The United States is likely just a few years away from implementing a national digital currency, according to analysts at Bank of America.
The idea of digital coin issued by the US government, known as central bank digital currencies (CBDCs), have gained prominence in recent years alongside the rise of leading crypto tokens such as Bitcoin, which isn’t tied to any government institution.
US-backed digital coins “are an inevitable evolution of today’s electronic currencies,” Bank of America crypto strategists Alkesh Shah and Andrew Moss wrote in a client note on Monday, according to Bloomberg.
The first US digital dollar could be issued between 2025 and 2030, the strategists added.
The Federal Reserve issued the findings of a study evaluating the pros and cons of a US digital currency. The central bank requested public comment through May 20 on the concept as it considers whether a digital coin “could improve the safe and effective domestic payments system.”
“We look forward to engaging with the public, elected representatives, and a broad range of stakeholders as we examine the positives and negatives of a central bank digital currency in the United States,” Fed Chair Jerome Powell said in a statement.
Meanwhile, President Joe Biden is expected to issue executive orders directing multiple agencies to develop a federal strategy on cryptocurrencies, Bloomberg reported. The orders could come as soon as February.
Bank of America expects more private companies to make use of digital currencies in the coming years as they gain mainstream acceptance for transactions.
“We expect stablecoin adoption and use for payments to increase significantly over the next several years as financial institutions explore digital asset custody and trading solutions and as payments companies incorporate blockchain technology into their platforms,” the analysts added.
While investors have piled into major cryptocurrencies in recent years, the digital assets have proven to be volatile. After reaching an all-time high of $69,000 in November, bitcoin has plummeted below $37,000 as of Tuesday.