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Breaking news: Ethereum Developer Virgil Griffith Pleads Guilty to Conspiracy Charge in North Korea Sanctions Case

Former CFTC Boss' Digital Dollar Project Ready to Kick Off First US CBDC Tests

The Digital Dollar Project's first five pilots will launch during the next year.

May 3, 2021 at 11:00 a.m. UTC
Updated Sep 14, 2021 at 12:49 p.m. UTC

The U.S.-based Digital Dollar Project is kicking off a handful of pilot projects to test how a Federal Reserve-issued central bank digital currency (CBDC) may operate.

The organization, which is led by former U.S. regulators and executives from the consulting firm Accenture, announced its intention to launch within the next year its first five pilot projects to evaluate different aspects of a digital dollar. 

A digital dollar – a central bank-issued, tokenized form of the U.S. currency – could help improve financial access for the unbanked and make it easier to disburse government aid, proponents argue. Opponents say existing technologies may be better suited for those tasks. A number of countries are already experimenting with the concept, with China’s digital yuan perhaps the most advanced so far. 

The Digital Dollar Foundation was formed last year by Accenture, former U.S. Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo, former LabCFTC director Daniel Gorfine and investor Charles Giancarlo to design and advocate for the digital dollar. It's a private effort separate from the Federal Reserve's own research into a CBDC, though the two groups have been in contact, said David Treat, one of the directors of the project.

The five pilot projects will evaluate whether and how a digital dollar would benefit individuals who are unbanked or underbanked, individuals who do have access to banking services and small businesses.

“What we’re announcing is a funding structure, a process structure and a framework for how the Digital Dollar Project is going to form a testing ground for these (efforts),” Treat said.

Treat, who is a senior managing director at Accenture, said that the projects would receive support from Accenture, but would also be self-funded. He declined to share any specific details about the projects.

He did say, however, that they are designed to be “as close … as we can get” to a real-world application.

“Of course, until it’s something that is minted and issued by the Federal Reserve, it won’t be a  central bank digital currency, but the advantage we have is it’s the same underlying structure,” Treat said. “We can use a stablecoin structure to directly demonstrate how a CBDC would perform, and the only difference is who the issuer is.”

Treat said he expects results to come in fairly quickly.

“Some of them we’ll be able to get results fairly quickly, measured in months, not quarters, and we’ll extend well into 2022,” Treat said. “As individual pilots are completed, we’re going to share those results.”

UPDATE (May 3, 2021, 12:15 UTC): Updated to clarify that the Digital Dollar Project is a private enterprise.

DISCLOSURE

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