International Policy Digest

Tech /06 Jul 2020
07.06.20

Will 2020 Be the Year the U.S. Takes a More Accommodating Policy Stance Towards Digital Currency?

As the first half of 2020 rounds the bend, it is clear that 2020 has already been filled with a number of unforeseen challenges — many linked to COVID-19. The pandemic has weighed heavily on the U.S., and global, economy.

Nonetheless, in the thick of the murky uncertainty in the road ahead, renewed calls for innovation and strides towards a digital currency within the U.S. are being sounded. Digital currency advocates point to a number of reasons 2020 should be a year to make meaningful strides.

Leveraging technology and innovation could be a means to tackle the obvious economic challenges within the U.S. An argument could be made that digital currency, if more widespread, would have softened some of the blows Americans have faced since the pandemic first struck in March.

There also are renewed calls to keep the rollout of a national digital currency at the forefront of policy discussions in the hopes of keeping the U.S. competitive. While China is reportedly slowing its full-scale digital yuan launch, all signs point to continued efforts to perfect its implementation — perhaps in time for the 2022 Winter Olympics in Beijing.

Where the U.S. federal government stands on digital currency

While much of the policy discussion this year emanating out of Washington, D.C., has centered on COVID-19 and taking short-term steps aimed at stabilizing the economy, a digital currency has remained a topic of conversation among politicians.

In March, as lawmakers on both sides of the political aisle discussed provisions for financial assistance to individuals, businesses, and local and state governments, Rep. Maxine Waters (D-CA) proposed language that included digital currency accommodations.

Although the language within H.R.6321 ultimately was omitted prior to passage, Rep. Waters originally included a stipulation in the bill that “establishes digital wallets for individuals without bank accounts to receive such payments.”

Another proposal within the U.S. Congress still has a pulse. In April, Rep. Stephen Lynch (D-MA) introduced H.R.6607 or the Strategic National Stockpile Enhancement and Transparency Act.

Rep. Lynch, who chairs Congress’ Task Force on Financial Technology, is calling for the creation of a National Emergency Biodefense Network, which reportedly was spurred by the initial shortage of personal protective equipment (PPE) for frontline workers at the onset of the pandemic.

H.R.6607 is currently in the hands of the House Committee on Energy and Commerce. The bill, as drafted, states the “network must be developed and implemented using a private blockchain (i.e., a distributed ledger technology).”

Elsewhere in the nation’s capital, U.S. Treasury Secretary Steven Mnuchin in March announced the formation of a cryptocurrency working group as a possible next step to enacting policy. Reportedly, industry leaders are being included in the conversation about potential supervision and regulation focused on cryptocurrency and other digital assets.

“The U.S. welcomes responsible innovation, including new technologies that may improve the efficiency of the financial system,” Mr. Mnuchin said in a statement at the time the working group was formed. “We must ensure that we balance innovation with the need to protect our national security and maintain the integrity of our financial system.”

Amid the pandemic, officials within the U.S. Federal Reserve in May also reiterated the instant payment offering FedNow Service remains on track, with a launch targeted for 2023 or 2024. In the interim, a FedNow Community group has been convened to pilot the project.

“The FedNow Community will help influence FedNow Service design and our development roadmap by providing input on desired service features, technology, and implementation plans,” Kenneth Montgomery, FedNow program executive, said in a statement.

New innovations outside the government sphere

Beyond government, efforts to bring digital currencies to the U.S. continue, despite the curveballs the coronavirus has thrown into the process. In fact, the financial crisis that has erupted out of the pandemic could give strength to a new endeavor known as the Open Initiative.

In a recent interview with The Tokenist, Richard Olsen, founder, and CEO of Lykke, shared how Open Initiative is designed to leverage technology and sustain the economy, even amid the challenging headwinds from a situation such as COVID-19.

“The Open Initiative kicks off an open-source/open knowledge movement to develop digital technologies to transform the post-coronavirus economy and to unleash the potential of the global economy to address the many challenges that society faces,” Mr. Olsen said in the interview.

J. Christopher Giancarlo, former chairman of the Commodity Futures Trading Commission, also weighed in on Open Initiative in the Tokenist interview. Coupled with another effort, the Digital Dollar Project, Mr. Giancarlo has expressed renewed optimism of digital currency, given the circumstances in play at present.

“Times of stress and change are often the catalyst for great innovation,” Mr. Giancarlo said. “The global Covid-19 pandemic is just such a time and just such a spur to innovation.”

In some traditional circles, there have even been encouraging signs digital currency is being taken seriously. On the heels of last year’s introduction of the blockchain-based JPM Coin, venerable financial institution J.P. Morgan this year doubled down on its commitment this spring, announcing a partnership with major crypto exchanges. Major cloud accounting and financial services companies like H&R Block and FreshBooks have also enabled cryptocurrency payments for some customers.