On September 16, 2022, the White House released a new report[1] outlining a comprehensive framework for the responsible development of digital assets. This report is the first of its kind and comes six months after President Biden's March 9, 2022, Executive Order (EO) on Ensuring Responsible Development of Digital Assets[2], which summarized the principal policy objectives of the United States with respect to digital assets.
The EO called on the coordination of multiple government agencies, including the Secretary of Treasury, Secretary of State, Secretary of Commerce, Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and Federal Trade Commission (FTC), to submit recommendations on how to advance the White House's six key priorities related to digital assets: (1) consumer and investor protection, (2) promoting financial stability, (3) countering illicit finance, (4) U.S. leadership in the global financial system and economic competitiveness, (5) financial inclusion, and (6) responsible innovation. The September 16 report outlines the actions that the White House intends to take to address these six key priorities as a result of reviewing the interagency recommendations.
A few highlights of steps the Biden-Harris Administration intend to take include: encouraging the SEC and CFTC, consistent with their mandates, to aggressively pursue investigations and enforcement actions against unlawful practices in the digital asset space, encouraging the adoption of instant payment systems such as FedNow, considering a federal framework to regulate non-bank payment providers, working with financial institutions to bolster cyber protection, and assisting private U.S. firms in developing new financial technology.
In addition, the September 16 report specifically addresses the potential of offering a U.S. Central Bank Digital Currency (CBDC), or a digital form of the U.S. Dollar. The Biden-Harris Administration has developed policy objectives for a U.S. CBDC system, which align with the key digital assets objectives outlined in the EO. The Administration has encouraged the Federal Reserve to continue expanding its knowledge of the technology that would support a CBDC system and has tasked the Treasury Department to lead an interagency working group to consider the impact of a U.S. CBDC.
Although many of the White House's action items do not have associated formal deadlines, all interested parties should continue to monitor developments from the White House and other government agencies. We should expect to see developments in all six priorities, including advancements around research and innovation related to digital asset and cyber risk mitigation technologies, increased enforcement actions by the SEC and CFTC, which we are already seeing, and completion of an illicit finance risk assessment on decentralized finance by the Treasury Department in February 2023.
Given the White House's recent formal focus on the responsible development of digital assets in the U.S. and the interagency initiative, it is important to consider how your organization will embrace the ever-evolving world of digital assets. Ankura's team of experienced digital asset experts across multiple disciplines can assist your organization in every step of your virtual asset journey, including working with your finance function to develop and implement a digital asset strategy, conducting end-to-end reviews of transaction monitoring and suspicious activity reporting processes, and leading complex investigations of cryptocurrency frauds and tracing and recovering digital assets.
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