On July 7, 2022, the Secretary of Treasury, along with the Secretary of State, the Secretary of Commerce, the Administrator of the U.S. Agency for International Development, and other agency heads, provided President Biden a framework for interagency engagement with foreign counterparts, as directed in President Biden’s Ensuring Responsible Development of Digital Assets Executive Order signed on March 9, 2022. The President’s Executive Order stipulated an interagency approach to address the risks and benefits of digital assets, including their underlying technology. Additionally, the Executive Order directs the agencies to encourage the development of digital assets and central bank digital currencies that stay consistent with our legal requirements and America’s core principles.
Financial innovation that is technology driven can impact households, businesses, and governments around the world. Therefore, international cooperation among the public and private sector is necessary to maintain high regulatory standards and a level playing field by expanding safe and affordable financial services and reducing the cost of domestic and cross-border payments. If there is a lack of regulation and compliance, financial stability and consumer protection are at risk.
The objectives of the framework are as followed:
- Protect consumers, investors, and businesses in the U.S. and globally. This will be accomplished by encouraging technology and regulatory standards that reflect U.S. values;
- Protect the U.S. and global financial system;
- Mitigate illicit finance and national securities risks;
- Reinforce U.S. leadership in the global financial system, including in technological and economic competitiveness;
- Foster access to safe and affordable financial services; and
- Support technological advances that promote responsible development and use of digital assets by advancing research that increase shared learning
The U.S. Government has a history of being an active participant in international engagement on digital assets. From 2018-2019, as President of the Financial Action Task Force, the United States led the group in developing the first international standards on digital assets. Further, during its 2020 G7 Presidency, the U.S. established the G7 Digital Payments Experts group that discussed CBDCs, stablecoins, and other forms of digital payments. The G7 group established a set of shared policy principles for retail CBDCs that establishes principles for jurisdictions in their development of CBDCs. Although a country’s CBDC would be issued by its perspective central bank, the infrastructure supporting it could involve both public and private participants, presenting opportunities for U.S. companies to lead in the development of these technical systems.
The U.S. continues to remain actively engaged in collaborative work on digital assets and will continue to promote its participation in these bodies. Working with international partners on standards for the development of digital payment and CBDCs is imperative. Some of the key international engagements the U.S. participates in are as follows:
- G7. The U.S. engages with the G7 on issues related to digital payments, including the roles of the public and private sector in the creation and movement of money, thoughts related to CBDCs, and implications of new technologies.
- G20. The U.S. works with the G20 to engage with other major economies to lead in the reduction of the challenges of cross-border payments, identify financial stability risks of digital assets, and push for stronger regulatory financial sector policies for digital assets.
- Financial Stability Board. The U.S. actively participates as part of the Financial Stability Board, which works together with the international standard-setting bodies to work on issues related to stablecoins, other international dimensions of digital assets, and cross-border payments.
- Financial Action Task Force and the Egmont Group of Financial Intelligence Units. The U.S. supports countries in implementing the FATF standards for virtual assets. Further, the U.S. supports the Financial Intelligence Units via the Egmont Group, who brings together FIUs to support international AML/CFT efforts.
- Organization for Economic Cooperation and Development. The OECD carries out policy work in collaboration with international bodies and issues reports on a range of topics related to digital assets.
- Other Standard-Setting Bodies. The U.S. will continue its participation in cross-sectoral international standard setting bodies as it relates to digital assets.
- International Monetary Fund. The U.S. will support the IMF in its expansion of analytical work and surveillance into digital assets.