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Coronavirus adds fuel to the Digital Dollar debate

April 1, 2020, 2:02 PM UTC

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Should banking have a public infrastructure option?

Congress is beginning to think so. Last week early drafts of several coronavirus-related stimulus bills included provisions for “digital dollars” and “digital dollar wallets.” Put forward by House Financial Services Committee Chair Maxine Waters and House Speaker Nancy Pelosi, the initial proposals would have offered Americans access to the electronic equivalent of cash through free bank accounts connected directly—and unprecedentedly—to the Federal Reserve.

Generally, only banks and an assortment of other big institutions can keep accounts at the Fed; the hoi polloi must use commercial banks. The once-radical idea of digitizing the U.S. dollar could transform the financial system into a public service akin to public libraries, schools, and highways.

Think of it as a nationalized Chime-slash-Venmo for the masses—a fee-free checking account, debit card, and payment system backstopped by Uncle Sam. The idea descends from an unorthodox 2018 proposal by Treasury Department alumni and legal academics who called their theoretical program FedAccounts, or “central banking for all.”

The possible benefits of FedAccounts are many. Among them, potential uptake by millions of families often excluded from the traditional banking system; Real-time payments akin to what Japan, Australia, and the UK already have; Transactions without interchange fees, saving retailers and consumers; And fully insured deposits.

The House’s draft digital dollar proposals did not make it across the finish line, however. As the bills narrowed their focus to the matter at hand—supplying trillions of dollars in immediate relief to millions of Americans who find themselves suddenly jobless—the propositions got stripped. In the end, a different rescue deal got passed.

Digitizing the dollar – but how?

That may be for the best, says J. Christopher Giancarlo, former chair of the U.S. Commodity Futures Trading Commission, who urges patience in policymaking even as he agitates for innovation in central banking. “To get it right, you can’t draft it over the course of a weekend in the middle of a crisis,” says Giancarlo, who earlier this year founded a nonprofit think tank, the Digital Dollar Foundation, to advance the cause of U.S. government-issued digital currency.

“I’m pleased to see the word digital dollar in legislation,” says Giancarlo, now a senior counsel at the law firm Wilkie Farr & Gallagher. “But we are talking about something that is not merely a delivery mechanism”—getting aid into the hands of Americans—”but something more long term and fundamental,” he says of his own cryptocurrency-inspired approach.

Other policymakers continue to hold out hope for a public banking option—even as they set blockchain-related crypto-technologies aside for the time being. These include Senator Sherrod Brown of Ohio, ranking member of the Senate Banking Committee, who revived the FedAccounts concept in a separate, non-stimulus-related bill last week.

The plan is designed to “allow every American to set up a free bank account so they don’t have to rely on expensive check cashers to access their hard-earned money,” Sen. Brown said in a statement.

“There has been a mobilization of attention around these issues. People are actually paying attention in a large way,” says Rohan Grey, a Cornell Law School PhD student and coauthor of yet another recent bill demanding digital cash. Representative Rashida Tlaib of Michigan introduced that draft legislation last week.

Unlike the other proposals, the Tlaib-Grey bill calls for digital wallets to be hosted by the Treasury Department. The executive branch is more answerable to the public—and thus more equipped to handle delicate privacy and civil liberties concerns—than the independent-minded central bank, Grey argues.

While the details of the various competing proposals floating around Congress may be in dispute, at least one fact is obvious: Change is in the air.

“Once every generation or more, we stop and think, “What does money mean?’” Giancarlo says. Grey agrees, comparing the present moment to periods in American history when similar concerns overtook the national consciousness. He cites Andrew Jackson’s Bank War, Abraham Lincoln’s printing of “greenbacks,” and William Jennings Bryan’s Cross of Gold speech.

One day our children may read about the dawn of the digital dollar, too, in a public school, or at the neighborhood library.

Robert Hackett




Coronavirus lockdowns trigger a 72% surge in the use of fintech apps ... That includes huge gains for Glint, a digitized gold payments service ... Microsoft files patent for cryptocurrency mining powered by human activity ... Germany's coronavirus relief fund is reportedly already delivering money to freelancers ... Square says bitcoin's recent volatility has increased investing activity.


Nearly 60% of Americans have suffered financial damage from coronavirus ... and many can't afford to wait for relief via paper check ... China shows an early surge in consumer loan defaults ... Small business loan platform Kabbage to furlough staff, close Bangalore office ... A ruling against Telegram may threaten many other cryptocurrency projects ... Hacker hijacks YouTube accounts to promote Bill Gates-themed crypto scam ... Meri Williams steps down as CTO of UK challenger bank Monzo.



“You have to understand that this is now a project of the state. If you don’t hand over the file, I won’t be responsible for what happens to you.”

A Venezuelan official, telling blockchain engineer Gabriel Jiménez to get with the program.

Reporters Nathaniel Popper and Ana Vanessa Herrero detail how Jiménez came to believe that he could change Venezuela from within by programming a cryptocurrency, the Petro, for the regime of President Nicolás Maduro - and how wrong he turned out to be. Maduro and other leaders were initially cordial to Jiménez, and enthusiastic about his ideas. But when he tried to shape the Petro into a currency resistant to government control, they began spying on his staff and threatening him with imprisonment.

Venezuela for a time became a symbol of the threats of hyperinflation that bitcoin was partly designed to counter, and some Venezuelans have adopted it for moving money out of the country. Bitcoin, that is, not the Petro: after much hooplah around the world, that project has come to very little.


$400 million

The reported price Binance could pay in its acquisition of the cryptocurrency data site CoinMarketCap. At that price the deal, which is now official, would rank with the largest-ever acquisitions of cryptocurrency firms.

Despite some critiques and missteps, CoinMarketCap has been the default destination for cryptocurrency price information for many of the years since its founding in 2013 by Brandon Chez. Chez is a mysterious figure - there are few if any photos of him. For years, he ran CoinMarketCap alone from his Queens apartment, and reportedly has never taken outside investment. The site's value apparently lies mainly in its ability to generate web traffic - it had 207 million visitors in the past six months, even with crypto in decline.


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This edition of The Ledger was curated by David Z. Morris. Contact him at