Digital assets are gaining traction – and catching the attention of the federal government.
Six months after President Joe Biden’s Executive Order forwarding efforts for the responsible development of digital assets, the White House Briefing Room has unveiled the first-ever comprehensive framework. This framework, along with policy recommendations, is a result of the collaborative efforts of various thought leaders across government agencies and stakeholders of diverse backgrounds.
In case you missed it, the Executive Order Ensuring Responsible Development of Digital Assets identified six key priorities: consumer and investor protection, promoting financial stability, countering illicit finance, U.S. leadership in the global financial system and economic competitiveness, financial inclusion and responsible innovation.
The goal of Biden’s Executive Order, along with the nine reports in response, is to answer this question: how can the potential of digital assets be proactively harnessed while still managing risk? To answer this question, the White House correspondence unveils three common themes: regulation, research and education and global collaboration.
The first overarching idea in the framework is regulation. Digital assets are in their infancy and as is the case with anything new, there is huge potential for future regulation. Consumers, investors and businesses alike can all be impacted by digital assets. When you add market volatility, international inconsistencies and the potential for bad actors into this equation, there is plenty of room for oversight. The Administration plans to establish standards and bolster enforcement actions alongside multiple agencies like the Consumer Financial Protection Bureau, the Securities and Exchange Commission and the Treasury. Another potential for the regulation of digital assets is building onto existing anti-money laundering legislation to fight illicit finance and maintain market integrity.
Another theme in the administrative framework goes back to the new nature of digital assets – a need for research and education. This can foster responsible innovation by gaining insights and increasing public dialogue and exposure. The Administration, in coordination with the National Science Foundation, will back research across technical, behavioral economic and social science disciplines. All of this will be done to ensure that various stakeholders are fully informed about responsible digital asset use, help consumers understand the risks involved, and forward a digital asset ecosystem that is usable, inclusive, equitable and accessible for all.
The last main point of the Administration’s digital asset framework is a focus on global collaboration. The payments landscape continues to expand on cross-border frontiers and digital assets are no different. The U.S. is a world leader in innovative technology within the private sector and the Administration plans to maintain that while also supporting global reach. By capitalizing on existing relationships in international organizations and standard-setting bodies like the G7, Financial Action Task Force and International Organization for Standardization, agencies will promote standards, regulations and frameworks that reflect values like data privacy, efficient markets and robust law enforcement.
Digital assets will continue to evolve into the future and have an increasing impact on international users and markets. Along with this framework, the U.S. government will continue to monitor the evolution of digital assets.