Federal agencies compiled a joint factsheet on six key directions for crypto regulation in the United States, following the executive order of Joe Biden, United States President. This fact sheet summarizes nine reports that were submitted to President Joe Biden to create a framework for responsible development of digital assets and to pave the way to further action both at home and abroad.
The White House published the fact sheet on its official website on September 16th. It contains seven sections: (1) Protecting consumers, investors, and businesses; (2) Promoting Safe, Affordable Financial Services; (3) Fostering financial Stability; (4) Advancement Responsible Innovation; and (5) Reinforcing our Global Financial Leadership, Competitiveness, and Strengthening Our Global Financial Leadership; and (6) Fighting Illicit Financing; and (7) Exploring U.S. Central Bank Digital Currency.
While some sections do not contain new information, they emphasize the principles and policies that the President’s Administration has been following. The reports, for example, urge regulators (the Securities and Exchange Commission and Commodity Futures Trading Commission) to “aggressively pursue investigation and enforcement actions against unlawful acts in the digital assets area.” However, they do not mention anything about regulators’ segregation, which remains a major regulatory problem in the country.
Federal agencies recommend that nonbank payment providers be included in the federal framework. They also encourage the adoption of instant payment systems such as FedNow. This launch is expected to take place by the Federal Reserve in 2023.
As part of responsible innovation, the Office of Science and Technology Policy, which recently published a critical report about the climate impact of crypto mining, will create a Digital Assets Research and Development Agenda in order to mitigate these negative climate impacts. The Department of Energy, Environmental Protection Agency and other agencies will also be considering further monitoring digital assets’ environmental effects.
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Although the fact sheet states that U.S. agencies will “leverage U.S. position in international organisations to message U.S. Values”, it doesn’t explain how these values differ from the rapidly emerging European regulatory approach.
Security strategy includes amendments to Bank Secrecy Act and anti-tip-off statutes. The laws against unlicensed money transmission and laws against unlicensed cash transmitting are explicitly applicable to digital asset service providers. This includes exchanges and nonfungible token platform.
The U.S. CBDC is the last and most important section of this fact sheet. The fact sheet reveals that the Administration has already created Policy Objectives for the U.S. CBDC system. However, further research is required to determine the technological foundation of such a system. The intention seems serious, as Treasury will be leading an interagency group that includes the Federal Reserve, National Economic Council, and National Security Council.