bank payment
providers aimed at promoting financial
inclusion, technology-focused financial firms
and companies, financial technology companies,
or foreign central banks; and
(ii) through, or in partnership with, any
existing Federal, State, or local government
fund disbursement and payments program,
including those that rely on the U.S. Debit
Card and Digital Pay Program, the EagleCash
Card program, or any other payments technology
offered by or in partnership with the Bureau of
the Fiscal Service of the Department of the
Treasury.
(C) Field test pilots.--Field Test Pilots may be
conducted in partnership with any entity capable of
partnering for a Proof-of-Concept Pilot, as well as
other departments, branches, agencies, and
instrumentalities of the United States Government, or
State, local, and foreign governments and international
regulatory bodies.
(3) Objectives.--The objectives of the pilot programs are
to test the viability and capacity of various forms of e-cash
technologies to--
(A) preserve the privacy, anonymity-respecting, and
minimal transactional data-generating properties of
physical currency instruments such as coins and notes
to the greatest extent technically and practically
possible;
(B) enforce total balance and transactional
activity limits on a per-device basis without rendering
such devices vulnerable to surveillance or censorship
by third parties including the United States
Government;
(C) deploy rapidly, securely, and efficiently on a
mass scale; and
(D) maintain ease of use and interoperability with
existing financial institution and payment provider
systems, as well as any other digital dollar products.
(4) Parameters and constraints.--
(A) All technologies selected for Proof-of-Concept
Pilots and Field Test Pilots shall be--
(i) designed as bearer instruments;
(ii) capable of instantaneous, final,
direct, peer-to-peer, offline transactions; and
(iii) capable of being distributed directly
to, and owned, held, and used directly by, the
general public.
(B) At least two technologies selected for Proof-
of-Concept Pilots shall be based on secured hardware-
based architectures for the purposes of creation,
distribution, holding, and payment that do not involve
any common or distributed ledger.
(C) At least one technology selected for Proof-of-
Concept Pilots shall include a stored-value or pin card
option for storage and payment of e-cash.
(D) At least one technology selected for Proof-of-
Concept Pilots shall include a cell phone or SIM card
option for storage and payment of e-cash.
(E) All technologies selected for Field Test Pilots
shall have or at a minimum be capable of incorporating
stored-value card functionality.
(5) Special tender authority.--In order to facilitate and
promote the effectiveness of the pilot programs, the Secretary
may grant special recognition of prototypical e-cash
instruments issued under a pilot program as legal tender, and
direct the Board of Governors of the Federal Reserve System,
other departments, branches, agencies, and instrumentalities of
the United States Government, any other federally regulated
financial institution to accept such prototypical e-cash
instruments in settlement of outstanding obligations on an at-
par basis.
(6) Reporting.--Not later than 180 days after the date on
which each phase of the pilot programs terminates, the
Secretary shall submit to Congress a report regarding that
phase of the pilot programs, which shall--
(A) include--
(i) a description of which elements of the
pilot programs were successful and which were
unsuccessful;
(ii) recommendations regarding legislative
changes to the pilot programs and related
authority under this Act and elsewhere; and
(iii) recommendations for additional pilots
and revisions to the pilot program; and
(B) make the nonsensitive analytical data available
for public review and comment.
SEC. 5. DIGITAL DOLLAR COUNCIL.
(a) In General.--The Secretary shall establish the Digital Dollar
Council (in this section referred to as ``the Council'') to coordinate
the Secretary's ECIP-related activities with the efforts of other
bureaus of the Department of the Treasury and other departments,
branches, agencies, and instrumentalities of the United States
Government, including the Board of Governors of the Federal Reserve
System and the United States Postal Service.
(b) Membership.--The Council shall be comprised of the Secretary,
the Director of ECIP, the Chairman of the Board of Governors of the
Federal Reserve System, the Postmaster General of the United States
Postal Service, the Director of the Office of Science and Technology
Policy, the Chief Technology Officer of the United States, and the
Director of the National Institute of Standards and Technology, and any
other Federal employees or representatives of Federal agencies as the
Secretary, in the Secretary's discretion, determines to be appropriate.
(c) Leadership.--The head of the Council shall be the Secretary,
however, the Secretary may, at the Secretary's discretion, delegate
administrative and decision-making responsibility to the Director.
(d) Authority.--The Council shall have the power to redeploy
personnel and resources among the various participating agencies, as
well as establish or amend any rules and regulations promulgated by any
participating agencies to the extent the Council determines such
actions to be necessary to achieve the goals and objectives established
under this Act.
(e) Jurisdiction.--Nothing in this section shall be construed as
taking away any powers heretofore or otherwise vested by law in the
Secretary, and wherever any power vested in the Council appears to
conflict with the powers vested in the Secretary under this Act, such
powers shall be exercised subject to the supervision and control of the
Secretary.
(f) Joint Report.--Beginning 180 days after the date of enactment
of this Act, and each 180 days thereafter, the Council and the National
Institute for Standards and Technology shall issue a joint report to
the Congress detailing a plan to achieve full interoperability with
existing public and private payments systems within 1 year.
SEC. 6. MONETARY PRIVACY BOARD.
(a) In General.--There is established a Monetary Privacy Board (in
this section referred to as ``the Board'').
(b) Membership.--
(1) In general.--The Board shall be comprised of 5 members,
appointed by the President, by and with the advice and consent
of the Senate.
(2) Chair.--The President shall appoint one member of the
Board as the Chair of the Board. Except as provided under
subsections (c) and (e), the Chair shall--
(A) make all decisions of the Board with respect to
staffing, hiring, and budget allocation; and
(B) conduct the meetings of the Board.
(3) Term.--The term of each member of the Board is 3 years.
(4) Removal.--The President may remove a member of the
Board from office. On removal, the President shall send a
message to the Senate giving the reasons for removal.
(5) Interim members.--When a vacancy on the Board remains
open for more than three months, the President may appoint an
interim member to fill that vacancy. Interim members shall
enjoy the full powers and privileges of a full member until
such time as a permanent member is appointed and confirmed.
(c) Member Offices.--Each member of the Board shall be entitled to
spend 5 percent of the budget of the Board on the personal office and
staff of the member.
(d) Duties and Powers.--
(1) In general.--The Board shall review the actions and
decisions of the Secretary, the Director of ECIP, and ECIP
generally on an ongoing basis to evaluate the extent to which
their decisions are consistent with their statutory
responsibilities under this Act, and more broadly, a general
commitment to preserving the privacy interests of individuals
and actors that use e-cash and other forms of digital dollar
technologies issued or administered by the United States
Government.
(2) Semi-annual report.--The Board shall issue a report to
Congress no less than twice per year--
(A) detailing its findings from its ongoing review
process;
(B) providing an assessment of the general state of
monetary privacy in the United States; and
(C) offering recommendations for how to better
protect civil liberties and individual privacy
interests through legislative and regulatory reform.
(3) Interim reports.--The Board, or one or more members
thereof, may publish interim reports or any other communication
at any time at their discretion, provided such reports and
communications are clearly distinguished from the reports
required under paragraph (2), and the particular authors and
co-signatories are clearly indicated.
(e) Funding Authority.--The Board shall submit an annual budget
request to the Secretary, and the Secretary shall transfer the
requested amount to the Board, using the authorities provided under
section 7(b), unless the Secretary determines that the amount is
unreasonable in light of the Board's duties and powers under this Act.
SEC. 7. ENABLING AUTHORITY.
(a) Authorization of Appropriations.--There are authorized to be
appropriated such sums as may be necessary to carry out this Act.
(b) Financing.--
(1) Fund account.--The Federal Reserve Bank of New York
shall establish a new account on behalf of the Secretary,
called the ``Treasury Electronic Currency Innovation Fund
Account'' (in this section referred to as the ``Fund
Account'').
(2) Use of fund account.--The Secretary shall effectuate
any and all spending under this Act by drawing an overdraft on
the Fund Account, which shall be accommodated and facilitated
automatically, on an indefinite basis, and without the
imposition of any interest charge or other form of maintenance
or overdraft fees by the Federal Reserve Bank of New York and
the Board of Governors of the Federal Reserve System.
(3) Overdraft treatment.--The Fund Account shall be exempt
from any overdraft prohibitions that currently apply to other
accounts administered on behalf of the Department of the
Treasury Department by the Federal Reserve System or a Federal
reserve bank, and any overdraft liability incurred by the
Department of the Treasury shall not be included in
calculations of public debt subject to limit under section 3101
of title 31, United States Code.
(4) Treatment of losses.--The Federal Reserve Bank of New
York shall record any losses incurred as a result of spending
undertaken on behalf of the Secretary from the Fund Account as
a deferred asset (as described in section 11.96 of the
Financial Accounting Manual for Federal Reserve Banks, as in
effect on the date of the enactment of this Act) and shall be
excluded from calculations of the net operating position or
consolidated balance sheet of the Federal Reserve Bank of New
York or the Federal Reserve System, so as to not reduce or
impact the calculation of total income or revenue generated by
the Federal Reserve System, or otherwise reduce the total
amount of net operating profits to be made available for
remittance to the Treasury on an ongoing basis.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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