On July 7, 2022 the US Secretary of the Treasury (Treasury), in consultation with the Secretary of State, the Secretary of Commerce, the Administrator of the US Agency for International Development (USAID), and the heads of other relevant agencies issued a framework for inter-agency engagement with foreign counterparts and in international forums to address the risks and benefits of digital assets, including the promotion and development central bank digital currency (CBDC) technologies (see Treasury Framework).

The framework is Treasury's first response to the directives in President Biden’s March 9, 2022 executive order on responsible development of digital assets, which directed a number of relevant US administrative agencies to conduct studies or research, consult with other agencies, and issue reports on US engagement with digital assets (see Legal Update, President Biden Signs Comprehensive Executive Order on Digital Assets Including Exploration of US CBDC).

On July 8, 2022, Treasury published a request for comment on the development of digital assets under the Biden executive order (see Treasury Request For Comment).

Treasury notes in the framework that the US must continue to work with international partners on standards for the development of digital payment architectures and CBDCs to reduce payment inefficiencies and ensure that any new payment systems are consistent with US values and legal requirements. Outlined in the framework are steps designed to ensure that the following are accounted for in the development of digital assets:

The framework specifies that:

Group of Seven (G7). The US will continue to engage with the Group of Seven (G7) as a global forum for central banks on a broad suite of issues related to digital payments, including the roles of the public and private sector in the creation and movement of money, considerations related to CBDCs, and the implication of new technologies on the international monetary system (see Legal Update, G7 Issues Public Policy Principles for Retail Central Bank Digital Currencies (CBDCs)).

Group of Twenty (G20). Treasury and the US will work through the Group of Twenty (G20) to engage with other major economies to:

Financial Stability Board (FSB). The US will continue to use the FSB as a forum to pursue and push for monitoring, identification, and fostering a shared understanding of global financial stability risks from digital assets, consider policy responses to the risks identified, help international cooperation, and promote US priorities on cross-border payments.

Financial Action Task Force (FATF). The US will continue to support countries in implementing the standards developed by the Financial Action Task Force (FATF) for virtual assets and virtual asset service providers (VASPs) to monitor the virtual asset sector for material changes, raise awareness about the ransomware threat and related money laundering, and message FATF’s position to implement appropriate policy choices for CBDC projects. Treasury notes that FATF sets international standards to prevent money laundering, terrorist financing, and proliferation financing to which over 200 countries and jurisdictions have committed to implementing (see Legal Updates, FATF targeted update on implementation of standards on virtual assets and virtual asset service providers: June 2022).

Financial intelligence units (FIUs). The US will continue to support the financial intelligence units (FIUs), investigative units established by individual countries to centralize the gathering of suspicious activity reports related to criminal financial activity, in developing best practices to share financial intelligence through the Egmont Group, a network of national FIUs with 154 members, which brings together FIUs to support international anti-money laundering (AML) and countering the financing of terrorism (CFT) efforts, including those related to digital assets.

Organization for Economic Cooperation and Development (OECD). The US will continue to use the Organization for Economic Cooperation and Development (OECD) as a forum to engage with like-minded, market-driven democracies on policies that support efficient, open, and stable international markets, including support for best practices on digital assets; monitoring, identifying, and helping foster a shared understanding of risks to consumer financial protection that digital assets pose; and improving global tax compliance in the crypto asset area.

International standard-setting bodies. The US will continue to participate in sectoral and cross-sectoral international standard-setting bodies (SSBs) related to digital assets and will increase its work in these forums to ensure that the US plays a leading role in developing associated standards. According to the framework, standard setting in the rapidly evolving digital asset ecosystem is critical to ensuring that key US policy priorities from privacy, to respect for democratic values, to interoperability that reduces cross-border frictions and increases access to safe and affordable financial services are incorporated into any new systems.

International Monetary Fund (IMF). The US will support the International Monetary Fund (IMF) in expanding its analytical work and surveillance to include digital assets where such activities are macro-critical and in line with its mandate to promote economic and financial stability.

Multilateral development banks (MDBs). The US will use its influence at various MDBs such as the World Bank, the Inter-American Development Bank, and the Asian Development Bank to advance efforts to promote greater and more efficient access to financial products and services, develop investment and lending activities related to digital assets that adequately reflect the associated risks, and support incorporation of US values in capacity-development efforts to shape policies, projects, and other assistance relating to digital assets.

Regional and bilateral engagements. Treasury's framework stated that the US will identify where existing regional and bilateral engagements can be strengthened and ramp up engagement with new partners to achieve US objectives regarding digital assets to use these engagements under a coordinated framework for prioritization across departments and agencies to explore potential opportunities and risks of digital assets, engage in information sharing, drive the adoption and implementation of policies including regarding AML/CFT; and provide technical assistance.

The stated objective of the framework is to track the six key national priorities stated in the executive order, as tailored to reflect the international aspects of Treasury's mission to:

On July 8, 2022, Treasury published a request for comment (RFC) on US digital asset developments under the executive order, including recommendations pertaining to the implications of the development and adoption of digital assets and changes in financial market and payment infrastructures for US consumers, investors, and businesses, and for equitable economic growth. Through the RFC, Treasury is requesting input from the public on the following questions that will inform its work in carrying out its mandate under section 5(b)(i) of the executive order:

Public comment on the RFC must be received on or before August 8, 2022.

For more information on regulation of digital assets, see Cryptocurrency and Virtual Currency Regulatory Tracker.