July 11, 2022

Treasury RFC seeks input on digital assets; Fed’s Brainard reveals thoughts on CBDC

Digital dollarThe Treasury Department Friday issued a 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 seeks public 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 the financial market and payment system.

The RFC outlines several questions for consideration, including:

  • What explains the level of current adoption of digital assets?
  • What factors that would further facilitate mass adoption?
  • What are the main opportunities for consumers, investors, and businesses from digital assets?
  • What are the risks to consumers, investors and businesses?
  • Can digital assets play a role in increasing these and other underserved Americans' access to safe, affordable, and reliable financial services, and if so, how?

NAFCU last week 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.

The association will engage with the Treasury Department on this topic and continue to ensure credit union concerns are heard.

Relatedly, Federal Reserve Vice Chair Lael Brainard spoke about a number of issues surrounding digital asset risk and regulation on Friday. Brainard concluded her remarks with the observation that for “responsible innovation to flourish will require that the regulatory perimeter encompass the crypto financial system according to the principle of like risk, like regulatory outcome, and that novel risks associated with the new technologies be appropriately addressed.” In addition, Brainard discussed the possible introduction of a CBDC, noting ways in which it might be complementary to public and private payment systems.

NAFCU will keep credit unions up-to-date as discussions around this topic progress.