On 16 September 2022, the US Government released a comprehensive framework for responsible development of digital assets. It confirms the top down adoption of digital assets by the US government, which emerges as more systematic and effective than the EU adoption.
1. Background: This release follows the Biden’s Executive Order of 9 March 2022 on Ensuring Responsible Development of Digital Assets, which outlined the first whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology. It was followed by nine reports submitted to President Biden. The 16 September 2022 release summarises these nine reports along seven areas.
2. Protecting Consumers, Investors, and Businesses. The government encourages regulators A) to aggressively pursue investigations and enforcement actions against unlawful practices, B) to redouble their efforts to monitor consumer complaints and to enforce against unfair, deceptive, or abusive practices, C) to issue guidance and rules to address current and emergent risks in the digital asset ecosystem.
3. Promoting Access to Safe, Affordable Financial Services: The government encourages A) the adoption of instant payment systems, B) the creation of a federal framework to regulate nonbank payment providers and C) the improvement of the efficiency of cross-border payments by working to align global payments practices, regulations, and supervision protocols, while exploring new multilateral platforms that integrate instant payment systems.
4. Fostering Financial Stability: The Treasury will A) work with financial institutions to bolster their capacity to identify and mitigate cyber vulnerabilities, and B) work with other agencies to identify, track, and analyze emerging strategic risks that relate to digital asset markets.
5. Advancing Responsible Innovation: The government will A) develop a Digital Assets Research and Development Agenda to kickstart fundamental research on topics such as next-generation cryptography, transaction programmability, cybersecurity and privacy protections, and ways to mitigate the environmental impacts of digital assets; B) encourage the Treasury and financial regulators to provide innovative U.S. firms with regulatory guidance; encourage the Department of Energy, the Environmental Protection Agency, and other agencies to track digital assets’ environmental impacts - developing performance standards as appropriate.
6. Reinforcing US Global Financial Leadership and Competitiveness: The government will leverage U.S. positions in international organizations to message U.S. values related to digital assets.
7. Fighting Illicit Finance: The President will evaluate whether to call upon Congress to amend the Bank Secrecy Act and laws against unlicensed money transmitting—including digital asset exchanges and nonfungible token platforms. He will also consider urging Congress to raise the penalties for unlicensed money transmitters.
8. Exploring a U.S. CBDC: The government has developed Policy Objectives that if pursued should protect consumers, promote economic growth, improve payment systems, provide interoperability with other platforms, advance financial inclusion, protect national security, respect human rights, and align with democratic values.