iTechGuides is reader-supported. When you buy through links on our site, we may earn an affiliate commission. As an Amazon Associate I earn from qualifying purchases. Learn more
“American digital currency” is not one precise legal category in U.S. law. It can mean several kinds of digital value connected to the United States or the U.S. dollar, including bank deposits, private digital assets and, in a narrower sense, a central bank digital currency (CBDC). The key question is who issues the value and owes it: a commercial bank, a private issuer, or the Federal Reserve.
What does “American digital currency” mean?
In everyday use, the phrase can describe digital forms of dollar value as well as digital assets used in the United States. It does not, by itself, identify a particular product, issuer or legal status.
For its sanctions programs, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) defines digital currency broadly to include sovereign cryptocurrency, non-fiat virtual currency and digital representations of fiat currency. OFAC’s definition is specific to that sanctions context, not a universal definition for every U.S. law or agency. OFAC FAQ 559, last updated October 15, 2021, defines virtual currency as digital value that functions as a medium of exchange, unit of account and/or store of value, and is neither issued nor guaranteed by a jurisdiction.
Crashes, No Sound, or Screen Glitches?
Random freezes, missing sound and display glitches usually trace back to one bad driver. Find and replace yours safely.Free scan · under a minutePC Slower Than It Used to Be?
A free scan shows the junk files, broken settings and background clutter dragging Windows down - then fixes them in one click.Free scan · Windows 10 & 11Is there a U.S. digital dollar?
A U.S. CBDC would be a digital form of central-bank money: a direct liability of the Federal Reserve and, under the Federal Reserve’s general definition, widely available to the public. This liability distinction matters more than the fact that a balance or payment appears on a screen. The Federal Reserve’s CBDC page says it has made no decision to pursue or implement a U.S. CBDC.
#1 Best Overall
The Office of the Law Revision Counsel’s preliminary text for 12 U.S.C. § 423 describes a CBDC as a digital asset denominated in U.S. dollars, a U.S. currency, a direct Federal Reserve liability and widely available to the public. That preliminary code page also contains provisions concerning issuance and an end date of December 31, 2030. Because the page is marked preliminary and legal status can change, consult the current Code and Federal Reserve statements for the present status. A statutory definition is not evidence that a consumer CBDC has been issued.
How digital dollars and other digital value differ
| Type | Who owes or issues the value? | What it means |
|---|---|---|
| Bank deposit | A commercial bank | An electronically recorded deposit is a bank liability, not a Federal Reserve liability. The Federal Reserve’s 2022 discussion paper explains this distinction: Money and Payments: The U.S. Dollar in the Age of Digital Transformation. |
| CBDC | The Federal Reserve | Digital central-bank money that is a direct Federal Reserve liability and generally available to the public. The Federal Reserve has made no decision to pursue or implement one. |
| Virtual currency or cryptocurrency | Not issued or guaranteed by a jurisdiction under OFAC’s definition | Digital value used as a medium of exchange, unit of account and/or store of value. The IRS uses a narrower tax definition, described below. |
| Payment stablecoin | A private issuer | A distinct private-money category. The exact backing, redemption terms and current legal requirements depend on the particular stablecoin and applicable law; the Congressional Record’s June 5, 2025 GENIUS Act proceedings alone do not establish the final terms or current implementing rules. |
| FedNow payment | Not a new currency issuer | A Federal Reserve instant-payment service offered to banks and credit unions. It is neither currency nor a consumer account service, according to the FedNow FAQ. |
Is a bank balance a digital currency?
In casual conversation, someone may call an online bank balance digital money. More precisely, it is a commercial-bank deposit recorded electronically. The bank owes the deposit; it is not a direct claim on the Federal Reserve. A transfer service can move money without creating a new currency, as with FedNow, which serves participating financial institutions rather than offering individual consumer accounts.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What does “virtual currency” mean for taxes?
The IRS defines virtual currency for tax purposes as digital value other than a representation of the U.S. dollar or foreign “real” currency, functioning as a unit of account, store of value and medium of exchange. It describes cryptocurrency as a type of virtual currency that uses cryptography to secure transactions recorded on a distributed ledger such as a blockchain. IRS guidance treats virtual currency as property for federal income-tax purposes. Its FAQ applicability note says the FAQs generally cover digital-asset transactions completed before January 1, 2025; for later transactions, consult current IRS guidance for the relevant tax year: IRS virtual-currency FAQ.
Quick wins for a faster PC:
Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Clear out junk files and repair common Windows errorsFree Scan →Quick Recap
Rank #3
How to tell which meaning applies
- Check the issuer: Is the value owed by the Federal Reserve, a commercial bank, a private issuer, or no government issuer or guarantor?
- Check what it represents: A bank deposit, central-bank money, a private representation of fiat value or non-fiat digital value are different categories.
- Check the context: An agency’s definition may be limited to sanctions, taxation, payments or central-bank policy.
- Separate money from payment technology: A digital transfer or payment rail can move existing money without being a currency itself.
- For stablecoins, verify the specific issuer and current rules: Do not assume a particular reserve arrangement or redemption promise from the word “stablecoin” alone.
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
