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1) FACT SHEET:  WH Releases Comprehensive Framework for Responsible Development of Digital Assets

The digital assets market has grown significantly in recent years. Millions of people globally, including 16% of adult Americans, have purchased digital assets—which reached a market capitalization of $3 trillion globally last November. Digital assets present potential opportunities to reinforce U.S. leadership in the global financial system and remain at the technological frontier.  But they also pose real risks as evidenced by recent events in crypto markets. . . .

President Biden’s March 9 Executive Order (EO) on Ensuring Responsible Development of Digital Assets outlined the first whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology. . . .

The nine reports submitted to the President to date, consistent with the EO’s deadlines, reflect the input and expertise of diverse stakeholders across government, industry, academia, and civil society. Together, they articulate a clear framework for responsible digital asset development . . . .

[T]he Biden-Harris Administration and independent regulators have worked to protect consumers and ensure fair play in digital assets markets by issuing guidance, increasing enforcement resources, and aggressively pursuing fraudulent actors. . . . [T]he Administration plans to take the following additional steps:

-- The reports encourage regulators like the SEC and CFTC, consistent with their mandates, to aggressively pursue investigations and enforcement actions against unlawful practices in the digital assets space.
-- The reports encourage CFPB and FTC, as appropriate, to redouble their efforts to monitor consumer complaints and to enforce against unfair, deceptive, or abusive practices.
-- The reports encourage agencies to issue guidance and rules to address current and emergent risks in the digital asset ecosystem. . . .
-- The Financial Literacy Education Commission (FLEC) will lead public-awareness efforts to help consumers understand the risks involved with digital assets, identify common fraudulent practices, and learn how to report misconduct.

Today, traditional finance leaves too many behind. Roughly 7 million Americans have no bank account. Another 24 million rely on costly nonbank services, like check cashing and money orders . . . .

The digital economy should work for all Americans. That means developing financial services that are secure, reliable, affordable, and accessible to all. . . .

[T]he Administration plans to take the following steps:

-- Agencies will encourage the adoption of instant payment systems, like FedNow, by supporting the development and use of innovative technologies by payment providers to increase access to instant payments, and using instant payment systems for their own transactions where appropriate . . . .
-- The President will also consider agency recommendations to create a federal framework to regulate nonbank payment providers.
-- Agencies will prioritize efforts to improve the efficiency of cross-border payments by working to align global payments practices, regulations, and supervision protocols, while exploring new multilateral platforms that integrate instant payment systems.
-- The National Science Foundation (NSF) will back research in technical and socio-technical disciplines and behavioral economics to ensure that digital asset ecosystems are designed to be usable, inclusive, equitable, and accessible by all.

Digital assets and the mainstream financial system are becoming increasingly intertwined, creating channels for turmoil to have spillover effects. Stablecoins, in particular, could create disruptive runs if not paired with appropriate regulation. . . . In October, the Financial Stability Oversight Council (FSOC) will publish a report discussing digital assets’ financial-stability risks, identifying related regulatory gaps, and making additional recommendations to foster financial stability.

The Biden-Harris Administration has long recognized the need for regulation to address digital assets’ stability risks. . . . [T]he Administration plans to take the additional following steps:

-- The Treasury will work with financial institutions to bolster their capacity to identify and mitigate cyber vulnerabilities by sharing information and promoting a wide range of data sets and analytical tools.
-- The Treasury will work with other agencies to identify, track, and analyze emerging strategic risks that relate to digital asset markets. . . .

U.S. companies lead the world in innovation. Digital asset firms are no exception. . . .

The U.S. government has long played a critical role in priming responsible private-sector innovation. It sponsors cutting-edge research, helps firms compete globally, assists them with compliance, and works with them to mitigate harmful side-effects of technological advancement.

In keeping with this tradition, the Administration plans to take the following steps to foster responsible digital asset innovation:

-- The Office of Science and Technology Policy (OSTP) and NSF will develop a Digital Assets Research and Development Agenda to kickstart fundamental research on topics such as next-generation cryptography, transaction programmability, cybersecurity and privacy protections, and ways to mitigate the environmental impacts of digital assets. It will also continue to support research that translates technological breakthroughs into market-ready products. Additionally, NSF will back social-sciences and education research that develops methods of informing, educating, and training diverse groups of stakeholders on safe and responsible digital asset use.
-- The Treasury and financial regulators are encouraged to, as appropriate, provide innovative U.S. firms developing new financial technologies with regulatory guidance, best-practices sharing, and technical assistance through things like tech sprints and Innovation Hours.
-- DOE, EPA, and other agencies will consider further tracking digital assets’ environmental impacts; developing performance standards as appropriate; and providing local authorities with the tools, resources, and expertise to mitigate environmental harms. . . .
-- Commerce will examine establishing a standing forum to convene federal agencies, industry, academics, and civil society to exchange knowledge and ideas that could inform federal regulation, standards, coordinating activities, technical assistance, and research support.

Today, global standard-setting bodies are establishing policies, guidance, and regulatory recommendations for digital assets. The United States is working actively with its partners to set out these policies in line with our goals and values, while also reinforcing the United States’ role in the global financial system. . . .

To reinforce U.S. financial leadership and uphold U.S. values in global digital asset markets, the Administration will take the following steps . . . :

-- U.S. agencies will leverage U.S. positions in international organizations to message U.S. values related to digital assets. U.S. agencies will also continue and expand their leadership roles on digital assets work at international organizations and standard-setting bodies . . . .
-- The State Department, the Department of Justice (DOJ), and other U.S. enforcement agencies will increase collaboration with—and assistance to—partner agencies in foreign countries through global enforcement bodies . . . .
-- The State Department, Treasury, USAID, and other agencies will explore further technical assistance to developing countries building out digital asset infrastructure and services. . . .
-- Commerce will help cutting-edge U.S. financial technology and digital asset firms find a foothold in global markets for their products.

The United States has been a leader in applying its anti-money laundering and countering the financing of terrorism (AML/CFT) framework in the digital asset ecosystem. . . .

It is in the national interest to mitigate these risks through regulation, oversight, law enforcement action, and the use of other United States Government authorities. To fight the illicit use of digital assets more effectively, the Administration plans to take the following steps:

-- The President will evaluate whether to call upon Congress to amend the Bank Secrecy Act (BSA), anti-tip-off statutes, and laws against unlicensed money transmitting to apply explicitly to digital asset service providers—including digital asset exchanges and nonfungible token (NFT) platforms. . . .
-- The United States will continue to monitor the development of the digital assets sector and its associated illicit financing risks, to identify any gaps in our legal, regulatory, and supervisory regimes.  ]. . .
-- Relevant departments and agencies will continue to expose and disrupt illicit actors and address the abuse of digital assets.  Such actions will hold cybercriminals and other malign actors responsible for their illicit activity and identify nodes in the ecosystem that pose national security risks.
-- Treasury will enhance dialogue with the private sector to ensure that firms understand existing obligations and illicit financing risks associated with digital assets, share information, and encourage the use of emerging technologies to comply with obligations. . . .

Informing the above recommendations, the Treasury, DOJ/FBI, DHS, and NSF drafted risk assessments to provide the Administration with a comprehensive view of digital assets’ illicit-finance risks. The CFPB, an independent agency, also voluntarily provided information to the Administration as to risks arising from digital assets. . . .

A U.S. CBDC – a digital form of the U.S. dollar – has the potential to offer significant benefits. . . . Recognizing the possibility of a U.S. CBDC, the Administration has developed Policy Objectives for a U.S. CBDC System,which reflect the federal government’s priorities for a potential U.S. CBDC. . . .
 
https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/16/fact-sheet-white-house-releases-first-ever-comprehensive-framework-for-responsible-development-of-digital-assets/
 
2) Statement by NEC Director Brian Deese & National Security Advisor Jake Sullivan
https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/16/statement-by-nec-director-brian-deese-and-national-security-advisor-jake-sullivan-on-digital-assets-framework/
 
3) Background Press Call by Senior Administration Officials
https://www.whitehouse.gov/briefing-room/press-briefings/2022/09/16/background-press-call-by-senior-administration-officials-on-the-first-ever-comprehensive-framework-for-responsible-development-of-digital-assets/

4) Reports and statements from federal agencies https://www.aeaweb.org/forum/3059/digital-statements-responsible-development-treasury-commerce

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