A Central Bank Digital Currency (CBDC) can help the United States to preserve its leadership in global finance as well as support the effectiveness of sanctions. This is according to a read-out published by the White House as the US releases the first comprehensive framework for Responsible Development of Digital Assets.
This will be one of the considerations as the United States Federal Reserve steps up its exploration of a CBDC. More government agencies will come on board, with the US Treasury tasked to lead an Inter-Agency Working Group to increase efforts towards a CBDC.
The United States 🇺🇸government will complete assessments on Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs) in 2023 #DeFi #NFTs pic.twitter.com/7h85IhKDJF
— BitKE (@BitcoinKE) October 19, 2022
The framework comes a few months after President Joe Biden issued an executive order on Responsible Development of Digital Assets in March 2022 where the government was compelled to fast-track a framework for digital assets.
The White House also indicates that the government will be developing a Digital Assets Research and Development Agenda. The role of this will be to kickstart fundamental research on several topics including:
- Next-generation cryptography
- Transaction programmability
- Cybersecurity and privacy protections
- Ways to mitigate the environmental impacts of digital assets
The US also says it will help cutting-edge innovations establish a ”global foothold’ through the Department of Commerce.
All government agencies collaborated to research and then produce the framework. The framework included input from diverse players drawn from academia, civil society, industry, as well as the government.
The 6 key motivations for the framework are:
- Consumer and investor protection
- Promoting financial stability
- Countering illicit finance
- U.S. leadership in the global financial system and economic competitiveness
- Financial inclusion
- Responsible innovation
From the framework, the White House has made several commitments and directives, although there are not any legal changes. We have indicated all the key points in the list below:
- President Biden will decide whether to ask congress to amend certain laws among them the Bank Secrecy Act, and anti-tip-off statuses to apply explicitly to digital assets
- The President is also considering a framework to regulate non-bank payment providers
- Agencies such as the SEC, FTC, and CFTC have been asked to be more aggressive and redouble their efforts toward protecting consumers, businesses and investors
- The United States Federal Reserve will continue to explore a central Bank digital currency (CBDC) with the aid of an inter-government working group
- The United States Government will be supporting cutting-edge digital asset solutions to grow and find a foothold in the global market
- The government science and technology office will develop a digital assets research and development agenda
- The US will also use its position in global international organizations to ‘message their values related to digital assets’
- The government will track the environmental impact of cryptocurrencies, and when appropriate, will develop performance standards
- The government will complete assessments on Decentralized Finance and Non-Fungible Tokens in 2023
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