According to a series of interagency reports released today by the Treasury Department, federal regulators should “aggressively” continue to crack down on illegal practices in digital asset markets and increase efforts to monitor consumer complaints about bad actors. The nine reports, spurred by a March 9 executive order from President Joe Biden, call on federal agencies to take several steps to strengthen regulation and educate the public about the risks associated with cryptocurrencies and other digital assets. They also call for further research into the creation of a US central bank digital currency, or CBDC.
In a statement, the Treasury Department said the reports “articulate a clear framework for the responsible development of digital assets and pave the way for further action at home and abroad.” The Biden administration plans to take several steps in response. These include directing regulators, the Securities and Exchange Commission and the Commodity Futures Trading Commission, to “aggressively pursue” investigations and enforcement against illegal practices in the digital asset space; urging the CFPB and the Federal Trade Commission to monitor consumer complaints; and directing the Financial Literacy Education Commission to lead a public awareness effort to help consumers understand the risks of digital assets.
Other actions will require congressional approval. The Biden administration will assess whether to ask Congress to amend the Bank Secrecy Act, anti-whistleblower laws, and laws against unlicensed money transmission to explicitly apply to asset servicing providers digital, according to the Treasury Department. The president will also consider whether to urge Congress to increase penalties for transmitting unlicensed money to match penalties for similar crimes, and amend relevant federal laws to allow the Justice Department to prosecute. digital asset crimes in any jurisdiction.
Regarding the creation of a CBDC, the reports outline no clear course of action, though they do point to “significant benefits” such as helping to “preserve U.S. global financial leadership.” The Biden administration instead urges the Federal Reserve to continue its ongoing research into CBDCs, but added that the Treasury Department will lead an interagency task force to examine the potential implications of a CBDC, leverage technical expertise intergovernmental and share information with partners.
American Bankers Association President and CEO Rob Nichols noted in a statement that US banks are leading the way in financial innovation and offering cutting-edge solutions. “As policymakers strive to bring unregulated crypto-native businesses and offerings into the regulatory perimeter, we believe that consumers and our financial system are better protected when we follow the principle of ‘same business, same regulations,'” he said.
Nichols also reiterated the ABA’s concern over the creation of a CBDC, which would “fundamentally reshape the banking industry to the detriment of consumers and the economy, and we continue to urge banking regulators and Congress to take heed negative and unforeseen consequences that could result from falling from this erroneous path.”