The US Treasury Department has cooperated with other agencies, notably the US Agency for Worldwide Development (USAID), to present President Biden with an international crypto regulatory framework on July 7, 2022. In compliance with President Biden’s executive order, the information sheet highlights how the agencies intend to collaborate with regulators in other countries to promote responsible crypto regulation (EO).
It will be remembered that US President Joe Biden issued an executive order on digital assets earlier this month, forcing the country’s key government agencies to collaborate on developing a crypto regulatory framework.
Now, the Secretary of the Treasury, in conjunction with the leaders of other agencies, including the Secretaries of State, Commerce, and the U.S. Agency for International Development (USAID). In compliance with the executive order’s mandate, the Agency for International Development (USAID) and others have written and forwarded to Biden a framework explaining how they expect to interact with foreign authorities to establish policies that would support responsible crypto innovation.
The United States Treasury Department issued a fact sheet on Thursday describing how it plans to collaborate with international authorities to manage the cryptocurrency sector.
The fact sheet, the department’s first report following U.S. President Joe Biden’s executive order on crypto, stated that the framework “is intended to ensure that… America’s core democratic values are respected,” citing consumer, investor, and business protection, global financial system safety, and interoperability. The policy of the framework, as per the sheet; Reduce the potential use of cryptocurrency for criminal financing, promote access to financial services, assist technical innovation, and “reinforce[ing] US leadership in the global financial system” are all goals.
“To decrease payment inefficiencies and verify that any new payment methods are consistent with US principles and regulatory requirements,” the fact sheet stated. According to the text, this effort should alleviate those issues.
“In addition, via bilateral and regional contacts, the United States will support the adoption and implementation of international standards.” Across all engagements, the US will strive to provide a consistent message, limit duplication, and promote the continuation of collaboration within its major stakeholders,” according to the statement.
The Treasury Department stated in the information sheet that the United States should organize “engagements” and other sorts of forums to promote this endeavor. Last month, the Justice Department issued its response to Biden’s executive order on digital assets.
The US Treasury produced a fact sheet outlining the need for consumer, investor, and corporate safeguards, as required by President Biden’s executive order on digital assets. The US Department of Treasury has released a framework for American government entities to collaborate with their overseas counterparts on cryptocurrencies.
The information sheet, released on Thursday, is the Treasury department’s first report in response to President Joe Biden’s executive order on cryptocurrency.
The framework “is designed to ensure that…America’s essential democratic ideals are honored,” with a focus on decreasing the possible use of cryptocurrency for criminal financing, increasing access to financial services, boosting technical innovation, and “reinforc[ing] US leadership in the global financial system.”
“Inadequate anti-money laundering and counter-terrorism financing (AML/CFT) regulation, supervision, and enforcement by other countries challenges the United States’ ability 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,” according to the Treasury report.
In terms of international collaboration and coordination, the Treasury Department stated that it will engage with G7 policymakers and regulators on digital asset concerns, particularly central bank digital currencies (CBDCs), and incorporate new technology into the international financial system.
“To decrease payment inefficiencies and verify that any new payment methods are consistent with US principles and regulatory requirements,” the fact sheet stated.The US will also collaborate with G20 member countries to investigate possible threats to financial stability posed by digital assets, as well as confer with members on “macro-financial concerns.”
“Across all interactions, the United States will endeavor to guarantee a cohesive message, reduce duplication, and encourage work to be retained within its key stakeholders,” according to the report.
The executive order, issued in March, mandated the Treasury Department to lead an interagency effort to provide policy recommendations for reducing the risks connected with cryptocurrency. Given the potential dangers to investors from “uneven regulation, supervision, and compliance across jurisdictions,” the department underlined the need for “international collaboration among public authorities, the private sector, and other stakeholders.”
In addition to the factsheet, the Justice Department released a study in June on how it plans to “strengthen international law enforcement cooperation” in the fight against unlawful exploitation of digital assets. In addition to the Treasury’s regulatory framework proposals, the order recommends that the Federal Reserve (Fed) investigate the formation of a CBDC.
The Fed began investigating a digital dollar last year and issued a study on digital currencies in January. The United States has one of the highest rates of cryptocurrency adoption in the world. Recent research indicated that over 25% of US investors are taking out loans to invest in cryptocurrency throughout the winter.
According to Gemini’s 2022 state of the crypto report, more over 20% of Americans own cryptocurrency. Crypto is extremely popular among high-income households, with around 30% owning various crypto assets. Adoption rates are also reasonably spread between genders and ethnicities in the United States.
On the regulatory front, the Biden administration is actively experimenting with crypto rules. In early June, government officials signaled that stablecoin legislation may be enacted before the end of the year. Simultaneously, some senators are proposing legislation to govern cryptocurrencies on a national scale.
Despite the government’s pro-crypto regulatory signals, it is also harmed because of the present bear market
On July 7, the United States Office of Government Ethics issued a legal warning to all government employees advising them not to own any crypto assets. At the same time, states are reconsidering permitting cryptocurrency tax payments as crypto skeptics speak out during the bad market. According to the fact sheet, the framework’s key objectives include collaborating with international agencies to develop digital asset regulatory standards that reflect US values, while also protecting consumers, investors, and businesses both at home and abroad, fostering financial stability, and mitigating systemic risk.
Furthermore, the framework intends to address the dangers of money laundering and national security concerns caused by the criminal use of digital assets, as well as to improve access to safe havens. Also to encourage innovation that promotes legitimate creation and usage of cryptocurrency by encouraging research and collaborations that boost shard learning.
The Treasury ‘s Plan of Action
Importantly, the framework seeks to “reinforce US leadership in the global financial system and in technological and economic competitiveness, including through the responsible development of payment innovations and digital assets, as well as by advancing technology and regulatory standards that are consistent with US values.”
To achieve the goals outlined in the framework, regulators have emphasized the importance of the United States continuing to collaborate with international organizations and regulatory bodies such as the Financial Action Task Force (FATF) and the Egmont Group of Financial Intelligence Units (FIUs) to assist other nations in implementing the framework.
Implementing FATF standards for virtual assets and virtual asset service providers (VASPs), raising awareness about ransomware and money laundering dangers, and other initiatives. The regulators also asked the US to continue working with the G7, G20, Financial Stability Board (FSB), Organization for Economic Cooperation and Development (OECD), International Monetary Fund (IMF), World Bank, and Other Standards Setting Bodies (SSB).
“The United States will continue to engage in sectoral and cross-sectoral international standard-setting organizations relating to digital assets, and we will expand our efforts in these forums to ensure that we take the lead in producing associated standards.” Setting standards in the quickly changing digital asset ecosystem is crucial to ensuring that many of our core policies are implemented.
“Standard-setting in the rapidly evolving digital asset ecosystem is critical to ensuring that many of our key policy priorities – from privacy to respect for democratic values, to interoperability that reduces cross-border frictions and increases access to safe and affordable financial services – are incorporated into any new systems,” according to one section of the fact sheet.
The US Treasury stated that the US should collaborate with its worldwide partners to develop global crypto legislation. According to the press release, this is only natural for a global and decentralized asset class. Furthermore, the Treasury indicated that the United States should take the lead in negotiations around central bank tokens.
According to the announcement: “Uneven regulation, oversight, and compliance across jurisdictions generates arbitrage possibilities and endangers financial stability as well as consumer, investor, company, and market protection,”
On July 7, the Treasury included a framework for international regulation and submitted it to President Biden. The plan also specified other state departments to work with on the global regulation. The United States already has numerous stablecoins tied to the US dollar. Despite the fact that China is now the leading country in the development of Central Bank Digital Currencies (CBDC), the United States has been considering the notion.
In January 2022, the Federal Reserve of the United States (Fed) took the first step toward constructing a CBDC. The Fed emphasized that the introduction of an American CBDC would be a key innovation for the US dollar. It would also broaden financial inclusion and payment options and hasten money transfers However, the department also identified numerous important concerns with CBDCs and proposed alternatives that were not well received by the community.
Fed also advocated for a worldwide effort to address all potential CBDC hazards at the time. According to the Fed:
“Such international work should continue to address the full range of issues and challenges raised by digital assets, including financial stability, consumer and investor protection, and business risks, as well as money laundering, terrorist financing, proliferation financing, sanctions evasion, and other illicit activities,” the report says.