A look at recommendations to inform future policies, including consumer/investor protections, financial crimes, and national security
KPMG Insights. As directed by the Administration, Treasury and DOJ have prepared reports that examine certain aspects of the crypto and digital assets markets for the purposes of informing future policies. As issued, the reports confirm known regulatory risk areas of concern, including payments activities, consumer/investor protection, financial crimes, national security, and cross-border/international applications as well as again recommend that regulatory and law enforcement agencies continue to use their existing authority to address current and emerging risks.
The Department of the Treasury (Treasury) and the Department of Justice (DOJ) have each released reports on crypto and digital assets pursuant to the March 2022 Executive Order 14067 on “Ensuring Responsible Development of Digital Assets.” Each report looks at a specific aspect of the developing crypto and digital assets markets and offers recommendations for action. At a high level, the recommendations across the reports encourage:
The Treasury and DOJ reports include:
In response to these reports and others required by the Executive Order, the White House released a fact sheet outlining a “Comprehensive Framework for Responsible Development of Digital Assets,” highlighting key points drawn from the reports as well as the Administration’s acknowledgement of and intended plans to address crypto and digital assets based on the recommendations.
A summary table of the four reports and recommendations follows.
|Report Name||Scope||Key Recommendations|
|The Future of Money and Payments (Treasury)||Outlines key design choices for a potential U.S. central bank digital currency (CBDC), associated public policy considerations, and recommendations to promote financial innovation in money and payments, while managing related risks.|
|Crypto-Assets: Implications for Consumers, Investors, and Businesses (Treasury)||Provides an overview of crypto-assets, entities that provide related services or products, and detail on market size, trends, and uses. The report outlines crypto-asset opportunities, risks, and exposures and offers recommendations to protect and inform consumers, investors, and businesses.|
|Action Plan to Address Illicit Financing Risks (Treasury)||Action Plan to Address Illicit Financing Risks (Treasury)|
|The Role of Law Enforcement in Activity Related to Digital Assets (Department of Justice)||Outlines how illicit actors exploit digital assets, the challenges they pose to investigations, initiatives to improve law enforcement efforts, and recommended regulatory and legislative actions to further enhance law enforcement’s ability to address digital asset crimes.|
Treasury Request for Comment. Separately, Treasury put out a request for public comment on illicit finance and national security risks posed by the use of digital assets and the ongoing efforts to mitigate those risks. Input received is expected to assist in setting controls to hold “bad actors” accountable and to identify potential gaps in existing enforcement. Comments are requested by November 3, 2022. Questions include those related to:
DOJ Digital Asset Coordinator Network. DOJ also announced the establishment of a nationwide “Digital Asset Coordinator” (DAC) Network within its Criminal Division, comprised of federal prosecutors and subject-matter experts, to support DOJ efforts to combat the threats posed by digital assets.