On July 7, 2022, the Treasury Department laid out how it would work with its overseas counterparts and in international forums as the U.S. studies cryptocurrencies to set up a possible regulatory regime. This framework is the first executive agency response as mandated President Biden’s March executive order on crypto that we wrote about here.
The Treasury Department has several objectives including:
Protecting consumers, investors, and businesses in the United States and globally by promoting technology and regulatory standards that reflect U.S. values;
Protecting U.S. and global financial stability and mitigate systemic risk;
Mitigating illicit finance and national security risks posed by misuse of digital assets and counter and respond to efforts by foreign adversaries to drive standards and promote their protocols;
Reinforcing U.S. leadership in the global financial system and in technological and economic competitiveness, including through the responsible development of payment innovations and digital assets and by advancing technology and regulatory standards that align with U.S. values;
Promoting access to safe and affordable financial services; and
Supporting technological advances that promote responsible development and use of digital assets by advancing research and relationships that increase shared learning.
The framework also emphasized that the United States must continue to work with international partners on standards for the development of digital payment architectures and central bank digital currencies (CBDCs) to reduce payment inefficiencies and ensure that any new payment systems are consistent with U.S. values and legal requirements (we previously wrote about CBDCs here).
Meanwhile, overseas, the UK amended its Sanctions and Anti-Money Laundering Act to sweep up crypto-asset exchange providers and custodian wallet providers. Those entities are now considered “relevant firms” under the act and are required to inform UK authorities as soon as practicable if they know or suspect a transaction involves or may involve a sanctioned party or party who has committed financial sanctions offenses.
Under the new U.S. regulations, it is likely that OFAC will be coordinating with UK authorities as it considers its own reporting requirements.
The framework for collaboration is just the first of its kind that was ordered by President Biden in March. Stay tuned for future updates as executive agencies continue to develop a potential framework for regulating blockchain and related technologies.
Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XII, Number 214