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  • J McGlynn and M Bacina

U.S Treasury releases framework for responsible development of digital asset regulation

Updated: Mar 13

The United States Treasury has issued a framework on crypto-assets designed to assist US government agencies to work with foreign regulators.

This globally focused framework follows an executive order on digital assets made by President Joe Biden back in March, which focused on the coordination and consolidation of various government agencies under a national policy. The Treasury's recent framework order appears to be an internationalisation of the governments efforts to ensure the responsible development of digital assets under the executive order. According to the Treasury the framework aims to:

ensure that, with respect to the development of digital assets, America’s core democratic values are respected; consumers, investors, and businesses are protected; appropriate global financial system connectivity and platform and architecture interoperability are preserved; and the safety and soundness of the global financial system and international monetary system are maintained.

The government department cites that due to the risks posed to investors by the uneven regulation, supervision, and compliance across jurisdictions international cooperation among public authorities, the private sector, and other stakeholders is critical. This could be seen as a dig at the highly centralised Chinese central bank digital currency.

To elaborate on the nature of the issue, the report continues:

Inadequate anti-money laundering and combating the financing of terrorism (AML/CFT) regulation, supervision, and enforcement by other countries 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.

To promote these aims of international co-ordination and cooperation the Treasury will continue to engage with international policy makers at G7 on topical matters related to digital assets payments, including the implications of: new technologies on the international monetary system, the creation and movement of money in public and private sectors and central bank digital currencies, it says.

In addition, the country will work with G20 members to: reduce the challenges presented by the use of digital assets for cross-boarder payments and financial stability due to digital assets, push for better digital asset regulations, and speak over any remaining macro-financial challenges.

It remains to be seen if the bold statement of "inadequate anti-money laundering" is evidenced by the data, as the regular Chainalysis Crypto Crime reports continue to show that crypto-assets are not used in illicit activity in a substantial proportion relative to total transaction volume (and well below the levels of illicit use of cash).


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