A Quick Look at the White House Digital Asset Framework and Nine Reports in Response to Biden’s Executive Order

On September 16, the White House released its first framework for responsible digital asset development. The framework is a response to President Biden’s March executive order (see Golden Finance’s previous report “Biden Officially Releases the Full Text of the Digital Asset Executive Order”), which requires government agencies to conduct an in-depth study of the impact of digital assets on the U.S. economy and its consumers opportunities and challenges, and implications for national security.

The framework is divided into seven parts

include:

  • Protect consumers, investors and businesses
  • Promote access to safe and affordable financial services
  • Promoting financial stability and promoting responsible innovation
  • Strengthening U.S. Global Financial Leadership and Competitiveness
  • Fight against illicit finance
  • Explore the U.S. Central Bank Digital Currency (CBDC)

Each section presents a set of recommendations for how the U.S. should advance its response to digital assets, based on nine reports submitted in response to the U.S. President’s Executive Order.

Here are the details of the nine reports and their recommendations you need to know:

Detecting, Investigating, And Prosecuting Criminal Activity Related to Digital Assets

https://www.justice.gov/ag/page/file/1535236/download

This DOJ report details the steps various departments and agencies have taken to combat the illegal use of digital assets. It explores how legal and regulatory frameworks need to keep pace with technological change, and provides advice on how these frameworks can do so to enhance their ability to detect, investigate, prosecute and otherwise disrupt criminal activity that exploits digital assets.

In addition to the report, the U.S. Department of Justice announced the creation of a nationwide Digital Asset Coordinator (DAC) network that will work to further combat the threat posed by the illegal use of digital assets.

The Future of Money and Payments

https://home.treasury.gov/system/files/136/Future-of-Mo

The U.S. Treasury Department released three reports in response to the executive order , the first on the future of money and payments. This report responds to whether the United States should develop its own central bank digital currency (CBDC) and how the payment system needs to adapt to ensure it can adequately serve consumers for years to come. This includes exploring the use of stablecoins and instant payments. The report recommends advancing work on a possible U.S. CBDC, encouraging the use of instant payments, recommends establishing a regulatory framework for federal payments, and finally recommends prioritizing efforts to improve cross-border payments.

Crypto-Assets: Implications for Consumers, Investors and Business (Crypto-Assets: Implications for Consumers, Investors and Business)

https://home.treasury.gov/system/files/136/CryptoAsset_EO5.pdf

A second report from the U.S. Treasury Department takes a closer look at cryptocurrencies and how consumers and investors are currently using them. It takes into account the risks faced by all parties, with particular attention to vulnerable groups. While it clarifies that many of the risks faced by cryptoassets, such as conduct and market integrity risk, operational risk, and intermediary risk, are the same as those faced by traditional financial products, it also clarifies that the crypto industry faces a unique set of risks.

To help combat these risks, protect consumers, and promote the responsible adoption of cryptoassets, the report recommends that U.S. regulatory and law enforcement agencies monitor the cryptoasset sector for illicit activity and enforce these laws where applicable. The report also recommends that regulators continue to issue guidance and rules when needed to limit risks. Finally, the report recommends that the Financial Literacy and Education Commission provide reliable information on cryptoassets.

Action Plan to Address Illicit Financing Risks of Digital Assets

https://home.treasury.gov/system/files/136/Digital-Asset-Action-Plan.pdf

As the name suggests, this Treasury Department report lays out the U.S. government’s plan to address the risks of illicit financing of digital assets. It begins with a comprehensive overview of how digital assets have been exploited by malicious actors to date, and then goes on to explore the various vulnerabilities of digital assets for such misuse. To address these vulnerabilities, the report lays out a detailed set of priority actions grouped by topic, as follows:

  • Monitor emerging risks – including country risk assessments for DeFi and NFTs
  • Improving Global AML/CFT Regulation and Enforcement
  • Update BSA regulations
  • Enhanced U.S. AML/CFT oversight of virtual asset activities
  • Holding cybercriminals and other illegal actors accountable
  • Working with the private sector
  • Supporting U.S. leadership in financial payments and technology

The action plan was followed by a formal exposure draft with a list of issues that Treasury is keen to engage with the public. These open-ended questions cover general illicit financial risks and call for recommendations on regulation and oversight, global implementation of AML/CFT standards, private sector engagement, AML/CFT solutions and AML/CFT controls for CBDCs.

‍Technical Evaluation for a US Central Bank Digital Currency System

https://www.whitehouse.gov/wp-content/uploads/2022/09/09-2022-Technical-Evaluation-US-CBDC-System.pdf

This White House report explores how policy goals for the U.S. CBDC system can be further detailed through an interagency process led by the National Economic Council and the National Security Council . It considers technical design choices for a U.S. CBDC system and estimates the feasibility of building such a system. It also assesses the impact on cybersecurity, privacy, customer experience and social safety.

Responsible Advancement of the US Competitiveness in Digital Assets

https://www.commerce.gov/sites/default/files/2022-09/Digital-Asset-Competitiveness-Report.pdf

In this report, the U.S. Department of Commerce explores how the U.S. can strengthen its leadership in the global financial system and foster technological and economic competitiveness through digital assets. To this end, it underlines the importance of effective regulatory approaches, international engagement, meaningful public-private partnerships, and continued research and development in the digital asset space.

‍Climate and Energy Implications of Crypto-Assets in the United States

https://www.whitehouse.gov/wp-content/uploads/2022/09/09-2022-Crypto-Assets-and-Climate-Report.pdf

This report explores the challenges and opportunities of cryptoassets on energy and climate change issues, and considers whether adoption of cryptoassets could hinder U.S. climate commitments and goals. It recommends understanding and monitoring the environmental impact of cryptoassets, advancing energy efficiency standards, encouraging trading and improving environmental performance, and conducting further research in this area.

‍Factsheet: Framework for International Engagement on Digital Assets

https://home.treasury.gov/news/press-releases/jy0854

In addition to the aforementioned report, the U.S. Treasury Department earlier this summer released a framework that lays out how the U.S. will engage with partner countries regarding digital assets. The framework applies the policy priorities contained in the Presidential Executive Order to international engagement that the U.S. deems relevant to its response to digital assets. It lists key collaborations with: G7, G20, Financial Stability Board, Financial Action Task Force (FATF) and Egmont Group, OECD, other standard setting bodies such as Bank for International Settlements, International Monetary Fund organization and the World Bank.

‍How To Strengthen International Law Enforcement Cooperation For Detecting, Investigating, And Prosecuting Criminal Activity Related To Digital Assets

https://www.justice.gov/ag/page/file/1510931/download

The U.S. Department of Justice released a related report in June that examined how the best foreign law enforcement agencies are working together to “locate and collect electronic records and records involving offshore digital asset issuers, trading platform service providers and other online infrastructure. digital evidence; confiscate and prevent further distribution of crime-related digital assets; and identify and hold criminals who exploit these technologies accountable. The report recommends further efforts to build the capacity of foreign counterparts for complex investigations and improve coordination among agencies , and promote more uniform regulation between the United States and its partners based on the proper implementation of international standards.

‍What’s next?

Following the publication of these reports and the overarching framework, further activity related to the future of digital assets has emerged in Washington. The House Financial Services Committee held a meeting on the national security implications of alternative payment systems.

Overall, this substantial work will set the agenda for US agencies for years to come. Key themes emerged in the report, including the need to closely monitor the risks of digital asset development, fill any regulatory loopholes that undermine responsible adoption of digital assets, and finally the need to work closely with partners, whether they are in another government sector, the private sector or foreign. In fulfilling these recommendations, the United States may ensure that the positive aspects of digital assets are the greatest for the American people.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/a-quick-look-at-the-white-house-digital-asset-framework-and-nine-reports-in-response-to-bidens-executive-order/
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