On July 7, 2022, the U.S. Department of the Treasury released “Fact Sheet: Framework for International Engagement on Digital Assets” on its official website to sort out the principles and frameworks for the international development of the United States in the field of digital assets. BlockBeats has compiled its translation as follows.
Today, the Secretary of the Treasury, in consultation with the Secretary of State, the Secretary of Commerce, the Administrator of the U.S. Agency for International Development (USAID), and other relevant agency heads, submitted to President Biden to comply with the President’s Executive Order on Ensuring the Responsible Development of Digital Assets (9 March 2022), a framework for cross-sector engagement with foreign counterparts and international forums. The executive order outlines a collaborative, cross-agency approach to addressing the risks and leveraging potential value of digital assets and their underlying technologies, including through international engagement, to adapt, update and enhance the development of global principles and standards for how digital assets are used and traded . The executive order also directs the government to promote the development of digital assets and central bank digital currency (CBDC) technologies that are consistent with our values and legal requirements. What is outlined in the framework is intended to ensure that, in the development of digital assets, core U.S. democratic values are respected; consumers, investors, and businesses are protected; proper global financial system interconnectivity and platform and framework interoperability are maintained ; maintain the safety and soundness of the global financial system and the international monetary system.
Technology-driven financial innovation is often cross-border and can affect households, businesses and governments around the world. Therefore, international cooperation between public authorities, the private sector and other stakeholders is essential to maintaining high regulatory standards and a level playing field, expanding access to safe and affordable financial services, and reducing the cost of domestic and cross-border payments. crucial, including by continuing to modernize public payment systems. Imbalances in regulation, oversight and compliance across jurisdictions create opportunities for arbitrage and increase risks to financial stability and the protection of consumers, investors, businesses and markets. Weak anti-money laundering and combating the financing of terrorism (AML/CFT) regulation, oversight, and enforcement in other countries has challenged the ability of the United States to investigate illicit digital asset trade flows that are often diverted overseas, such as ransomware payments and other The same is often the case with crime-related money laundering. Friction makes cross-border payments and remittances slow and costly, especially when sending to developing or emerging economies.
Objectives of this framework
This framework follows the key U.S. policy objectives set forth in the Executive Order on Ensuring the Responsible Development of Digital Assets (March 9, 2022) and is tailored to our engagement with international collaborations:
1. Protect consumers, investors, and businesses in the United States and around the world by promoting technical and regulatory standards that reflect American values;
2. Protect U.S. and global financial stability and mitigate systemic risks;
3. Mitigate illicit financial and national security risks posed by the misuse of digital assets, and respond to foreign efforts to promote standards and promote their protocols;
4. Strengthen U.S. leadership in the global financial system and in technological and economic competitiveness, including through the responsible development of payment innovations and digital assets, and by advancing technology and regulatory standards consistent with U.S. values;
5. Promote access to safe and affordable financial services;
6. Support technological advancement, increase shared learning by fostering research and relationships, and promote the responsible development and use of digital assets.
The U.S. government has been actively engaged in international forums and bilateral partnerships on many of these issues and will continue to advance related matters to achieve the President’s policy goals.
Consistently robust engagement has laid a solid foundation for future expansion of strategic engagement
The U.S. government has been actively involved in international engagement on digital asset issues. For example, during its chairmanship of the Financial Action Task Force (FATF) from 2018 to 2019, the United States led the task force to develop and adopt the first international standard for digital assets. During its G7 presidency in 2020, the United States established the G7 Digital Payments Expert Group to discuss CBDC, Stablecoin and other digital payments issues. In 2021, the work of the G7 resulted in a set of common policy principles for retail CBDCs that established principles for jurisdictions to explore and potentially develop CBDCs. Furthermore, while a country’s CBDC will be issued by its central bank, the infrastructure supporting it will likely involve both public and private actors. This provides an opportunity for U.S. companies to take the lead in developing these technological systems, and an opportunity for the U.S. government to work with G7 partners to encourage the development of technologies that would support a CBDC (if determined to be appropriate), in line with the G7’s commitment to Long-term public commitment to transparency, the rule of law and sound economic governance.
In addition to these contributions, the United States remains actively engaged in cooperation on digital assets through multilateral forums and will continue to increase its participation in these institutions. The U.S. continues to work on the G20 roadmap to address challenges and frictions in cross-border payments, including improvements to existing systems, potential barriers to data localization and other frictions in data governance frameworks, the international dimension of CBDC design, and having adequate Potential to regulate Stablecoin deployments. The United States actively participates as part of the Financial Stability Board (FSB), which, along with international standards-setting bodies, leads work on issues such as stablecoins, other international aspects of digital assets and payments, and cross-border payments.
The United States must continue to work with international partners on developing standards for digital payment architectures and CBDCs to reduce payment inefficiencies and ensure that any new payment systems meet values and legal requirements. Such international work should continue to address the various issues and challenges posed by digital assets, including financial stability; consumer and investor protection; commercial risk; money laundering, terrorism financing, proliferation financing, sanctions evasion, and other illegal activities. In addition, the United States will promote the adoption and implementation of international standards through bilateral and regional engagement. In all operations, the United States will seek to ensure consistent information, reduce redundancies, and encourage the maintenance of work within its key stakeholders.
key international players
Group of Seven (G7) : The United States will continue to engage with the G7 on a wide range of issues related to digital payments, including the role of the public and private sectors in money creation and flow, CBDC-related considerations, and the impact of new technologies on the international monetary system. influences. The United States will also work with key allies and partners to more actively develop a vision for digital assets that aligns with U.S. values and goals; identifies financial stability, national security, and other risks; and promotes the development and adoption of strong regulatory and oversight policies to mitigate these risks. In 2020, under the leadership of the United States as the G7 Presidency, the United States established the G7 Digital Payments Expert Group (DPEG) as a forum to discuss and develop a shared vision for digital payments. The G7 has publicly expressed its views on digital assets through the annual G7 Finance Ministers and Central Bank Governors Statement on Digital Payments, and released a set of “Retail CBDC Public Policy Principles” in 2021.
Group of Twenty (G20) : The United States will work with other major economies through the G20 to take the lead in reducing cross-border payment challenges across different use cases and jurisdictions; identify financial stability risks to digital assets; promote and, if necessary, drive stronger regulation, oversight, and other financial sector policies on digital assets; and sharing experiences on macro-financial challenges related to digital assets. In 2020, the G20 adopted a roadmap to strengthen cross-border payments. This roadmap sets out an ambitious work plan to meet our policy priorities of developing a faster, cheaper and more transparent international payments system, including leveraging new technologies where appropriate.
Financial Stability Board (FSB) : The U.S. will continue to use the FSB as a forum for work to monitor, identify, and promote a common understanding of global financial stability risks posed by digital assets; consider policy responses to identified risks ; promote international cooperation; and advance our technology priorities in cross-border payments. Since 2019, the Financial Stability Board has prioritized work on digital assets and has published several reports on the subject, including but not limited to: 1.) Surveillance, regulation and oversight of “global stability” arrangements (2020); 2.) G20-CPMI Coordination Roadmap for Strengthening Cross-Border Payments (2020); 3.) Assessing Risks to Financial Stability posed by Crypto Assets (2022). Through this forum, we will work to ensure that we understand and can take thoughtful action to appropriately address financial stability risks or systemic risks.
Financial Action Task Force (FATF) and International Anti-Money Laundering Organizations (FIUs) : The U.S. will continue to support countries in implementing the FATF’s Virtual Assets and Value Added Business Standards; monitor significant changes in the virtual asset sector; raise awareness of ransomware threats and related money laundering awareness; and communicate the FATF’s position to implement appropriate policy options for CBDC projects. The FATF sets international standards for preventing money laundering, terrorist financing and proliferation financing, and more than 200 countries and jurisdictions have committed to implementing these standards. The United States, under the leadership of the Treasury Department, co-chairs the FATF Foundation’s Virtual Assets Working Group. Since 2018, the FATF has made it clear that the FATF standards apply to virtual assets and virtual asset service providers (VASPs), developing resources to help countries and the private sector implement these standards, noting that the FATF standards apply to CBDCs, similar to any other form issued by central banks of legal tender. The United States will also continue to support the Financial Intelligence Unit (FIU) in developing best practices for sharing financial intelligence through anti-money laundering organizations. The Anti-Money Laundering Organization brings together financial intelligence agencies to support international AML/CFT efforts, including those related to digital assets.
Organisation for Economic Co-operation and Development (OECD) : The United States will continue to work through OECD forums with countries that share the same values on policies that support efficient, open, and stable international markets, including best practices for supporting digital assets; monitoring, identifying And help promote a common understanding of the risks digital assets pose to consumer financial protection; and improve global tax compliance in the crypto asset space. Among its functions, the OECD collaborates with international bodies such as the G20 on policy coordination and publishes reports on a range of topics related to digital assets. This includes reports on institutional adoption of cryptoassets and decentralized finance (DeFi), as well as reports on the development of financial consumer protection standards that consider digital assets.
Other Standard Setting Bodies (SSBs) : The United States will continue to participate in sectoral and cross-sectoral international standard setting bodies related to digital assets and will increase our work in these forums to ensure that we have a leading role in the development of relevant standards. Setting standards in the rapidly evolving digital asset ecosystem is critical to ensuring many of our key policy priorities – from privacy, respect for democratic values, to reducing cross-border friction and increasing interoperability for access to safe and affordable financial services –It is essential to be incorporated into any new system. For example, the U.S. financial supervisory authority, through the International SSB, reviews and, as appropriate, updates existing guidelines, standards, and principles for digital asset regulation and oversight of activities within its purview. The U.S. Federal Reserve Board (FRB) also participates in the Bank for International Settlements (BIS) central bank forum to discuss CBDCs and other developments in the payments space. In 2021, the Federal Reserve Bank of New York also launched the New York Innovation Center (NYIC), a strategic partnership with the BIS Innovation Center. IFC NY works with the Federal Reserve System, the BIS Innovation Center, and experts from the public and private sectors to validate, design, build and launch new financial technology products and services for the central banking community. Finally, technical standards forums, such as the International Organization for Standardization, develop protocols and other standards for underlying digital assets and payment technologies. The United States will continue to promote the development and adoption of strong digital asset policies through these forums so that these policies are developed in a responsible and values-aligned manner.
International Monetary Fund (IMF) : The United States will support the IMF in expanding its analytical work and surveillance to include macro-critical digital assets, consistent with its mandate to promote economic and financial stability. As such, the IMF has an important role to play in monitoring, advising, and helping manage issues arising from the use of digital assets, with a focus on their impact on macro-financial policy, potential spillovers, and the stability and functioning of the international monetary system. The IMF can also provide technical assistance in designing member countries’ policy frameworks related to digital assets and payments, while providing advice on its core macroeconomic policies. In July 2021, IMF staff, in accordance with its mandate, developed a strategic plan to address the rise of digital assets.
World Bank and Regional Development Banks (MDBs) : The United States will use its influence in various regional development banks to promote greater and more efficient evaluation of financial products and services; develop digital asset-related investment and lending activities that fully reflect associated risks; and support efforts to integrate values into capacity development in this area. Regional development banks, such as the World Bank, Inter-American Development Bank, Asian Development Bank, etc., are institutions where the United States should use its influence to develop policies, programs and other assistance related to digital assets. Regional development banks support member countries in setting and achieving their development goals through lending and other activities, such as capacity building, as well as efforts to promote access to safe and affordable financial services.
Regional and Bilateral Cooperation : The United States will determine where existing regional and bilateral engagements can be enhanced, and new partners, as appropriate, to achieve our goals in digital assets. The United States will engage under a coordinated framework to prioritize departments and agencies to explore the potential opportunities and risks of digital assets, engage in information sharing, and advance the adoption and implementation of policies including AML/CFT ; and provide technical assistance as appropriate. The United States will explore opportunities for joint experimentation in digital asset technology, market innovation, and CBDC, strengthening our shared learning with this core ally and partner on how to develop systems that meet our shared policy goals.
Note : “Retail Central Bank Digital Currency” or “Retail CBDC” refers to a form of digital currency or monetary value used for payment, denominated in the national unit of account, which is a liability of the central bank. It will be designed to be widely available to the public, possibly through an intermediary or directly.
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