NAFCU to Treasury: Work closely with the NCUA regarding digital asset development
NAFCU Regulatory Compliance Counsel Dale Baker offered comments in response to the Treasury Department’s request for comment (RFC) on the responsible development of digital assets, expressing support for Treasury and other regulators applying existing anti-money laundering and countering the financing of terrorism regulations to intermediated digital-assets-related finance applications and activities.
Baker explained that, while the Treasury Department fulfills its consultative requirement under President Joe Biden's Executive Order on Ensuring Responsible Development of Digital Assets, they do not have to “go at it largely alone.” Baker urged Treasury to work closely with the NCUA to ensure it does not deter responsible technological innovation or unnecessarily burden the already well-regulated credit union system as it strives to detect, disrupt, and prevent criminals’ misuse of digital assets and related technologies.
In addition, Baker highlighted the differences between intermediated digital-assets-related finance applications and activities, like those engaged in by some credit unions, and truly decentralized digital-asset-related finance applications specifically designed to enable users to interact and transact with one another without any intermediary’s involvement.
NAFCU also offered comments in response to the Treasury Department’s initial RFC on this topic offering support for a framework for regulating digital assets that accommodates responsible innovation within the credit union industry while also ensuring that standards exist to promote safety and soundness, mitigate financial stability risks, protect consumers and investors, and prevent financial crime.
NAFCU responded to a similar RFC from the Commerce Department, reiterating that the expected costs of digital assets, such as a central bank digital currency, would outweigh the benefits and 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.
The association will engage with the Treasury Department on this topic and continue to ensure credit union concerns are heard.
NAFCU Update - May 2023
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