U.S. Treasury Department Reports Weigh Digital Assets Policy Priorities

On September 16, 2022, the U.S. Treasury Department issued a trio of reports related to digital assets policy: “The Future of Money and Payments”, “Crypto-Assets: Implications for Consumers, Investors and Businesses” and “Action Plan to Address Illicit Financing Risks of Digital Assets”. An executive order mandated the production and release of the documents, each of which advances a set of policy prescriptions and recommendations for the digital asset landscape.

1) The Future of Money and Payments

In “The Future of Money and Payments”, the following measures are endorsed:

Recommendation 1: The Federal Reserve should advance work on a possible U.S. central bank digital currency (“CBDC”), in case one is determined to be in the national interest.

In support of this effort, the Treasury Department will lead an inter-agency working group to coordinate research and assessment of the adoption of a U.S. CBDC.

Recommendation 2: The U.S. government should encourage use of instant payments systems to support a more competitive, efficient and inclusive U.S. payment landscape.

Recommendation 3: A federal regulatory framework should be established for nonbank payment providers to protect users and the financial system while supporting responsible innovations in payments.

Recommendation 4: Prioritize efforts to improve cross-border payments, including by prioritizing the roadmap for enhancing cross-border payments endorsed by the G20 in 2020.

2) Crypto-Assets: Implications for Consumers, Investors and Businesses

In “Crypto-Assets: Implications for Consumers, Investors and Businesses”, US Treasury policymakers endorse the following measures:

Recommendation 1: U.S. regulatory and law enforcement authorities should, as appropriate, pursue vigilant monitoring of the crypto-asset sector for unlawful activity, aggressively pursue and expand investigations, coordinate cross-agency actions and bring civil and criminal actions to enforce applicable laws with a particular focus on consumer, investor and market protection.

Recommendation 2: U.S. regulatory agencies should use their existing authorities to issue supervisory guidance and rules, as needed, to address current and emerging risks in crypto-asset products and services for consumers, investors and businesses. Agencies should work collaboratively to promote consistent and comprehensive oversight.

Recommendation 3: U.S. authorities should, where appropriate, work individually and through the Financial Literacy and Education Commission to ensure that U.S. consumers, investors and businesses have access to trustworthy information on crypto-assets.

3) Action Plan to Address Illicit Financing Risks of Digital Assets

In “Action Plan to Address Illicit Financing Risks of Digital Assets”, the following actions are prioritized:

Priority Action 1: The United States shall continue to monitor the development of the digital assets sector for emerging risks.

Priority Action 2: The U.S. government shall improve anti-money-laundering/countering-the-financing-of-terrorism (“AML/CFT”) regulation and enforcement in foreign jurisdictions.

Priority Action 3: U.S. regulatory agencies shall update Bank Secrecy Act regulations to combat threats associated with the development of emerging financial technologies.

Priority Action 4: The Treasury Department shall continue to engage with intergovernmental standard-setting bodies to supervise, examine and ensure virtual assets comply with existing AML/CFT regulatory obligations.

Priority Action 5: The U.S. government shall impose sanctions, special measures and other means of disrupting the illicit use of virtual assets.

Priority Action 6: The U.S. government shall continue to engage with the private sector to ensure that it understands existing obligations as well as to learn from the private sector’s experience and assessment of risks.

Priority Action 7: The U.S. government shall promote the modernization of U.S. payments infrastructure by working with government agencies and U.S. firms to promote the development and regulation of new financial technologies.

Are you planning to participate in an initiative involving digital assets? Do you need to learn more about the policy framework governing this financial instrument? If so, contact us to schedule an introductory consultation with Castle Garden Law.