On September 23, US Treasury Department Undersecretary for Domestic Finance Nellie Liang discussed ways digital assets could change the future of money and payments in the US. Speaking at the Brookings Institution, Liang highlighted the recommendations highlighted in an agency report released earlier in September. as part of President Biden’s executive order on ensuring responsible development in digital assets (covered here by InfoBytes). The report, Crypto Assets: Implications for Consumers, Investors and Businesses, outlined several key areas of concern, including “frequent instances of operational failures, market manipulation, fraud, theft and scams.” The report advised federal agencies, including the CFPB, SEC, CFTC, and DOJ to (i) continue to aggressively pursue enforcement actions focused on the crypto-asset sector; (ii) clarify existing authorities to ensure that they are appropriately applied to crypto-assets; (iii) coordinate efforts to increase compliance; and (iv) take collaborative measures to improve the quality of information about crypto-assets for consumers, investors and businesses.
Liang also commented on the potential benefits of adopting a US central bank digital currency (CBDC), “such as preserving the uniformity of the currency, or providing a basis for further innovation,” but cautioned that further research and development on the technology needed to support such a currency could take years. “There are many important design choices that will require additional consideration,” Liang said, for example, “a retail CBDC will be widely available to the public, while a wholesale CBDC will be limited to banks and other financial institutions.” Liang said Treasury plans to lead an interagency working group to advance further work on a possible CBDC and “consider the implications of CBDC in areas such as financial inclusion, national security and privacy.”
Liang also discussed other recommendations made in the report related to the possible establishment of a federal regulatory framework for non-bank payment service providers. “A federal framework could provide a common floor for minimum financial resource requirements and other standards that could exist at the state level,” Liang pointed out. “It will also complement existing federal [anti-money laundering/combating the financing of terrorism] obligations and consumer protection requirements applicable to non-bank payment providers,” and “could work with a US CBDC or with instant payment systems.” She also commented on the Treasury’s work to develop a faster, cheaper cross-border international payment system and noted that the agency will consider potential risks, such as privacy and human rights considerations.
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