New York lawmakers proposed a bill on a peer-to-peer (P2P) savings and payment platform called the “New York Inclusive Value Ledger.”

Introduced by New York State Assembly legislator Ron Kim and Senator Julia Salazar, the bill proposes to set up the “empire state inclusive value ledger establishment and administration act” that would create a system of wallets for payments by state entities and residents. According to public records, the bill was proposed in the State Assembly and the State Senate on Oct. 23, 2019, but New York State’s legislative session only reopened on Wednesday Jan. 8.

Kim says that implementing blockchain technology would be “very difficult”

The system described in the bill is based on eponymous white paper written by Robert Hockett, a law professor at Cornell University. Published on Oct. 17, 2019, the white paper sets out the Inclusive Value Ledger (IVL) plan, which aims to bolster the mechanisms of the state’s monetization, production, saving and spending with the help of new digital technologies.

Despite having the word “ledger” in its name, the IVL will not necessarily be based on distributed ledger technology (DLT) or blockchain. In fact, the white paper doesn’t refer to either blockchain or cryptocurrency incorporation to the IVL at all.

In this regard, Assembly member Kim outlined that creating a blockchain or crypto-based type of initiative would be very complicated, so the authors of the project made the proposal’s language open enough for providing a “100% free and public payment platform.” Speaking to Cointelegaph by phone, Kim said:

"We thought it would be very difficult for us to launch a full blockchain-cryptocurrency type of technology up front. So what we tried to do is make our language as open as possible to make the initial argument that payment platforms do not have to be just privately run. And we could — just like anything we do providing a highway or sidewalk as a public good — we could provide a 100% free and public payment platform."

The author of the IVL white paper says “some form of DLT seems likely”

Hockett, the white paper’s author, told Cointelegraph that incorporation of “some form of DLT seems likely, even if not yet quite certain,” adding that the the project designers are still in the process of evaluating different opportunities. He said:

“At present we know what functionalities we require and are assessing the various ways to provide those. There are many, some of which of course are blockchain or other-chain based.”

When asked why the system refers to the term ledger, which is widely used in the crypto industry and particularly used to refer to major global crypto wallet firm Ledger, the professor said that this term is “much broader in meaning.” Hockett elaborated:

“First, given how payments technologies are developing, some form of DLT seems likely, even if not yet quite certain. And second, as you know, the word 'ledger' is much broader in meaning than any contemporary digital application. ANY system of debit/credit accounting is tracked on a 'ledger,' be it digital and distributed or be it tracked, as it was for many centuries till the mid-20th, on a literal paper 'account book' (one synonym for which has always been 'ledger').”

Why does New York need the Inclusive Value Ledger aka “Public Venmo?”

Also referred to as “Public Venmo,” the project has ambitious goals as it intends to address a number of interconnected challenges in the New York state economy: financial inclusion, keeping money in local commerce, payment speed, monetization or incentivization, as well as financial privacy.

Specifically, the project aims to provide free access to the payment system to the unbanked and under-banked, professor Hockett explained, noting:

“Those who now either lack access to payment systems or who must pay extractive fees for such services now will have free access to them, as was the case for all of us back when all money was paper or coin.”

If passed, the IVL bill would impact as many as one third of homes in New York City. According to New York City’s Department of Consumer and Worker Protection, more than 1 million households are unbanked or underbanked. Nationwide, the number is slightly lower at roughly a quarter of all American households lacking adequate access to financial services.

Regarding privacy, the IVL aims to provide “whatever degrees and kinds of privacy New Yorkers wish to characterize their money and payments system,” while also ensuring compliance with Anti-Money Laundering measures and related practices. “The IVL system enables us to be as strict or as flexible as we want to be along any of those dimensions,” Hockett said.

The IVL intends to tap uncollected tax credits while striving for decentralization

Assembly member Kim emphasized that the proposed bill is not just about upgrading the government system but rather injecting more cash flow into local communities. The IVL system aims to pay for traditionally unvalued and undervalued work such as care work that often goes under-compensated. Eventually, the IVL will help to effectively administer untapped tax credits by integrating those rebates directly into its public P2P platform, Kim said.

Kim also suggested that the project would likely become more decentralized in the future. He said:

“The long-term goal is really to decentralize the process and to tokenize the benefits. There can be very minimal involvement from any state or local or central government operators. We could potentially create a very decentralized peer-to-peer system.”

Kim says that the IVL is better than Andrew Yang’s $1,000 UBI proposal

Kim has also contrasted the IVL model with universal basic income (UBI), an idea that has gained publicity as part of 2020 Democratic presidential candidate Andrew Yang’s campaign. While Yang’s UBI proposal suggests granting every American $1,000 a month in cash, the New York Assembly member believes the IVL system is better than just cash.

According to Kim, just providing people with cash offers them a lower level of protection than a transparent ledger system that integrates already-existing tax credits. The legislator argues that putting money on a public payment platform enables more security and ensures that the money is being used for local commerce.

The “Democratic Digital Dollar” vs. Libra

While the IVL white paper is a P2P payment platform that represents New York's version of the plan, another IVL-associated white paper called the “Democratic Digital Dollar” refers to the initiative in a more general sense, Hockett explained to Cointelegraph. Also released in October, the Democratic Digital Dollar white paper represents an extension of the IVL. The original IVL white paper reads:

“The result would be a complete and fully integrated federal, state, and local P2P payment platform and associated Democratic Digital Dollar, with localities able to administer dollar-denominated community currency systems, states able to join and to integrate localities in that project of intrastate payment system completion, and the US Treasury providing the platform through which payments flow among household, business firm, municipal, state, and federal treasuries.”

As the original IVL white paper draws up a complementary currency or payment system plan, this digital dollar initiative is considered to be complementary. As part of the IVL, this digital dollar will be digital in the sense that individual wallets will be credited and debited digitally in dollar units, Hockett said. According to the professor, the initiative will “render all other such projects completely superfluous,” noting that the digital dollar initiative is absolutely different from Facebook’s stablecoin project Libra and “other proposed scams.”

Hockett had previously explicitly criticized Libra proposal. The professor predicted a thorny path filled with regulatory issues for Libra. In a Forbes article published just a couple of days after Libra’s white paper was released on Jun. 18, 2019, Hockett wrote:

“Will regulatory approval be forthcoming? I think it virtually certain that it won’t if Libra retains its current announced form – at least without attached ‘strings’ that neither Facebook nor its consortium partners are likely to accept. [...] not only will Libra likely have to register as and submit to exacting regulation both as a de facto money market fund and as a systemically important financial institution (‘SIFI’) by the Securities and Exchange Commission (‘SEC’) and the Financial Stability Oversight Council (‘FSOC’), respectively, but it also will have to jump through all counterpart hoops raised by counterpart regulators in all other jurisdictions where Libra would be available.”