In this special episode, Rohan Grey (@rohangrey) joins Billy Saas (@billysaas) and Maxximilian Seijo (@MaxSeijo) to discuss the “ECASH” or “Electronic Currency and Secure Hardware” Act. Introduced by Rep. Stephen Lynch (MA-08), Chair of the House Committee on Financial Services’ Task Force on Financial Technology, and based on Grey’s research on electronic currency, the ECASH Act directs the Secretary of the Treasury to develop and pilot digital dollar technologies that replicate the privacy-respecting features of physical cash. Recognizing the United States Treasury as an institution ideally suited to managing a digital U.S. dollar, the Act treats monetary inclusion and privacy as a political rights and public goods, while at the same time eschewing the exclusionary and ecologically destructive effects of crypto currencies that rely on blockchain technologies.
The ECASH Act is co-sponsored by Rep.’s Jesús G. “Chuy” García (IL-04), Rashida Tlaib (MI-13), Ayanna Pressley (MA-07), and Alma Adams (NC-12) of the Committee on Financial Services, and endorsed by Americans for Financial Reform, Demand Progress, the Action Center on Race and the Economy (ACRE), and Public Money Action.
Rohan Grey is Assistant Professor of Law in the College of Law at Willamette University.
Full text of the E-CASH Bill
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Music by Nahneen Kula: www.nahneenkula.com
Transcript
Maxximilian Seijo: Rohan Grey, it’s great to have you back on Money on the Left.
Rohan Grey: Thanks for having me.
William Saas: So last time we spoke in fall, a lot was going on, and particularly around the debt ceiling debates. We discussed the trillion dollar coin proposal, which you’ve done a lot of work and research on, and which entails the US president animating and channeling the money creating authority of the US Treasury to avert financial apocalypse. This time, we’re having you back to talk about an exciting new proposal. And that is the Electronic Currency and Secure Hardware (ECASH) Act (H.R. 7231), which was introduced today by Representative Stephen Lynch of Massachusetts, who also serves as chairman on the task force of financial technology. So I think in a way, like #MintTheCoin, Congressperson Lynch’s ECASH proposal entails recognizing and using the money creating authority of the Treasury, motivated this time toward less spectacular and very different, very urgent ends. So can you tell us a bit about your work on the bill and how you understand the nature of the US Treasuries claim on the digital dollar? And what does this proposal have to offer users of US dollars?
Rohan Grey: Yeah, I mean, there’s actually an interesting additional connection to the #MintTheCoin story, which is that one of the probably first very vocal advocates for a treasury issued cash-like version of a digital dollar was the former director of the US Mint, Philip Diehl. And he made that proposal not in the last five years, but back all the way in 1997 in a congressional hearing on the future of money, where he was essentially arguing that we need to look to the future of money. We’ve just done big internet regulation bills, like the Telecommunications Act of 1996. And now we need to look at what the future of money is going to look like. And he made the argument at that point and in that committee that the Mint is the agency that has historically made hardware-based forms of a privacy respecting dollar. The coin is the most privacy respecting form of money we’ve ever created. You can hold it in your pocket, it doesn’t have a barcode, there’s no identifying features, and you can carry it wherever you go.
The idea at that point was that we could use prepaid debit cards, magnetic chip-and-pin card technology, to hold balances of currency directly, like we do with coins in our wallet. Today, that’s the similar kind of logic that we’re bringing back to the conversation. Right now, around the world, the debate over how to create a government digital currency has been almost exclusively defined in terms of a central bank digital currency, or a CBDC. That term sounds very technical, it sounds very wonky, but it says nothing other than the central bank is going to issue it. It doesn’t tell you how it’s going to be designed. It doesn’t tell you who it’s going to be for. It doesn’t tell you why it’s being issued. All it says is: we’re in charge. But it creates this very perverse dynamic because the central bank says, “We don’t know what it’s going to look like, but we’re going to issue it.” And then, in the next breath, they say, “Well, when it comes to the design, we don’t have any experience doing retail services. We don’t work with the public so we probably shouldn’t design it that way. And, of course, Congress gets to make the decision on how it should be designed, but we think it shouldn’t have these features, XYZ, like anonymity.”
So suddenly, by the simple act of calling it a CBDC, even though that term has no content whatsoever, you’ve already narrowed the ideological, imaginative space around what we’re trying to do with a digital dollar. So what this proposal is doing that is different from the conversation we’ve had up until now is to say, let central bankers continue their conversation and we’re going to have a separate parallel conversation. We’re going to have a conversation around a form of digital dollar that is like physical currency, it’s like coins and notes, and it works differently to the kind that central bankers are really interested in. Not in competition, not in some sort of zero-sum fight to the death, there can only be one, like Highlander, but in the sense that we’ve always had multiple forms of money. They’ve always existed in parallel. You open your wallet right now, you might have some cash, debit cards, credit cards, and maybe a prepaid gift card or a Starbucks card. We’ve always had different options.
This is simply preserving that kind of pluralism and institutional, ecumenical approach to government currency design as we go into this digital dollar debate. But the Treasury, historically, has the capacity to do hardware security technologies. Coins and paper currency have existed for a long time before the Federal Reserve was ever established. The Federal Reserve manages accounts, but the Treasury is responsible for anything that is designed to go directly to the public held in your hand and in your pocket. That’s true of both coins, which the mint was established very shortly after the Constitution was ratified. Then, the Bureau of Engraving and Printing was established in the 1860s, 50 years before the Fed. More recently, the Treasury does prepaid cards. It sends out snap cards, EBT cards, and all that kind of stuff. So if you were being objective, and you hadn’t already had your ideological blinkers narrowed by the CBDC discourse, you would say, “Hey, we want to issue a form of digital cash. Who’s best positioned to do that?” I think, objectively, you would end up at the Treasury. So the question of why the Treasury, I think, is always kind of backwards. Why shouldn’t we be doing it with the Treasury? It’s the obvious place to start. The only answer to why not would be central bank ideological dominance, frankly.
Maxximilian Seijo: Perhaps we can dig into a little bit of these details of what the Treasury would be doing under this proposal. We have in our notes here that only one of the three pilot programs in the proposal uses anything like a distributed ledger. So I guess, maybe as a way of getting into that, why so little love for the blockchain in this ECASH Act?
Rohan Grey: See, I would have said, we’ve actually given a lot of love to the blockchain, because we’re even giving one option to be blockchain-based, when in fact, this technology, and the use cases that we’re trying to establish, shouldn’t be using any ledger at all. If you think about cash, there are a lot of different reasons why people like to use cash. They like the simplicity of it, the resilience, you can use it offline, you don’t need an internet connection, it’s not going to run out of battery, you don’t need permission, and it’s not keeping a record. But I think one of the things that defines cash is that there is no third party involved. There’s no permission you need to ask once the cash gets issued. We’re not talking about a private cryptocurrency, where the issuance itself is based on some pseudo gold standard, mining logic. We’re talking about a publicly issued dollar, where the amount and who it gets issued to is still a matter of collective governance. But once the money is out there, once it’s issued, it has its own locus of gravity.
You can’t have the government back door shut it down afterwards. Once it’s out of your mouth, it takes on its own life, so to speak. And in this situation, in order for that to exist, you need to think about how to not simply distribute a ledger, but have no ledger whatsoever. I forget who it was, but one of the poets said, “Silence is the most beautiful language.” Because everyone else has to compete against the most perfect language where you can say things without any words at all. And this idea of a centralized ledger versus a distributed ledger is a question of, well, we need someone to keep the records. Who do we trust? Do we trust Big Daddy’s central government? Or do we trust the wisdom of the crowd or something? And the reality is that that’s an interesting conversation. But there’s a whole separate conversation, which is, what if we don’t want a record at all? What if we want to go dark? What if we want to actually just have this transaction to exist ephemerally in the moment, and then it’s done. And the only record is that the ownership of these instruments has changed on the other side.
Maxximilian Seijo: I think what’s so interesting about what you’re saying, too, and something to highlight, because I can imagine a lot of people getting really mad at this for a lot of different reasons, that maybe they don’t even really fully know why they’re mad at it, but the thing that stands out to me when you describe it is the pluralist approach. This necessity for having multiple forms of money that have multiple structures, that have a ledger attached, or even not attached to them. And how with certain aspects of society, there’s something necessary about providing space in different forms of money, and different ways of securing the hardware of the currency. I was wondering if maybe you could talk a little bit more about why that’s necessary?
Rohan Grey: Yeah, and we designed this initially to be a pilot, because this is still very early days. We need to actually have a conversation as a public about this. And one of the things is that, because central banks have dominated the conversation up until now, they’ve sent a pretty clear message to the industry about what they’re looking for. So when you’re looking at people out there who are proposing technologies to sell to central banks, to provide services to central banks issuing digital currency, interested in digital currency, right now, most central banks have said we want something that’s likely to be account based. It’s likely to involve intermediaries, it’s likely to be a two tier system where we’re not going to manage the last mile service, that’s going to be someone else. And the technology companies have heard that, and they’ve responded and marketed accordingly. But one of the things about this pilot program is essentially to say, look, there’s a whole separate segment of the market that we’re interested in supporting. There’s a whole separate segment of production. Take markets out of it. We want this kind of technology. If you’re interested in building it, then we’re interested in buying it, essentially.
And to open up this space for technologists to know that there’s interest in it for them to pursue. But we did keep it relatively agnostic at this stage, because there are different models. For example, prepaid cards have a different threat model than cell phones. They have a different set of use cases with a prepaid card. It’s a single-use piece of hardware. With your phone, you may be using the trusting environment on the phone or the SIM card, whatever it may be, but you’ve also got all these other applications and other ways that your phone can have your hardware security compromised. So we’re being ecumenical at this point by saying, let’s let the tech companies and let’s let people who’ve got interesting ventures on this front. I hope nonprofits and open source collectives will be a huge part of that. Let’s let them come up with things. Let’s fund it. Let’s see what the variety is. And this is why, even though I think at a kind of technical specs level, it’s almost antithetical to have a blockchain or ledger. We’ve even kept the option that if somebody can demonstrate a use case or a model where that could work, we’ll keep an open mind about it here.
But the goal is to be very clear that this is supposed to have the features of cash. There are account based technologies that are important. They should be pursued in other contexts, and certainly in the CBDC conversation. But here, we’re specifically looking for something that can have the functional specifications as close to cash. The other thing is that all technologies are vulnerable. There’s no perfectly secure system. So we’re not trying to propose here that hardware security is perfect or flawless. There are well known risks. But one of the elements here is that, if you design it with quantitative limits on each device, like we have with denominations of physical currency–we don’t have $100,000 Bill anymore–even though I might want a trillion dollar coin, I’m not suggesting that we’d be using them at the vending machines. So there will be some baked in limits to how bad counterfeiting could get at scale.
You would still need 10,000 cards shipped in big boxes and crates, or prepaid cell phones by the dozen, to benefit from counterfeiting at scale. But I think the other thing is that, when we’re talking about the scale of the political risks and political stakes at play here, that is to say, privacy, civil liberties, respect for tolerance, respect for dissent, those are such important values that, if we have to deal with a little bit of risk of counterfeiting, that’s fine. We’ve been doing that for centuries. The Secret Service protects the currency first and the president second. So I think the idea that we need to have a perfectly secure currency to be worthwhile is that technical model is not true. And that as long as we can keep the risk profile from being absolutely catastrophic, then the privacy benefits are worth pursuing this as one option.
William Saas: So the proposal is motivated by two moves that are, I think, going to strike a lot of people as immediately counterintuitive. One is that it should be the Treasury rather than the central bank. And then, two, there would not be a preference for, or prioritization of, or even special consideration of, the blockchain or distributed ledger over something else to make counterfeiting impossible and to guarantee security, which is illusory, right? So I love that we’ve gotten quickly into the weeds. And we’re going to have a link to as much information about this proposal as we can in the show notes. But I think it would be really useful for us and for listeners to have a bird’s eye view of what this proposal will look like if it is enacted, and from the pilot stages to that final moment of secure hardware. You talk about cards and then prepaid cell phones. Maybe take us from the legislation to the hands of consumers.
Rohan Grey: Yeah, sure, thanks. So the first thing is, due to your original observation, I think when we look at policy constraints that are also political or technical, we often take one particular constraint as the starting point for our inquiry, and then everything else is assumed to be less important than that constraint. So to give an example from a world we’re all familiar with, politicians will say it’s really hard to sell deficit and budget politics, so I don’t want to do it. And then, you end up having all these incredibly complicated conversations about how we’re going to get pay-fors, how we’re going to get the taxes, etc. And it may be that half of those political challenges are even more complicated than simply teaching people about deficit politics. But because you started from the idea that that was too hard, you end up doing things that are much, much harder to compensate. So in this debate, we often have a situation where people say, well, anonymous cash is impossible, politically. We can’t sell it. And then, we end up having these extremely convoluted conversations about how to balance privacy and national security and all these different interests that are often much more complicated than if we had just started from the outset and said, “Look, it is going to be hard to fight for this, but it’s actually really important.”
So all of that is just to give a precursor of the reason why this bill feels so different to everything else. It is because we aren’t making that initial political compromise that then makes all the other decisions really bad or really difficult. They say hard cases make bad law. Well hard compromises make bad further down the road policy decisions. But to go in the bill itself, first of all, the bill would be funded directly through money issuance. There’s no taxes funding it and there’s no national debt. The Treasury would spend the money, the funds would come out of a special account established at the Fed that would basically be like a permanent overdraft account. Any overdrafts incurred by the Treasury would not count towards a national debt. It would be at the Treasury’s discretion how much to spend, and the Federal Reserve would book any losses on that account and any overdrafts that it maintains for the Treasury, separate from the rest of its budget. So it wouldn’t affect any remittances back to the Treasury and it wouldn’t affect the net operating surplus that it returns. So that money would then go towards funding pilot programs.
Those pilot programs would be overseen by a new position, which is a director of what’s called the Economic Currency Innovation program. That director would have relatively wide authority under the Treasury Secretary. They would coordinate with a larger digital currency group that consisted of other agency heads and other important government officials across the government, including chief technology officers and things like that. There would also be, in addition to the Economic Currency Innovation program director, a monetary privacy board. And essentially, independent privacy experts would oversee the process and periodically conduct audits and reviews and release their findings to the public. Their job would be to essentially keep the system honest and oversee it from a privacy and stakeholder-oriented perspective. The bill itself, in addition to establishing pilots, defines what a digital currency would be. So it says what ECASH would be as a specific form of digital currency. So it’d be legal tender.
It would be a bearer instrument, which means whoever holds it, is the owner of it considered legally. It would be not based on a ledger so that the value would be stored on the physical instrument, on the physical device. And it would be capable of being held by the public without any fees, fines, and things like that. And merchants would be required to accept it to the same degree as they’re required to accept physical currency. So they couldn’t unfairly penalize people who were trying to pay with this instrument. The pilot program is set up in two phases. There is an initial phase, which is a proof of concept phase, where the Treasury would select three pilots of which two, at the very minimum, would involve some sort of debit card or prepaid chip card capacity. And then, at least one would require phone based capacity. So we left the option open for someone to come up with a ledger based system if they really can show how it can meet the broader specification needs of cash, i.e. offline capacity.
And then, after that initial set of pilots that would take place, I think, within about a year, there would be a write up, a report, a review of what went right and wrong, and then there would be a larger scale rollout pilot, presumably in collaboration with another government agency, or a state or local government, something like an EBT card program or an economic cash program. For example, you could imagine, not that I support it as a policy, but Gavin Newsom’s gas tax rebate card could be a good example of how you might pilot something like this. And that’s the sort of second phase pilot. And the idea is to keep a relatively tight timeframe on this. Obviously, if things need to be stretched out, because of technical considerations, that’s fine. But the goal is to not have this due in 2035 or something, but to be relatively soon, because in the world of technology, five years is infinity.
Maxximilian Seijo: So now that listeners maybe have a sense of not only what’s in the bill, but also like the certain considerations that went into drafting it, I think, a question that comes up is, who are the political coalition’s involved? And how is this gonna play out? Maybe you can talk a little bit about the stakeholders and where the political will for passing this might come from?
William Saas: Anyone can create an ECASH Act, the problem is getting accepted.
Rohan Grey: Yeah, from your mouth to God’s ears. I think this is a really interesting part of this bill. In addition to this institutional move, where we took it outside of the CBDC conversation to start a whole separate conversation to say, “Look, you’ve done a really great job as central bankers around the world defining this term CBDC to be exactly what you want it to be while still giving the appearance you haven’t made any decisions yet. We’re still considering every option as long as they’re black. And you’re in charge of creating an instrument that we’ve defined the parameters of.” This kind of debate. But in addition to that institutional move, there is also a political move, which is that if you look at the broader crypto conversation right now, a lot of it is taking place on this vector that I find to be very problematic, which is that a lot of the kind of industry people–the liberal crypto advocates–have positioned themselves as the only ones doing anything. They’re the only ones doing something new. We’re the ones trying to fix problems. Have you tried to use the payment system? It’s slow, it leaves people out. It’s exploitative, blah, blah, blah, blah, blah. Look how much better the things that we’re trying to create are going to be.
And then, the progressive response is, you’re lying. You’re a fraud. You’re a charlatan. You’re making it up. But it comes across as a combination of sour grapes and being the party of “No!” William Buckley talks about standing on top of history shouting, “No!” or shouting, “Stop!” There’s almost that vibe. It’s a bit reactionary in its opposition. And I think part of that is because you’re trying to fight something with nothing. Unless you actually have a progressive vision of the future that’s stronger, unless you want to own the future of technology, of where we’re going, then you sound like somebody that thinks the status quo is okay. Even if you don’t, that’s the dynamic. So I think it’s been really problematic that the only vision that people have at a mass level for the future of money in an exciting way is this crypto vision. And one of the big ways that that gets justified is that the government alternatives are pro-surveillance. They’re not your friends. You’re putting a dangerous device in your pocket, just like we had now come to realize with Facebook and Google and things. What we thought were more benign turned out to be malicious.
So this coalition, I think, is a combination of people that recognize that the ability to use cash or cash, like transactional freedom, is really important for marginalized populations. So sex workers, marijuana businesses, people in the gray economy, undocumented people, people working in the informal economy, all of those kinds of people, but also political dissidents. Palestinian activists who don’t want Venmo to shut down their donations. People who are trying to engage in political dissent, who don’t want the racist governor of Alabama getting the list of all of their political donors to the NAACP in the 1950s, which was a real Supreme Court case. So those kinds of things, where we don’t want the money to be a tool of oppression, I think brings or should bring progressives to the table. Then, you’ve got privacy advocates. You’ve got people that care about tech privacy in general. The ACLU and civil liberties groups who should have been on this for a long time, but have not been because money has been scary as a topic–it’s hard enough to get your head around technology to get your head around money as well.
But then, interestingly enough, and God forbid I would ever say I want to have a bipartisan coalition, you have the kind of libertarians who are true believers. Now, I think they are a vanishingly small subset of the community, but those for whom they definitely prefer private sector solutions, they definitely prefer crypto. But if they were going to have to have a government digital currency, they would probably prefer one like this. So they understand that from a pro-privacy point of view, that cash is very important. And even if they don’t like the government, they like having more privacy in their money than not. So I think you’re going to get some people on that front. Then, the last group of the people are those who’ve been opportunistically opposing other government options, who have been using the surveillance talking point as a stalking horse, as a way to bash CBDCs, which I think is a valid criticism. Now, whether they’re actually serious in saying they would prefer a privacy respecting alternative, I’m not very confident about, but this will at least give them an opportunity to show that they were something other than cynical, duplicitous liars. So we’ll see. But I think there could be a relatively wide coalition here of people who oppose government domination, or corporate domination, who believe in privacy and the ability of using money in ways that authorities might not approve of as being an important form of political freedom.
William Saas: So in terms of actual members of Congress who might be in support of this, we have Stephen Lynch. We also have Chuy Garcia?
Rohan Grey: Yeah, notably, Stephen Lynch is a moderate. He represents a relatively blue collar district, but he intuitively understands the benefit of opening up a conversation around the Treasury, rather than the Fed. He intuitively understands the value of preserving cash. He knows that this isn’t radical in the sense of a departure from the status quo. This is protecting freedoms that we’ve had for thousands of years so that they don’t get crushed in a sociological transformation towards a more digital society. So we’ve got moderates there. The original ECASH proposal that was in a much shorter form was actually the ABC ACT that I worked on as well with Congresswomen Rashida Tlaib and Pramila Jayapal. And about 19 other progressives signed on board, including Chuy Garcia and others. So Congresswoman Tlaib is a co-sponsor of this bill. Congresswoman Presley is a co-sponsor. I think other progressives are going to get on board. There have been other people in the Senate side who are supportive as well, who care about privacy and care about a public option.
In my experience, when we talk to progressives, they often haven’t considered this issue. But when we explain it to them, they go, “Oh, that makes sense, we should definitely have that.” Now, the way you’re going to lose people in this coalition are going to be those who care a lot about surveillance, who care a lot about anti-money laundering and KYC, and who see this as a step backwards. Because for them the War on Cash is a positive development. It’s a good thing that we have more surveillance, that we have the ability to create backdoors, to freeze accounts, and all those kinds of things. So they see the current inertia, which is towards the inevitable death by attrition of cash, as a good inertia. And anything that arrests that inertia is bad. So the opposition is going to come from people who are quite comfortable with the fact that cash is dying and don’t really want to resuscitate it.
William Saas: Because it’s dirty and can be used for dirty things.
Rohan Grey: Yeah, bad people use bad money. If you’re a good upstanding citizen, you’ve got nothing to hide,
William Saas: There’s nothing wrong with that logic.
Rohan Grey: No, famously, societies where every political leader is expected to have no vices at all never have their own political vulnerabilities.
William Saas: So I’m trying to imagine the scene of the dissident using this digital dollar, or ECASH electronic currency. What is the hardware that they might be using? I know there’s going to be lots of experimentation.
Rohan Grey: They could be using a prepaid card that might have an E-Ink display. It might have a few really basic buttons on it like something that looks like the remote that you might program your air conditioner with or something.
William Saas: Hopefully, a little more sturdy.
Rohan Grey: But yeah, there are already versions of those kinds of chip cards in China, and elsewhere, all the way back to the 1990s were the earliest forms of government pre-stored value cards. We also see similar kinds of stored value card technology with transit cards, things like that, currently in operation. But you could imagine something where you essentially tap that card using some sort of near field communication. You could maybe put some numbers into the card to say I want to send $25. The card then produces a unique 10 digit code. You can then type that code into someone else’s card and it will receive the funds. That’s one option. You could also have essentially an app on your phone that integrates an ECASH wallet on the phone with accounts that are managed remotely and in a ledger-based system somewhere else in a server. So that you pull up the app on your phone. It’s called your money app, and it has a checking account, credit card account, and a cash account. And if you want to transfer balances to your ECASH account, in a cash wallet, you simply go withdraw $100 from my checking account, your bank debits your account, and it’s the equivalent of if you walked into the bank and asked for a $100 note. They take it from their E cash balance. If they need more ECASH from the government, they buy it, the government debits their reserve account, gives them the equivalent of pallets of cash, and the armored truck comes and delivers them to the safe. This is all just happening remotely with software now.
William Saas: Can they animate a Brink’s truck on your card, maybe?
Rohan Grey: Yeah, that’s right. You see a little armored truck go from your bank app horizontal bar down to your cash app horizontal bar, and then the value appears there. And then, if you want to make a transaction to someone else’s phone, you can either send them a text message with the code, or you can tap the phone next to each other or whatever else. Merchant point of sale terminals, we demanded that the bill require the technology to be interoperable. So in the future, it would be simply you have a terminal and it says, would you like to pay with checking, credit, or ECASH? You press ECASH and it taps your balance, etc. And that can happen offline. It can happen with something that has no battery other than kinetically powered. There are wearable tech now things where the low powered chips get powered by movement and by you touching it, those kinds of things. So you can imagine all sorts of ways that that low powered hardware can continue to function without a battery or something like that.
William Saas: Speaking of low powered hardware, how many Nvidia graphics cards are going to be needed for the Treasury to roll out this program?
Rohan Grey: Yeah, I mean, this is one of the funny things. If you go back to that 90s moment, when I was saying before with Philip Diehl was testifying in Congress in the mid 90s, you had initiatives like Mondex, which was a bank initiative to create a stored value card. You had initiatives like Avant card at the Central Bank of Finland. But I think it was one of those moments where it’s wrong to be right too soon. So the conversation around money hadn’t caught up to the conversation around the internet, essentially. So when people were experimenting then with stored value cards, there just wasn’t that much government interest in them. And eventually, the technologists said, this isn’t going to work for us, we went a different direction. And the way that they went, because a lot of them were kind of libertarian, oriented in the Cypherpunk movement, unfortunately, they went into we’ll create our own money. Up until that point, it was we’re going to use the public money, but we’re going to create privacy respecting payments technology. And now it was, well, the government’s not going to meet us halfway. So we’re just going to create our own private money. And then, that way, we’ve closed the loop where private money and private tech can do the whole thing.
Now, of course, the problem is that you then need a theory of decentralized issuance. You need a kind of theory of fiscal and monetary policy to go with your payments theory. And that’s where you end up in these incoherent libertarian, we can do it in the private sector, there is no collective governance, bullshit. And it creates a technical problem, because you now need to solve not only decentralized payments, but decentralized issuance, and that’s where you get to mining and all of that kind of stuff. But if you have a public hardware based system, then you can have trusted issuance, and then the hardware is only doing the payments processing. It’s actually a much smaller technical problem to solve when you’re not simultaneously trying to solve the money problem as well as the payments problem.
Maxximilian Seijo: And from a technical perspective, too, I think, as you’re saying, this is interesting as a way of connecting up these ideological presuppositions about money and opening up a conversation to the design of money and the creation of money around a public and democratic ideals-based paradigm. And opening up what it means to have political freedom, as you said. And it’s interesting to see that in line, historically, with the moment of politicizing money, generally speaking. It feels like an important theoretical step in connecting up some of these problems.
Rohan Grey: Yeah, I mean, you all have done a great job of talking about queering money and the way that money can be a site of people to provide alternative modes of being, to demonstrate, and to experiment. In order for that to happen, the money itself needs to have some degree of tolerance for pluralism. We created the public money to serve these collective and social goals. But separately, it can also serve these goals that no one expected, no one planned for, but we’re improvising because we’ve got a few minutes in between rehearsals and that kind of stuff. As long as the studio isn’t shut down and we haven’t been kicked outside, then we’ve still got access to the materials. We can still play the instruments together while we’re in the room waiting. So this kind of technology is a way of saying, look, it’s still public, but it’s public with a little bit of space for you to define that around the edges. You, as an individual, all the way down to the individual node in the social organism, you can have the freedom and autonomy to offer a contribution to how you think this thing should look like, even if it’s different to how we have collectively decided up until now. It’s that balancing of the consensus versus the individual editor on the Wikipedia page.
And in that respect, I think, not to sound like this is super nuanced, but up until now, we’ve been having this conversation where the dichotomy is public money and private money. And we have confused the word private money there with privacy money. We think they’re the same. But really, at the very least, we should be thinking of a four box, two dimensional kind of thing, where you’ve got public money and private money, and then privacy respecting money and non-privacy respecting money. And as long as the public, the cultural imagination, is stuck between a public surveillance coin, and a privacy libertarian coin, I think we’re fucked. I think we’re in a bad place. I think we’re gonna continue to go in a bad direction for the future of money. But if we can get the conversation up between a privacy respecting public money and the other two, then we can see how privacy respecting public money is better than a government surveillance coin. And privacy respecting public money is better than pseudo-privacy respecting private money, and in fact, may actually be better at serving that privacy function, because of the features of public money, not despite them.
Maxximilian Seijo: That point about the construction of the antagonism between public and private in a vacuum without these other complex variables for thinking about the way we participate with money is so key. So yeah, thanks for the work that you put into opening up this conversation, both theoretically, and then, obviously, also technologically.
Rohan Grey: I think, obviously, none of us are so naive as to think that writing a piece of legislation is the same as making social change, but this is a form of intervention. And I think it’s a show don’t tell kind of model, because we’ve been trying to explain this idea to people for years, but sometimes you just need to really articulate the future. I mean, my wife loves The Dispossessed: An Ambiguous Utopia by Ursula Le Guin. And one of the reasons she loves it so much is just because she’s so good at explaining a whole world and making it actually seem viable, that something so fundamentally different could work. It’s not just once upon a time, there was a wood cutter and you’re like, well, wait a second, does he have healthcare? Does he see his relatives in other places? Is there a train line to the Sleeping Beauty story? But if you tell a story with enough detail, suddenly, that imagination can become real. So something like this bill is a way of saying get over that imaginative hump. This can happen. It’s a viable future. We just have to choose it.
Maxximilian Seijo: Not to go too far down a digression about The Dispossessed, but I read it again recently. And for fans, I was taken by Anarres, one of the more utopian planets. In the book, there’s so much, I guess you could call it, money in that utopian space in a way that I think is counterintuitive to people. But it’s because it’s money in a different way than we understand money operating in our world. So yeah, I like that you brought that up. It’s a great example.
William Saas: For sure. So I’m looking at the fact sheet that folks can also look at, I presume. And I’m seeing some great stuff here. We’re talking about the possibilities of something like this for achieving something maybe not utopia, but a more just order. So we have on this list of the features of ECASH, legal tender, which we’ve talked about, financial inclusion, and an emphasis on prioritizing technologies that promote universal access and usability, especially for folks with disabilities, low income individuals, and communities with limited access to internet or telecom networks. Privacy, we’ve talked a lot about that. Consumer protection, some regulatory details, and then some transparency and oversight functions. I don’t see anything here about fighting inflation or winning the war with Ukraine. So I’m joking, but at the same time, this is the context that we’re entering into.
Rohan Grey: Yeah, I think the first thing is that, in terms of the actual spending on the bill, we’re going to be talking about, maybe in the wildest dreams, a few 100 million dollars for these pilots and things. I mean, it’s a rounding error when it comes to actual real resource costs. What we’re going to be having and subsidizing like 15 computer programmers and a couple of computer manufacturers. But on the Ukraine question, I think it’s a really interesting moment, because there is this duality or tension with how people are understanding the role of things like crypto and financial sanctions right now. Because, on one hand, it’s nice to know that we don’t have to start nuking Russia to impose some warfare on them. If we have to go to war with someone, God forbid, the idea that we’re doing that with these soft financial means, rather than literally destroying the planet, seems like at some level a kind of relief. But on the other hand, what are economic sanctions? Every progressive has known for years, they’re painful, they hurt the most vulnerable, they don’t necessarily work, etc.
So, on one hand, it’s like, well, thank God, we’re not sending in shock troops. On the other hand, it’s financial warfare forever. That’s a terrible, bleak future as well. And then, conversely, people are saying, isn’t it amazing that people are supporting the people of Ukraine with cryptocurrency. So suddenly, the ability to subvert financial sanctions is also a good thing right now. We like financial sanctions against Russia, but we don’t really. And then, we like evading financial constraints with crypto, but we also don’t really like crypto. So it’s a very weird moment where I think the public is having to deal with a lot of ambiguous conflicting feelings. And that’s a productive space to be in because it problematizes a lot of these very morally clean binaries between criminals and average people, or the cops and the robbers and this kind of stuff. The reality is that there are bad uses of cash and there are good uses of cash. And there are downsides to having political freedom and there are good sides.
But if you think about it like a pen and paper, pen and paper in the wrong hands can be extremely dangerous. And in the right hands, it can be extremely liberatory. I think the question is, do we want to start from a world where we assume that access to a pen and paper can be controlled by somebody else? Maybe that’s not actually a question we want to ask ourselves, because how do we want to control people’s access to pen and paper gets us in a very dangerous headspace. So I think the Ukraine moment is at least going to be a more interesting context for having this conversation than the traditional four horsemen of the apocalypse, of the internet, that everybody loves to talk about, which is money laundering, terrorism, child pornography, and drugs. So if people think of censorship resistant money, and they immediately go to political dissidents, that’s probably a better starting point than what would have happened before all of this.
William Saas: Did I just hear you say that the ECASH Act might help to highlight and resolve the contradictions of late, imperial capitalism?
Rohan Grey: Well, yeah, maybe heighten. I’m not sure about resolving, but it certainly brings them into relief. And I think, just like with climate, it takes a climate apocalypse being literally on the doorstep for people to start thinking what a better world might look like at scale. I think the idea that we’re standing on the doorstep of a totalitarian surveillance dystopia with our digital money gives us a bit of space to imagine just what we really need and what’s really important for a future monetary system. And it’s this idea that we’ve actually been losing the war on cash for a while, I’d say since the 70s. It’s been a slow drip, drip, drip, war of attrition, that they’ve been winning. And I’m not happy that we seem to be on the precipice of building a surveillance panopticon that’s going to be the future of everything. But it’s also at least not drip, drip, dripping all the way to extinction.
And I don’t think I consider myself an accelerationist in general, but I think it’s one of these moments where, I didn’t choose accelerationism, it’s been chosen for us. And this is the kind of moment we get to deal with that. But after the last decade of watching how people’s thoughts changed after the global financial crisis, how the debate around crypto changed the debate around FinTech, how the debate around stable coins got changed by Libra, and now how the debate around privacy may be changed by this, I think there is a sense in which these antagonistic trends can open up space for new vectors for political organizing, consciousness building, and things like that. I think whatever else is gonna come out of this, a lot of journalists, a lot of commentators, and a lot of people thinking about digital currency, are now going to know that there’s another battlefront to fight here.
Maxximilian Seijo: Well, Rohan, thanks again for coming on Money on the Left. And I’m sure we’ll have you back on sometime for some other thing that you’re working on. Because you’re certainly working on a lot of things.
William Saas: Well, hopefully, we’ll talk about this, right? It’s a live thing.
Rohan Grey: Yeah, we’ll talk about the pilots and how they’re running, etc.
Maximilian Seijo: But yeah, thanks so much. And for listeners, we’ll have links to everything that we’ve discussed in the description.
William Saas: And listen to Rohan on the upcoming Odd Lots episode.
Rohan Grey: Thanks a lot, guys. It’s always a pleasure. Take it easy.