The U.S. has a new digital asset framework
The White House published its Comprehensive Framework to Responsible Development of Digital Assets (Framework) on September 16, 2022. It outlines how the administration will address digital resources in its “whole of government approach”, first described in a March 9 Executive order (EO).
The Framework will not change the regulatory uncertainty that has allowed some bad actors to flourish in the digital asset space while hindering responsible growth. Many important questions remain unanswered. This does not constitute official regulation, guidance or oversight by any regulatory authority.
This should be viewed as an effort by the current administration to develop a more unified approach. The digital asset industry has been hearing the phrase ” regulation will come” for the past several years. However, it has not seen much movement except occasional enforcement actions. Although this may not change immediately the Framework could offer the policy direction and guidance that regulators need to get the regulatory clarity they are seeking.
In his EO, President Biden outlined six priorities for digital assets that are important to him: (i. consumer and investor protection;(iii. financial stability;(iii. countering illicit financing; (iv. advancing US leadership within the international financial system;) (v. financial inclusion; (vi. driving responsible innovation).
The White House acknowledged that it had received nine multi-agency reports as a response. These report covers a broad range of topics related to digital assets. In October 2022, the Financial Stability Oversight Council of the US Department of the Treasury (FSOC), will release a second one that focuses on the financial stability risks associated digital assets.
The Framework summarizes the priorities in the EO, and takes note of many suggestions. The Framework, among other things, establishes forums for multiple stakeholders to exchange knowledge and encourages the creation of tech sprints or other innovation-driven events. It instructs agencies to monitor environmental impacts and funds education initiatives.
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Agencies that have enforcement and investigation authority are encouraged “to double their efforts” to hold bad actors accountable. Framework encourages agencies to issue guidelines and rules to address many of these risks.
Although this framework doesn’t represent a change of policy, it highlights the administration’s desire for regulation and innovation in this area. It coordinates cross-agency cooperation to achieve both of these goals.