It’s just March, and the world has witnessed multiple crises in the form of the threat of World War 3 and the spread of Coronavirus. The effect of the latter was so significant that stock markets crumbled in a recession like fashion, forcing investors to run helter-skelter.
To ensure better access to resources for the unbanked population, the House of Democrats has begun to consider the use of the digital dollar and digital wallets. This was done to ensure that the underprivileged do not get run over during the current crisis. Discussions about a digital dollar had surged after financial officials claimed they would be ready to print ‘infinite’ fiat currencies.
The members of Congress began discussions about digital wallets because of the rapid spread of the Coronavirus across the globe. If the decision is carried forward, cryptocurrency wallets will be a part of the COVID-19 economic stimulus plan.
The House Financial Services Committee Chairwoman Maxine Waters claimed that large Federal Reserve banks and other financial institutions will need to provide digital wallets to create a more seamless financial ecosystem. Although wallets were considered, the concept of a digital dollar was still far from inception.
Digital assets were considered as an answer to the current financial situation because of increased settlement times and security. The Fed has usually stayed away from cryptocurrencies because of the industry’s connection with the fraud.
Federal Reserve Chairman Jerome Powell has always been against the idea of a CBDC [Central Bank Digital Currency] and it does not look like it will be included in the stimulus plan either. The idea behind a ‘digital dollar’ was to link the advantages of a cryptocurrency with an overwatch from the Fed.
Both Republicans and Democrats negotiated a $1200 payout for single adults earning less than $75,000 per year. The payment amounts will also be phased down in value until hitting a hard cap of $99,000. Some sources have said that draft legislation mentioned a $2000 payment per month to each adult in that particular threshold. This would be done as long as the COVID-19 pandemic lasts.
Two trade associations that would be a part of the digital wallet mandate would be the American Bankers Association and the Bank Policy Institute. What surprised crypto enthusiasts the most about this development was the range discussed for digital assets.
The Electronic Transactions Association will also include additional payments methods such as digital wallet settlements. Cryptocurrency enthusiasts added that at this point, all industries must come together to survive the onslaught. Jodie Kelley, the CEO of the Electronic Transaction Association said:
“In addition to banks, ETA supports using other modern payments methods like prepaid cards, digital wallets, money service businesses, and P2P services to securely, quickly deliver stimulus money to American consumers.”
It was not hard to see why lawmakers chose to consider all sorts of payment methods during these trying times. The world has not seen such a collective fear since WWII and financial markets have responded poorly. Only time will tell if the virus spreads and wreaks more havoc or if things go back to normal as soon as possible. Daniel Gorfine, a former chief innovation officer at the CFTC admitted that it would be difficult to create a digital dollar during the currency crisis.