ECash Act – The Electronic Dollar! Can it Hurt the Crypto Market?

After witnessing the terrors of crypto investments & adoption leading to volatility & losses, countries are aiming at establishing stable digital currencies. The ECash Act introduced by U.S. Representative Stephen F. Lynch is a form of it.

Similarly, several other nations and Financial Technology Taskforce members are readily devoted to finding or creating a structured Digital economy. The Indian Government’s CBDC Act is another near-identical step in the same direction.

What is the ECash Act?

The ECash Act in legal terms is presented as H.R. 7231 – the Electronic Currency and Secure Hardware (ECASH) Act. It demands to electronically develop the American Dollar as an e-currency (ECash Dollar) for the use of the American Population.

ECash can thrive in the current realm of rapidly expanding payment options & currency exchange technologies, yet, it’s not ECash Crypto. At the core level, crypto & ECash are polar opposites despite both serving as electronic currency instruments.

ECash Act

Characteristics like centralized governance and stability are absent in cryptocurrencies, which are the base of the ECash Dollar.

Instead of delving in-depth into the differences, let’s only familiarize ourselves with the prerequisites and Distribution system of ECash. The ‘ECash & Cryptocurrencies Differences’ will become available later in another post on this website.

ECash Act Prerequisites

Making ECash Dollar interoperable with existing payment providers and the financial system requires the support of the Secretary of Treasury. The Treasury can better design and deploy suitable e-cash development, for which it will need to establish the Electronic Currency Innovation Program.

What is the Electronic Currency Innovation Program?

The function of the ECIP will be to oversee and direct and coordinate the implementation and development of e-cash. It will involve making or setting up the technologies, architecture, and platform enabling e-cash transactions.

Since the Treasury already manages hard currency production and the U.S. Debit Card Program, its role is suitable for building the creation and distribution ecosystem.

ECash Act

ECash Act Distribution Program

The Distribution Program for e-cash will be called Pilot Program initially, wherein it’s separated into two phases.

Implementation of these phases is segmented over a 90 days period from the date of enactment of Ecash. The timeline is backed by the fact that Ecash deployment shall take no longer than 48 months after its enactment.

Aside from this, it’s unclear how the ECash Crypto exchange may function after the enactment & distribution stages. Hence, readers are advised to revisit this website to learn more about ECash Exchange possibilities.


The general reason to commence the pilot program is to assess the viability and capabilities of e-cash technologies. Its functionality, in terms of security safeguards and compliance, will be measured to maintain its compatibility with existing financial systems.

Stages of deployment will gauge the rapidness and efficiency of eCash interaction with the available Financial institution and payment provider systems.

Phase 1

It shall have at least three ‘Proof-of-Concept’ pilot programs that will familiarize the Treasury with the base feasibility of ECash. Those programs may be conducted in partnership with several types of the following entities or national governing bodies.

• Federal, State, or Local Government Fund Disbursement Programs.

• Insured Financial Institutions • Financial Technology Firms.

• Non-Bank payment providers • Non- Profit Organizations.

• Other Federal, State, Local, or International entities.

A Minimum of two technologies chosen for the ECash deployment program must be free from distributed ledgers while having a secure hardware-based architecture.

At least one ECash technology must be inclusive of stored-value magnetic or pin card options for storage and payment purposes.

Additionally, at least one technology must also feature a functional architecture for accommodating a cell phone or SIM card option for ECash storage and payment.

Phase 2

It shall include at least one instance of large-scale ‘Field Test’ of ECash deployment to the American population segment. Such a pilot program will help to identify better deployments and may be conducted in partnership with several entities.

Naturally, the entities could be federal, state, local, and foreign governments, international regulatory bodies, and eligible entities from Phase 1.

Key ECash Act Electronic Dollar Mandates

The ECash Act Bill mandate showcases multiple mandates regarding the features of ECash, as listed below.

Legal Tender

ECash must be a legal tender and payable to the bearer, created and issued into circulation exclusively by the Treasury.

Financial Inclusion

ECash must be directly distributed & used by the American population via available/established hardware devices. It should be capable of performing peer-to-peer & offline transactions whilst being interoperable with available payment systems and financial institutions.

The ECash development should also prioritize technologies that enable its universal access and usability, especially in connection with individuals experiencing disabilities, low-income entities & communities with limited data or telecommunications access.

Consumer Protection

No merchants should levy any additional fee for using ECash purchases or payments. The Govt. and authorized third parties for ECash distribution should in writing readily offer a complete, correct, understandable disclosure about ECash.

It should include the terms of its usage, fees, security, interoperability, data collection, privacy, and other areas that are defined as relevant by the Bureau of Consumer Financial Protection.


  • ECash should incorporate and enforce any and all existing key security and functionality safeguards associated with the physical currency. Such features shall be inclusive of data anonymity, privacy, and minimal transactional data generation.
  • Distribution of ECash should involve secure hardware devices which are locally secured via cryptography encryption standards and other relatable technologies.
    • Collectively, they should ensure to not allow features like making personal information identifiable or subject to surveillance, data collection, censorship-enabling, etc.
  • A ‘Monetary Privacy Board’ is to be established whose functions will include reviewing decisions and actions of the ECIP besides ensuring their consistency with the ECash Act.
    • The board will commit and oversee that the privacy and interests of individuals using ECash remain unharmed and isolated from general access.
    • Additional responsibilities of the Board shall include reviewing the cash development actions and decisions, apart from evaluating the extent to which the individual privacy policies are preserved.
  • AML/CTF Regulations

Since ECash is to be classified and simultaneously regulated in manners similar to the physical currency, it shall therefore be subject to the existing & established transaction reporting requirements and regulations.

All subjects like anti-money laundering, counterterrorism, Know Your Customer, etc. will be applicable all the same regarding the handling, exchange, and distribution of the ECash.

  • Transparency & Oversight

Treasury must prioritize using hardware and software technologies issued under open-source licenses while developing ECash. It should furthermore establish a Digital Dollar Council within its governance for coordinating with other US Departments and agencies on activities related to ECash.

Read More: CBDC vs Cryptocurrency: Differences Explained!

The Takeaway

The ECash Act is readily endorsed by several individuals belonging to or associated with established US agencies, universities, and institutions. A few names among them include Demand Progress and Americans for Financial Reform, Digital Fiat Currency Research Institute, Public Money Action, and others.

Commencement of the ECash Dollar pilot program will certainly reflect some activity on the global crypto market. Perhaps, the ECash could save the American Dollar and its economy from being replaced as the World Standard.


What is the ECash Act?

The ECash Act is legally known as H.R. 7231 – the Electronic Currency and Secure Hardware (ECASH) Act.

It functions to initiate the development of the American Dollar as an electronic currency, setting up its architecture & technologies for its national adoption and use. It is not related to any ECash Crypto platforms or uses.

Can I exchange Ecash vs Crypto & vice versa?

At present, it’s unclear whether the ECash Dollar might become fungible with cryptocurrencies. But more can be learned once the enactment phase of ECash is complete, or during the stages of its distribution.

How is ECash value determined?

The value of ECash will ideally be determined by the existing parameters set for the American Dollar. However, the addition or removal of one or more of them may happen between the ECash enactment and distribution phases.

When will the ECash Pilot Program begin?

It is unknown when the Electronic Currency Innovation Program will come into effect. Simultaneously, readers are advised to not believe any statements regarding the ECash Crypto exchange possibilities until they are released by the US Department of Treasury.

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