BPI Comments on Treasury Department Review of Digital Assets in Response to Executive Order

Ladies and Gentlemen:

The Bank Policy Institute[1] appreciates the opportunity to comment on the Department of
Treasury’s Request for Comment on “Ensuring Responsible Development of Digital Assets” in connection with Executive Order 14067, “Ensuring Responsible Development of Digital Assets.”[2] According to the Fact Sheet accompanying the Executive Order, digital assets, including cryptocurrencies, exceeded a $3 trillion market cap last November, although published reports indicate that recent turmoil in those markets has reduced that number by as much as two thirds. In addition, some surveys indicated that around 16 percent of adult Americans – approximately 40 million people – have invested in, traded, or used cryptocurrencies. In light of the growth of digital assets over the past few years and the risks that are presented by digital assets and related activities that are not yet subject to a comprehensive regulatory framework, BPI supports the goal of the Executive Order to promote a coordinated, “whole of government” approach to fostering responsible innovation and the following specific policy objectives for digital assets articulated in the Executive Order:

(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; and
(f) support of technological advances that promote responsible development and use of digital

Section 5(b)(i) of the Executive Order directs the Secretary of the Treasury, in consultation with
the Secretary of Labor and the heads of other relevant agencies, 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, 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.”[3] We appreciate the Treasury Department’s solicitation of input and recommendations as it considers the implications of development and adoption of digital assets.

To read the full comment letter, click here, or click on the download button below.

[1] BPI is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation’s bank originated small business loans and are an engine for financial innovation and economic growth.

[2] 87 Fed. Reg. 14143 (March 14, 2022). The Executive Order provides that “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 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.”

[3] As provided in the Executive Order, 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.