July 15, 2022

NAFCU Reg Alert reviews Treasury RFC on digital assets

Reg AlertNAFCU sent members a Regulatory Alert Thursday on the Treasury Department’s request for comment (RFC) on the responsible development of digital assets. The RFC seeks public feedback on implications of the adoption of digital assets, such as a central bank digital currency (CBDC), and the changes that could be expected in the financial market and payment system.

In the Regulatory Alert, NAFCU highlights:

  • the RFC states that input received from the public will inform the Treasury’s work in carrying out its mandate under President Joe Biden's Executive Order on Ensuring Responsible Development of Digital Assets, which requires, among other things, the consideration of the conditions that would drive mass adoption of different types of digital assets and the risks and opportunities such growth might present;
  • the RFC notes that Treasury analysis will also take into consideration how digital assets innovation and adoption might promote equitable economic growth; and
  • the RFC clarifies that the term ‘mass adoption’ means a scenario where digital assets are accepted and used by the U.S. public on a large scale, which could be evident in the acceptance of cryptocurrencies as a common and regular payment method for goods and services.

NAFCU recently responded to a similar RFC from the Commerce Department, reiterating that the expected costs of a CBDC would outweigh the benefits and namely, that superior alternatives exist for accomplishing the same objectives. NAFCU first communicated these concerns to the Federal Reserve in a letter on the same topic.

Comments in response to the RFC are due to NAFCU July 25 and can be summited through the alert; comments are due to the Treasury Department August 8. Subscribe to receive Regulatory Alerts in your inbox. 

Relatedly, a new report from the Office of Financial Research reviews how a CBDC would affect banking system stability. The report acknowledges that the option to hold CBDC can increase the incentive for depositors to run on weak banks, but suggests that certain countervailing effects may mitigate this risk. Read the full report.

NAFCU will continue to monitor this topic closely as it evolves.