The US Treasury has delivered a framework that responds to President Biden’ss Executive Order on Ensuring Responsible Development of Digital Assets, which signalled the administration’s desire to ensure that cryptocurrency doesn’t introduce risks that could harm either individual investors or the wider economy at home and abroad.
The framework offers a familiar Biden administration approach, by suggesting wide engagement with allies and international institutions to create mutually agreeable arrangements. In the field of crypto – or “digital assets” to use the administration’ preferred nomenclature – that means working with the G7, G20, OECD, International Monetary Fund, World Bank and others “to promote the development and adoption of robust policies for digital assets such that they are developed in a responsible manner and in line with US values.”
Illicit digital asset transaction flows frequently jump overseas, as is often the case in ransomware payments.
And it’s not just about values. The framework suggests that if America leads discussion of digital assets, especially central bank digital currencies, it will create “opportunities for US companies to lead in the development of these technical systems.”
The framework document also states that the administration sees a role for stablecoins, or any other form of digital asset that helps to grease the wheels of international trade. Again, international collaboration is suggested as the way to frame appropriate rules.
Another element of such collaboration is regard for the downsides of digital assets.
“Such international work should continue to address the full spectrum of issues and challenges raised by digital assets, including financial stability; consumer and investor protection, and business risks; and money laundering, terrorist financing, proliferation financing, sanctions evasion, and other illicit activities,” the framework states.
Another section warns the current lack of such regulations “challenges the ability of the United States to investigate illicit digital asset transaction flows that frequently jump overseas, as is often the case in ransomware payments and other cybercrime-related money laundering.”
Arranging international agreements to make digital assets useful and safe will take time and plenty of talking, but the US this week ruled out the participation of some government employees in those talks.
A June 5 policy [PDF] issued by the United States Office of Government Ethics barred government employees who hold cryptocurrency or stablecoins from working on policies that impact the digital assets.
The policy notes that cryptocurrency is not a publicly traded security and is therefore not exempt from exemptions that allow US government staff to hold securities and work on related regulations.
But government employees are allowed to invest in mutual funds that concentrate on cryptos, provided they have invested no more than $50,000. ®