[Federal Register Volume 87, Number 130 (Friday, July 8, 2022)]
[Notices]
[Pages 40881-40883]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-14588]


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DEPARTMENT OF THE TREASURY


Ensuring Responsible Development of Digital Assets; Request for 
Comment

AGENCY: Departmental Offices, Treasury.

ACTION: Request for comment.

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SUMMARY: This notice invites interested members of the public to 
provide input pursuant to Executive Order 14067 of March 9, 2022, 
``Ensuring Responsible Development of Digital Assets.'' In particular, 
the Department invites input, data, and recommendations pertaining to 
the implications of development and adoption of digital assets and 
changes in financial market and payment infrastructures for United 
States consumers, investors, businesses, and for equitable economic 
growth.

DATES: Comments must be received on or before August 8, 2022.

ADDRESSES: You may submit comments via the Federal eRulemaking Portal: 
www.regulations.gov. Follow the instructions on the website for 
submitting comments.
    In general, all comments will be available for inspection at 
www.regulations.gov. Comments, including attachments and other 
supporting materials, are part of the public record. Do not submit any 
information in your comments or supporting materials that you consider 
confidential or inappropriate for public disclosure.

FOR FURTHER INFORMATION CONTACT: Natalia Li, Deputy Director, Office of 
Financial Institutions Policy, 202-622-1388, [email protected]; 
Amanda Shulak, Attorney-Advisor, Office of General Counsel, 202-622-
8906, [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    Executive Order 14067 of March 9, 2022, ``Ensuring Responsible 
Development of Digital Assets'' (hereafter ``Executive Order'') (87 FR 
14143; March 14, 2022), outlines principal U.S. policy objectives with 
respect to digital assets.\1\ These principal policy objectives are:
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    \1\ https://www.federalregister.gov/documents/2022/03/14/2022-05471/ensuring-responsible-development-of-digital-assets.

a. Protection of consumers, investors, and businesses in the United 
States
b. Protection of United States and global financial stability and the 
mitigation of systemic risk
c. Mitigation of illicit finance and national security risks posed by 
misuse of digital assets
d. Reinforcement of 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
e. Promotion of access to safe and affordable financial services
f. Support of technological advances that promote responsible 
development and use of digital assets

    Section 5(a) provides that the increased use of digital assets and 
digital asset exchanges and trading platforms may increase the risks of 
crimes such as fraud and theft, other statutory and regulatory 
violations, privacy and data breaches, unfair and abusive acts and 
practices, and other cyber incidents faced by consumers, investors, and 
businesses. The rise in use of digital assets, and differences across 
communities, may also present disparate financial risk to less informed 
market participants or exacerbate inequities. It is critical to ensure 
that digital assets do not pose undue risks to consumers, investors, or 
businesses, and to put in place protections as a part of efforts to 
expand access to safe and affordable financial services experienced by 
more vulnerable populations.
    Section 5(b)(i) directs the Secretary of the Treasury, in 
consultation with the Secretary of Labor and the heads of other 
relevant agencies, including, as appropriate, the heads of independent 
regulatory agencies, such as the FTC, the SEC, the CFTC, Federal 
banking regulators, and the CFPB, to report to the President on the 
implications of development and adoption of digital assets and changes 
in financial market and payment infrastructures for United States 
consumers, investors, businesses,

[[Page 40882]]

and for equitable economic growth. The report must address the 
conditions that would drive mass adoption of different types of digital 
assets and the risks and opportunities such growth might present to 
United States consumers, investors, and businesses, including a focus 
on how technological innovation may impact these efforts and with an 
eye toward those most vulnerable to disparate impacts.

II. Objective

    Through this request for comment (RFC), Treasury is requesting 
input from the public that will inform its work in carrying out its 
mandate under section 5(b)(i) of the Executive Order. This RFC offers 
an opportunity for all interested parties to provide relevant input, 
data, and recommendations pertaining to the implications of development 
and adoption of digital assets and changes in financial market and 
payment infrastructures for United States consumers, investors, 
businesses, and for equitable economic growth.

III. Request for Comments

    Treasury welcomes input on any matter that commenters believe is 
relevant to Treasury's development of the report on the implications of 
developments and adoption of digital assets and changes in financial 
market and payment infrastructures for United States consumers, 
investors, businesses, and for equitable economic growth as directed by 
Section 5(b)(i) of the Executive Order.
    Commenters are encouraged to address any or all of the following 
questions, or to provide any other comments relevant to the development 
of the report. When responding to one or more of the questions below, 
please note in your response the number(s) of the questions to which 
you are responding. In all cases, to the extent possible, please cite 
any public data related to or that support your responses. If data are 
available, but non-public, describe such data to the extent 
permissible.

(A) Adoption to Date and Mass Adoption

    (1) What explains the level of current adoption of digital assets? 
Please identify key trends and reasons why digital assets have gained 
popularity and increased adoption in recent years. In your responses, 
please address the following:
    a. Who are the users, consumers, and investors that are adopting 
digital assets? What is the geographic composition and demographic 
profile of consumers and investors in digital assets?
    b. What businesses are adopting digital assets and for what 
purposes?
    c. What are the main use cases for digital assets for consumers, 
investors, and businesses?
    d. What are the implications for equitable economic growth?
    (2) Factors that would further facilitate mass adoption
    a. Describe a set of conditions or pre-conditions that would 
facilitate mass adoption of digital assets in the future. To the extent 
possible, please cite any public data related to the responses above.
    b. What developments in technology, products, services, or markets 
account for the current adoption of digital assets? Are there specific 
statutory, technology, or infrastructural developments that would 
facilitate further adoption?

(B) Opportunities for Consumers, Investors, and Businesses

    (3) What are the main opportunities for consumers, investors, and 
businesses from digital assets? For all opportunities described, please 
provide data and specific use cases to date (if any). In your 
responses, please consider:

a. Potential benefits of decentralized and disintermediated systems
b. Creation of new types of financial products and contracts
c. Potential for improved access to and greater ease of use of 
financial products
d. Potential opportunities for building wealth
e. Potential benefits of interacting with counterparties, suppliers, 
vendors, and customers directly
f. Potential for improved cross-border payments and trade finance

(C) General Risks in Digital Assets Financial Markets

    (4) Please identify and describe any risks arising from current 
market conditions in digital assets and any potential mitigating 
factors. Identify any such responses that directly relate to:

a. Market transparency, including pre- and post-trade transparency
b. Accuracy and reliability of market data
c. Technological risks, including attacks, bugs, and network congestion
d. Smart contract design and security
e. Settlement and custody
f. Jurisdictional and legal conditions

(D) Risks to Consumers, Investors, and Businesses

    (5) Please identify and describe potential risks to consumers, 
investors, and businesses that may arise through engagement with 
digital assets. Identify any such responses that directly relate to:

a. Frauds and scams
b. Losses due to theft
c. Losses of private keys
d. Losses from the failure/insolvency of wallets, custodians, or other 
intermediaries
e. Potential losses associated with interacting with counterparties 
directly
f. Disclosures and amount of fees
g. Disclosures of other relevant terms
h. Authenticity of digital assets, including NFTs
i. Ability of consumers, investors, and businesses to understand 
contracts, coding, protocols

(E) Impact on the Most Vulnerable

    (6) According to the FDIC's 2019 ``How America Banks'' survey, 
approximately 94.6 percent (124 million) of U.S. households had at 
least one bank or credit union account in 2019, while 5.4 percent (7.1 
million) of households did not. And roughly 25 percent of U.S. 
households have a checking or savings account while also using 
alternative financial services. Can digital assets play a role in 
increasing these and other underserved Americans' access to safe, 
affordable, and reliable financial services, and if so, how?
    a. In your responses, please describe specific ways in which 
digital assets can benefit the underserved and the most vulnerable vis-
[agrave]-vis traditional financial products and services. Address 
factors such as identify verification process, costs, speed, ease of 
use, and access.
    b. In your responses, please describe specific ways in which 
digital assets can pose risks to the underserved and the most 
vulnerable given rapidly developing and highly technical and nature of 
the industry. Address factors such as financial and technical literacy 
and accessibility.

Notes

    The term ``mass adoption'' is defined as a scenario where digital 
assets are accepted and used by the U.S. public on a large scale. For 
example, mass adoption of digital assets as a payment method would 
translate to use and acceptance of cryptocurrencies as a common and 
regular payment method for goods and services.
    The term ``digital assets'' refers to all CBDCs, regardless of the 
technology used, and to other representations of value, financial 
assets and instruments, or claims that are used to make payments or 
investments, or to transmit or exchange funds or the equivalent

[[Page 40883]]

thereof, that are issued or represented in digital form through the use 
of distributed ledger technology. For example, digital assets include 
cryptocurrencies, stablecoins, and CBDCs. Regardless of the label used, 
a digital asset may be, among other things, a security, a commodity, a 
derivative, or other financial product. Digital assets may be exchanged 
across digital asset trading platforms, including centralized and 
decentralized finance platforms, or through peer-to-peer 
technologies.\2\
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    \2\ https://www.federalregister.gov/documents/2022/03/14/2022-05471/ensuring-responsible-development-of-digital-assets.

Daniel J. Harty,
Director, Office of Capital Markets.
[FR Doc. 2022-14588 Filed 7-7-22; 8:45 am]
BILLING CODE 4810-AK-P