Round Up: U.S. Releases Comprehensive Framework for Responsible Development of Digital Assets

White House Releases First-Ever Comprehensive Framework for Responsible Development of Digital Assets

The digital assets market has grown significantly in recent years. Millions of people globally, including 16% of adult Americans, have purchased digital assets—which reached a market capitalization of $3 trillion globally last November. Digital assets present potential opportunities to reinforce U.S. leadership in the global financial system and remain at the technological frontier.  But they also pose real risks as evidenced by recent events in crypto markets. The May crash of a so-called stablecoin and the subsequent wave of insolvencies wiped out over $600 billion of investor and consumer funds.

President Biden’s March 9 Executive Order (EO) on Ensuring Responsible Development of Digital Assets outlined the first whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology. Over the past six months, agencies across the government have worked together to develop frameworks and policy recommendations that advance the six key priorities identified in the EO: consumer and investor protection; promoting financial stability; countering illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation… Read the full press release here: https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/16/fact-sheet-white-house-releases-first-ever-comprehensive-framework-for-responsible-development-of-digital-assets/

Statement by NEC Director Brian Deese and National Security Advisor Jake Sullivan on Digital Assets Framework

At the direction of President Biden and after 180 days of determined work across the Biden-Harris administration, we are releasing the first-ever comprehensive federal digital assets framework– positioning us to keep playing a leading role in the innovation and governance of the digital assets ecosystem at home and abroad and in a way that protects consumers, is consistent with our democratic values, and advances U.S. global competitiveness.

First, consistent with the President’s directive to place the “highest urgency” on research and development of a U.S. central bank digital currency (CBDC), the Administration encourages the Federal Reserve to continue its research and experimentation. We will also launch an interagency working group to support Federal Reserve efforts by the considering policy implications of a potential CBDC, especially for our national security. The leadership of the Federal Reserve, the National Economic Council, the National Security Council, the Office of Science and Technology Policy, the Treasury Department, and other agencies as appropriate, will meet regularly to discuss updates and progress. Second, the Administration will execute a comprehensive action plan with priority steps to mitigate key risks of cryptocurrencies—among others, money laundering and financing for terrorism… Read the full statement here: https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/16/statement-by-nec-director-brian-deese-and-national-security-advisor-jake-sullivan-on-digital-assets-framework/

Background Press Call by Senior Administration Officials on the First-Ever Comprehensive Framework for Responsible Development of Digital Assets

MODERATOR:  Thank you, everyone, and thanks for joining.  Today we’re doing a press call on the new Comprehensive Framework for Responsible Development of Digital Assets.

The first part of the call is on the record so we’re going to go ahead and get that started.  And I’m going to turn it over to Director of the National Economic Council Brian Deese.  Over to you.

MR. DEESE:  Thanks, and thank you all for joining here today.  I’ll be brief at the top and them I’m going to turn it over to my colleagues, Secretary Yellen and Director Nelson.

Just to start, the bottom line here is that the responsible development of digital assets is vital for American interests, from the well-being of consumers and investors to the safety and stability of our financial system, and for our financial and technological leadership around the world.

And we’ve seen in recent months substantial turmoil in cryptocurrency markets, and these events really highlight how, without proper oversight, cryptocurrencies risk harming everyday American’s financial stability and our national security.  And it is why this administration believes that now more than ever prudent regulation of cryptocurrencies is needed if digital assets are going to play a role that we believe they can in fostering innovation and supporting our economic and technological competitiveness… Read the full press briefing here: https://www.whitehouse.gov/briefing-room/press-briefings/2022/09/16/background-press-call-by-senior-administration-officials-on-the-first-ever-comprehensive-framework-for-responsible-development-of-digital-assets/

Statement from Secretary of the Treasury Janet L. Yellen on the Release of Reports on Digital Assets

The U.S. Department of the Treasury today published three reports pursuant to Sections 4, 5 and 7 of President Joe Biden’s Executive Order 14067 on “Ensuring Responsible Development of Digital Assets.” The reports address the future of money and payment systems, consumer and investor protection and illicit finance risks.

“Innovation is one of the hallmarks of a vibrant financial system and economy.  But as we have learned painfully from the past, innovation without appropriately addressing the impact of these developments can result in significant disruptions and harm to the financial system and individuals, especially our more vulnerable populations. The reports clearly identify the real challenges and risks of digital assets used for financial services.  At the same time, if these risks are mitigated, digital assets and other emerging technologies could offer significant opportunities. These reports and their recommendations provide a strong foundation for policymakers as we work to realize the potential benefits of digital assets and to mitigate and minimize the risks.”… Read the full statement here: https://home.treasury.gov/news/press-releases/jy0956

The reports and their recommendations can be viewed at the following links:

Section 4 – The Future of Money and Payments: https://home.treasury.gov/system/files/136/Future-of-Money-and-Payments.pdf

Section 5 – Implications for Consumers, Investors, and Businesses: https://home.treasury.gov/system/files/136/CryptoAsset_EO5.pdf

Section 7 – Action Plan to Address Illicit Financing Risks of Digital Assets: https://home.treasury.gov/system/files/136/Digital-Asset-Action-Plan.pdf

Justice Department Announces Report on Digital Assets and Launches Nationwide Network

The Department of Justice today announced significant actions regarding digital assets, including the public release of its report, pursuant to the President’s March 9 Executive Order on Ensuring Responsible Development of Digital Assets,  on The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets; and the establishment of the nationwide Digital Asset Coordinator (DAC) Network, in furtherance of the department’s efforts to combat the growing threat posed by the illicit use of digital assets to the American public.

“As digital assets play a growing role in our global financial system, we must work in tandem with departments and agencies across government to prevent and disrupt the exploitation of these technologies to facilitate crime and undermine our national security,” said Attorney General Merrick B. Garland. “The efforts announced today reflect the commitment of the Justice Department and our law enforcement and regulatory partners to advancing the responsible development of digital assets, protecting the public from criminal actors in this ecosystem, and meeting the unique challenges these technologies pose.”… Read the full press release here: https://www.justice.gov/opa/pr/justice-department-announces-report-digital-assets-and-launches-nationwide-network

A link to the report, The Role of Law Enforcement in Detecting, Investigating, And Prosecuting Criminal Activity Related to Digital Assets, is here: https://www.justice.gov/ag/page/file/1535236/download

Technical Possibilities for a U.S. Central Bank Digital Currency

President Biden often summarizes his vision for America in one word: Possibilities. A “digital dollar” may seem far-fetched, but modern technology could make it a real possibility.

A United States central bank digital currency (CBDC) would be a digital form of the U.S. dollar. While the U.S. has not yet decided whether it will pursue a CBDC, the U.S. has been closely examining the implications of, and options for, issuing a CBDC. If the U.S. pursued a CBDC, there could be many possible benefits, such as facilitating efficient and low-cost transactions, fostering greater access to the financial system, boosting economic growth, and supporting the continued centrality of the U.S. within the international financial system. However, a U.S. CBDC could also introduce a variety of risks, as it might affect everything ranging from the stability of the financial system to the protection of sensitive data.

Notably, these benefits and risks might vary significantly based on how the CBDC system is designed and deployed. That is why Executive Order 14067, Ensuring Responsible Development of Digital Assets, placed the highest urgency on research and development efforts into the potential design and deployment options of a U.S. CBDC. The Executive Order directed the Office of Science and Technology Policy (OSTP), in consultation with other Federal departments and agencies, to submit to the President a technical evaluation for a potential U.S. CBDC system.

Today, OSTP is publishing its report, Technical Evaluation for a U.S. Central Bank Digital Currency System, which lays out policy objectives for a potential U.S. CBDC system and analyzes key technical design choices for a U.S. CBDC system. The report also estimates the technical feasibility of building a CBDC minimum viable product and describes how a U.S. CBDC system might affect Federal operations. The report makes recommendations on how to prepare the Federal Government for a U.S. CBDC system. Importantly, the report does not make any assessments or recommendations about whether the U.S. should pursue a CBDC, nor does it make any decisions regarding particular design choices for a potential U.S. CBDC system… Read the full briefing here: https://www.whitehouse.gov/ostp/news-updates/2022/09/16/technical-possibilities-for-a-u-s-central-bank-digital-currency/

A link to the report, Technical Evaluation for a U.S. Central Bank Digital Currency System, is here: https://www.whitehouse.gov/wp-content/uploads/2022/09/09-2022-Technical-Evaluation-US-CBDC-System.pdf