Digital Assets Regulatory Framework – Commerce Seeks Public Comment | Kilpatrick Townsend & Stockton LLP
On May 19, 2022, the U.S. Department of Commerce (Commerce) issued a Comment request titled “Developing a Competitiveness Framework for Digital Asset Technologies” (request for comments). Digital assets, in this context, cover a wide range of assets, including “cryptocurrencies, stablecoins, [and central bank digital currencies (CBDCs),]each of which has been the subject of recent federal projects regulation and legislation. Commerce released the request for comment pursuant to the March 9, 2022 decision of the Biden administration, Executive decree “Ensuring the responsible development of digital assets”, which requires many federal regulatory and executive agencies to submit reports and assessments on the regulation and administration of digital assets. The Invitation to Comment invites public comment on various aspects of digital asset development, including: US competitiveness in a global marketplace, consumer protection, systemic risk, environmental impacts and sustainability, implications on international trade and the current and future regulatory landscape of digital assets. Written comments must be received by Commerce “no later than 5:00 p.m. Eastern Time on July 5, 2022.”
Supposedly, the request for comments primarily addresses the Executive Order’s requirement that “[w]Within 180 days of the date of this order, the Secretary of Commerce, in consultation with the Secretary of State, the Secretary of the Treasury, and the heads of other relevant agencies, will establish a framework to strengthen the economic competitiveness of the United States and leverage digital asset technologies[.]That said, the information solicited in the Request for Comments goes beyond “competitiveness.” The Department of Commerce offers seventeen questions for consideration and encourages respondents to “answer any or all of the […] questions, or to provide any other comments relevant to the development of the [digital assets] framework.” While each of the seventeen questions addresses important topics, here are a few that may be particularly relevant:
Question (3): How does the current US regulatory landscape affect the global competitiveness of US digital asset companies? Are there future regulatory changes that could support greater global competitiveness of US digital asset companies? How does the U.S. regulatory landscape for digital assets compare to that of finance or other comparable industries?
Question (6): What, if any, is the future role of digital asset mining in the US digital asset industry? Can digital assets be compatible with a low-carbon economy that favors renewable energies? If so, how? In what ways can the U.S. government and U.S. businesses foster competitive and sustainable (environmentally and energy-efficient) development of digital assets?
Question (7): What impact, if any, will the global rollout of central bank digital currencies (CBDCs) have on the U.S. digital asset industry? How would the design of a US CBDC (eg, disintermediated or intermediated, interoperable with other countries’ CBDCs and other domestic and international financial services, etc.) impact the industry?
Question (10): Beyond increased economic competitiveness, how can the U.S. digital asset industry advance the other goals set out in the Executive Order? These other purposes include protecting consumers, investors, and businesses in the United States; protecting US and global financial stability and mitigating systemic risk; and mitigating illicit finance and national security risks posed by the misuse of digital assets.
Question (12): What factors and conditions, if any, that have driven and supported the global leadership of traditional US-based financial institutions will foster the same leadership for US digital asset firms? If there are no common factors, what factors and conditions will differentiate the global competitiveness of US digital asset companies?
Question (15): To what extent should new standards for digital assets and their underlying technologies be maintained or developed, for example those related to custody, identity, security, privacy and to interoperability? Which existing standards are already relevant? How could existing standardization efforts be aligned to support the responsible development of digital assets?
Given the key role that the Executive Order and its implementation will play in the development of a comprehensive framework for digital assets in the United States, digital asset companies and those who work in the field of digital assets or who are affected by it should seriously consider responding to Commerce’s request for comment.