Trump’s Digital Currency is Coming Fast

Donald Trump’s governing by Executive Order continued this week, most notably with two executive orders dealing with how transactions are processed through the General Fund, which the White House describes as “America’s bank account.”

The two executive orders were signed on Tuesday the 25^th, and were called “Protecting America’s Bank Account Against Fraud, Waste, and Abuse” and “Modernizing Payments To and From America’s Bank Account.”

Both executive orders are on WhiteHouse.gov in case you’d like to read them, and the second one is what requires the Treasury Department to phase out paper checks by September 30^th of this year. Both of these executive orders aim to give the Treasury Department greater power and control.

That includes control over intragovernmental payments, benefit payments, vendor payments and tax refunds. Federal agencies will also be expected to transition to EFT methods, including direct deposit, prepaid card accounts and other digital options. 

According to a Fact Sheet also on WhiteHouse.gov, the reasoning for these executive orders is that “President Trump is cracking down on waste, fraud, and abuse in government by modernizing outdated paper-based payment systems that impose unnecessary costs, delays, and security risks.”

This reasoning is spelled out in more detail on the “Protecting America’s Bank Account” executive order:

“The Department of the Treasury is the largest financial payment manager of the Federal Government and is responsible for safeguarding the General Fund, but lacks sufficient controls to track transactions flowing through the General Fund to determine if they were proper.  To enforce sufficient controls and ensure accountability to American taxpayers, the Department of the Treasury requires financial information from executive departments and agencies beyond what they currently provide.”

So, what do we make of all of this? Here are four quick takeaways from what I can see:

1) The phasing out of paper checks by September 30^th, just six months from now, seems like a very quick deadline for such a major overhaul to how the government handles payments.

This tells me that there are probably more executive orders coming that will be related to this, perhaps specifically tied in to additional digital verification methods for programs such as Social Security and Medicare.

2) The Fact Sheet on WhiteHouse.gov does explain that there will be exceptions made:

“Exceptions will be made for people without banking or electronic payment access, certain emergency payments, certain law enforcement activities, and other special cases qualifying for an exception under the Order or other existing law.”

In those cases, individuals or entities qualifying for an exception will be provided alternative payment options. However, nothing is stated how this would be determined or how to apply for the exception. It also doesn’t state what the payment alternatives will be.

This, again, points to additional executive orders coming down the pike that will have specific requirements that have to be met in order to qualify for an exception.

3) Of special note, the Fact Sheet states that “This Executive Order does not establish a central bank digital currency (CBDC).”

A central bank digital currency is a digital currency issued by a central bank. It would likely be implemented via a database run by the central bank or the government itself. The database would keep a record of the amount of money held by every single entity, whether a corporation or a person.

However, just because these executive orders didn’t specifically establish a central bank digital currency, it doesn’t mean that they’re not a step in that direction. This tells us we’ll need to keep an eye out for additional executive orders that are related to this.

4) The elimination of paper checks by the government is another step toward having a digital currency – and the September 30^th deadline is an indication of how serious this administration is.

If we also remember the recent elimination of the penny, and the talk of eliminating the nickel, we can see how cash itself is being attacked from all sides. There is an effort to remove cash and paper checks from society, slowly but surely.

About two years ago I talked about reverse ATMs, which are essentially the opposite of a traditional ATM. Instead of dispensing cash, however, the customer gets a prepaid debit card.

I’m going to replay that short video right now.