A group of financial services trade associations are urging the President’s Working Group on Digital Asset Markets to remove barriers to financial institutions engaging in digital asset activities.
In a joint letter, the associations acknowledge the progress the Federal Reserve, the FDIC and the OCC have made in rescinding policies that have hindered the ability of banks to engage in digital asset activities. However, the associations recommend additional steps that can be taken to further advance bank innovation.
“The U.S. will not be able to achieve a leadership position in digital assets and financial technology under the status quo,” the letter to the working group states. “Banks are an essential component of the financial and payments systems and are governed by a comprehensive regulatory framework carefully crafted to mitigate the risks inherent to financial activities. It is therefore critical that the federal banking agencies take further steps to facilitate banks’ ability to engage in digital asset activities.”
The associations made three key recommendations in the letter:
- Create consistent rules across agencies. The federal banking agencies should coordinate to issue joint rules and guidance when possible. If joint guidance isn’t possible, the agencies should at least align their policies to avoid conflicting requirements.
- Regulate the activity, not the technology. The agencies should affirm that banks may engage in permissible banking activities regardless of the technology used. A tokenized asset is no different from the traditional form of that asset; therefore, the regulatory framework should be technology neutral.
- Set clear risk-management expectations. Rather than requiring individual institutions to obtain permission from their regulator prior to engaging in digital asset activities, the agencies should issue uniform expectations for how institutions should manage the risks of those activities, including anti-money laundering, capital and liquidity risks.
The letter was signed by the Bank Policy Institute, American Bankers Association, American Fintech Council, Americas Focus Committee of the Association of Global Custodians, Financial Services Forum, Securities Industry and Financial Markets Association and The Clearing House Association.
The associations’ recommendations are aligned with the objectives outlined in the President’s Executive Order on digital asset markets.