The Democrats bill on supporting the economy in the context of the coronavirus pandemic involves the creation of a digital version of the dollar and wallet to provide incentive payments, reports The Block.
The current version of the bill has not yet been published and will undergo further improvements. The inclusion of the digital dollar clause has sparked a heated debate about the infrastructure for wallets. Its authors acknowledge that this is not about creating a cryptocurrency or using a blockchain.
Page 319 is not a cryptocurrency provision.
Legislative interpretation begins with the plain meaning and you must start at the definitions, they begin on page 314.
Moreover, that’s an old draft. There are a few ideas floating on how to provide stimulus to people.
— Devron Brown (@dvrnbrwn) March 23, 2020
According to the document, a digital dollar is defined as “a balance expressed as a dollar value consisting of digital ledger entries that are recorded as liabilities in the accounts of any Federal reserve bank.”
Another definition states that it is also an “electronic unit of value, redeemable by an eligible financial institution”.
The digital dollar wallet is defined as follows:
“… digital wallet or account, maintained by a Federal reserve bank on behalf of any person, that represents holdings in an electronic device or service that is used to store digital dollars that may be tied to digital or physical identity.”
The document also mentions a “pass-through digital dollar wallet’’ which means “a digital wallet or account, maintained by a member bank on behalf of a qualified individual, where such qualified individual is entitled to a pro-rata share of a pooled reserve balance that the member bank maintains at any Federal reserve bank.”
Qualified individual legislators define as any individual other than any nonresident alien individual.
The latter type of wallets will be designed to receive incentive payments from the government. These wallets will be stored by reserve banks of the Fed through separate legal entities.
The bill recommends that banks immediately provide the opportunity to open such pass-through digital dollar wallets online or via telephone.
Banks will not be able to charge any fees and will be required to provide functionality that is not inferior to existing offers in the financial market.
The document sets a deadline of January 1, 2021, during which time the creation of transit wallets for all citizens and US resident companies is set aside.
Recall, the Fed has already begun to study the possibility of issuing a digital dollar.