August 09, 2022

NAFCU voices CU concerns regarding digital assets to Treasury

TreasuryNAFCU Senior Counsel for Research and Policy Andrew Morris Tuesday wrote a letter to the Treasury Department in response to its request for comment (RFC) on the responsible development of digital assets, fulfilling its consultative requirement under President Joe Biden's Executive Order on Ensuring Responsible Development of Digital Assets. Through the RFC, the Treasury Department requested feedback on implications of the development and adoption of digital assets, such as a central bank digital currency (CBDC), and the changes that could be expected in financial markets and payment systems. Of note, NAFCU last month sent members a Regulatory Alert breaking down the RFC.

Concerning private sector digital asset regulation, the letter incorporates what NAFCU has conveyed in prior comments to the NCUA and Congress by offering several high-level principles to incorporate in any future “framework.” These principles include:

  • a level playing field for credit unions, banks, and other financial companies seeking to engage with digital asset technologies;
  • the application of consumer protection laws to entities facilitating consumer engagement with digital assets; and
  • support for responsible innovation within the credit union industry.

Morris also asks Treasury to clarify that references to insured depository institutions included in the President’s Working Group on Financial Markets’ Report on Stablecoins are inclusive of federally insured credit unions.

With respect to the RFC’s solicitation for input on a CBDC, Morris reiterates NAFCU’s position that the costs would outweigh the benefits – as the association has communicated previously to the Federal Reserve and Commerce Department on the same topic – and namely, that superior alternatives exist for accomplishing the same objectives.

“Given the lack of clarity regarding specific CBDC parameters and design features, NAFCU does not believe that sufficient evidence exists to justify development of a CBDC, particularly when better alternatives for achieving the same purported benefits already exist,” wrote Morris. “Credit unions are well positioned to improve underserved populations’ access to affordable financial products and their efforts do not depend upon the introduction of a CBDC.”

Read the full letter. NAFCU will monitor this topic as discussion about CBDC and digital assets continues.