New COVID relief bill aims to create anonymous, bearer, censorship-resistant digital dollar
Today Congresswomen Rashida Tlaib and Pramila Jayapal unveiled the Automatic BOOST to Communities (ABC) Act, which is primarily a relief bill with direct payments to individuals, but also includes a provision to create a digital dollar. Here is the text of the bill, and here are my first impressions.
If one was set on digitizing the dollar, you could do worse than this proposal. In fact, it’s definitely on the right track. First, it directs the Fed, along with the Post Office(!), to create public option bank accounts in which consumers can hold digital dollars. More importantly, though, it recognizes the importance of retaining a digital cash option and directs the Treasury to issue digital dollars that are bearer, “privacy and anonymity-respecting,” and censorship resistant, and which can be held in software wallets on one’s own computer. All the things that are on my checklist of what makes cash cash and necessary for an open society.
So far, so good, but the problem is that the legislative language that would accomplish this is too broad and poorly drafted.
Too broad because almost all the language about the digital dollar’s cash-like features comes not in a directive to the Treasury, but in the establishment of a “Digital Financial Privacy Board.” It is to be “established by the Secretary,” but the bill says nothing about the board’s composition or independence. The Board’s job is “to oversee, monitor, and report on the design and implementation of the Digital Dollar Cash Wallet System,” but that has no teeth—i.e. all the board can do is “oversee,” “monitor,” and “report” (although the bill doesn’t say to whom).
It seems that the Board is meant to ensure that the digital dollar is “designed in such a way as to replicate the privacy and anonymity-respecting features of physical currency transactions as closely as possible, including prohibition of surveillance or censorship-enabling backdoor features.” That bolded bit, of course, is a hole the sanctions and money laundering policy folks at Treasury will drive a train through.
Finally (and pedantically, I know), I say poorly drafted because, if you read Section 3(i)(3)(c)(iii) literally (as laws are mean to be) it says that it is the Digital Financial Privacy Board, not the digital dollar, that is meant to be designed to be cash-like. Also, the parts of the bill I like the most have “shall” language directing the Treasury to do this and that, but that language weirdly comes under section preambles about the “sense of Congress,” which is language usually reserved for non-binding resolutions. Weird.
Given that this bill also directs the Treasury Secretary to “mint and issue two $1 trillion platinum coins,” and further mint as many trillion-dollar coins as needed to fund the relief program that’s the main part of the bill, I’m not holding my breath that it’s going anywhere. But I’m glad to see Reps. Tlaib and Jayapal taking seriously the need for digital cash to be a part of any digital dollar that’s established.