Letter to the Treasury on Ensuring Responsible Development of Digital Assets

Jon Fishman
Assistant Director
Department of the Treasury
Office of Strategic Policy, Terrorist Financing and Financial Crimes
1500 Pennsylvania Ave, NW
Washington, DC 20220

Colleagues:

The American Bankers Association (ABA) welcomes the opportunity to respond to the request by the Treasury Department (Treasury) for information and comment concerning the responsible development of digital assets (RFC). The RFC implements Executive Order 14067 "Ensuring Responsible Development of Digital Assets" (EO), released in March 2022.

ABA looks forward to continuing to engage with the Administration, government agencies, bank regulators, and Congress to consider the implications of these important and complex policy decisions. We share the Administration's interest in responsible financial innovation and in ensuring that consumers, investors, and businesses are protected from digital-asset-related illicit finance and national security risks. We strongly believe that addressing these risks should be a priority for the government, and that can only be achieved through careful coordination with the private sector, including the banking industry.

Blockchain technology has potential for application in financial services, which over time, may lead to enhanced efficiencies, new products, and new ways to deliver traditional products. It is critical that such technology is developed responsibly and within a regulatory framework that ensures illicit finance and national security risks are limited. While banks currently operate within such a framework, that is not necessarily the case for non-banks.

We remain concerned that there has been very little action taken since the EO was issued to effectively regulate non-bank crypto companies. Meanwhile, bank regulators continue to take a very cautious approach, requiring banks to seek formal non-objection5 to any activities in the digital asset market.

This is the worst of all worlds. By combining inaction to bring into the regulatory perimeter non-bank crypto companies on the one hand, with limitation of banks' ability to engage responsibly in the digital asset market on the other, it becomes nearly impossible for responsible financial innovation to occur in this space.

We strongly believe that regulatory clarity and a level regulatory playing field for banks and non-banks are necessary to promote innovation and competitiveness in the digital asset market.

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