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Financial Services Law Insights and Observations

Upcoming Treasury reports will highlight CBDC issues

Federal Issues Digital Assets Fintech Stablecoins Department of Treasury CBDC

Federal Issues

On March 22, Treasury Under Secretary for Domestic Finance Nellie Liang spoke before the National Association for Business Economics on topics related to stablecoins and a possible central bank digital currency (CBDC). As instructed by President Biden’s Executive Order on digital assets (covered by InfoBytes here), Liang announced that Treasury will partner with other agencies in the coming months to produce a series of reports and recommendations focusing on (i) the future of money and payment systems, with a discussion of CBDCs; (ii) financial stability risks and regulatory gaps posed by digital assets; (iii) the use of digital assets for illicit finance and associated national security risks; and (iv) international engagement supporting global principles and standards for digital assets and CBDCs. “Regulatory policy for new financial products may need to evolve, but should follow ‘same risk, same regulation,’ in the sense that regulations should be based on risks of the activity rather than the technology itself,” Liang stressed, adding that Treasury’s work will “complement” other agency efforts such as the Federal Reserve Board’s recent discussion paper which emphasized that any CBDC should ensure users’ privacy, have an intermediated model, be transferable, and prevent illicit finance (covered by InfoBytes here).

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