Notice2022-20279
Ensuring Responsible Development of Digital Assets; Request for Comment
Primary source
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Published
September 20, 2022
Issuing agencies
Treasury Department
Abstract
This notice invites interested members of the public to provide input pursuant to The Executive Order of March 9, 2022, "Ensuring Responsible Development of Digital Assets." In particular, the Department invites comments on the digital-asset-related illicit finance and national security risks as well as the publicly released action plan to mitigate the risks.
Full Text
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<title>Federal Register, Volume 87 Issue 181 (Tuesday, September 20, 2022)</title>
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[Federal Register Volume 87, Number 181 (Tuesday, September 20, 2022)]
[Notices]
[Pages 57556-57558]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-20279]
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DEPARTMENT OF THE TREASURY
Ensuring Responsible Development of Digital Assets; Request for
Comment
AGENCY: Departmental Offices, Treasury.
ACTION: Request for comment.
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SUMMARY: This notice invites interested members of the public to
provide input pursuant to The Executive Order of March 9, 2022,
``Ensuring Responsible Development of Digital Assets.'' In particular,
the Department invites comments on the digital-asset-related illicit
finance and national security risks as well as the publicly released
action plan to mitigate the risks.
DATES: Comments must be received on or before November 3, 2022.
ADDRESSES: You may submit comments via the Federal eRulemaking Portal:
<a href="http://www.regulations.gov">www.regulations.gov</a>. Follow the instructions on the website for
submitting comments.
In general, all comments will be available for inspection at
<a href="http://www.regulations.gov">www.regulations.gov</a>. Comments, including attachments and other
supporting materials, are part of the public record. Do not submit any
information in your comments or supporting materials that you consider
confidential or inappropriate for public disclosure.
FOR FURTHER INFORMATION CONTACT: Jon Fishman, Assistant Director,
Office of Strategic Policy, Terrorist Financing and Financial Crimes,
202-622-5856, <a href="/cdn-cgi/l/email-protection#5c3633323d28343d32723a352f34313d321c282e393d2f292e25723b332a"><span class="__cf_email__" data-cfemail="bbd1d4d5dacfd3dad595ddd2c8d3d6dad5fbcfc9dedac8cec9c295dcd4cd">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
Executive Order 14067 of March 9, 2022, ``Ensuring Responsible
Development of Digital Assets'' (hereafter ``Executive Order'') (87 FR
14143; March 14, 2022), outlines principal U.S. policy objectives with
respect to digital assets.\1\ These principal policy objectives are:
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\1\ <a href="https://www.federalregister.gov/documents/2022/03/14/2022-05471/ensuring-responsible-development-of-digital-assets">https://www.federalregister.gov/documents/2022/03/14/2022-05471/ensuring-responsible-development-of-digital-assets</a>.
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1. Protection of consumers, investors, and businesses in the United
States.
2. Protection of United States and global financial stability and
the mitigation of systemic risk.
3. Mitigation of illicit finance and national security risks posed
by misuse of digital assets.
4. Reinforcement of U.S. leadership in the global financial system
and in technological and economic competitiveness, including through
the responsible development of payment innovations and digital assets.
[[Page 57557]]
5. Promotion of access to safe and affordable financial services.
6. Support of technological advances that promote responsible
development and use of digital assets.
Section 7(a) provides that digital assets have facilitated
sophisticated cybercrime-related financial networks and activity,
including through ransomware activity. The growing use of digital
assets in financial activity heightens risks of crimes such as money
laundering, terrorist and proliferation financing, fraud and theft
schemes, and corruption. These illicit activities highlight the need
for ongoing scrutiny of the use of digital assets, the extent to which
technological innovation may impact such activities, and exploration of
opportunities to mitigate these risks through regulation, supervision,
public-private engagement, oversight, and law enforcement.
Section 7(c) directs the Secretary of the Treasury, in consultation
with the Secretary of State, the Attorney General, the Secretary of
Commerce, the Secretary of Homeland Security, the Director of the
Office of Management and Budget, the Director of National Intelligence,
and the heads of other relevant agencies shall develop a coordinated
action plan based on the Strategy's conclusions for mitigating the
digital-asset-related illicit finance and national security risks
addressed in the updated strategy. The action plan shall address the
role of law enforcement and measures to increase financial services
providers' compliance with anti-money laundering and countering the
financing of terrorism (AML/CFT) obligations related to digital asset
activities.
II. Objective
In September 2022, the Treasury Department submitted this action
plan to the White House and publicly released the report. The digital
asset ecosystem is rapidly evolving, and the Department of the Treasury
is committed to continuing to monitor emerging risks in partnership
with other U.S. government agencies, foreign governments, and the
private sector, which will inform other potential actions to mitigate
these risks. Through this request for comment (RFC), Treasury is
requesting input from the public to understand the public's view on the
emerging risks as well as what actions the U.S. government and Treasury
Department should take to mitigate the risks. Through this RFC,
Treasury also seeks to further understand how public-private
collaboration may improve efforts to address the risks.
III. Request for Comments
Treasury welcomes input on any matter that commenters believe is
relevant to Treasury's ongoing efforts to assess the illicit finance
risks associated with digital assets as well as the ongoing efforts to
mitigate the risks. Commenters are encouraged to address any or all of
the following questions, or to provide any other comments relevant to
the development of the report. When responding to one or more of the
questions below, please note in your response the number(s) of the
questions to which you are responding. In all cases, to the extent
possible, please cite any public data related to or that support your
responses. If data are available, but non-public, describe such data to
the extent permissible.
A. Illicit Finance Risks
1. Has Treasury comprehensively defined the illicit financing risks
associated with digital assets? Please list any key illicit financing
risks that we have not raised in this Action Plan or the National Risk
Assessment.
2. How might future technological innovations in digital assets
present new illicit finance risks or mitigate illicit finance risks?
3. What are the illicit finance risks related to non-fungible
tokens?
4. What are the illicit finance risks related to decentralized
finance (DeFi) and peer-to-peer payment technologies?
B. AML/CFT Regulation and Supervision
1. What additional steps should the United States government take
to more effectively deter, detect, and disrupt the misuse of digital
assets and digital asset service providers by criminals?
2. Are there specific areas related to AML/CFT and sanctions
obligations with respect to digital assets that require additional
clarity?
3. What existing regulatory obligations in your view are not or no
longer fit for purpose as it relates to digital assets? If you believe
some are not fit for purpose, what alternative obligations should be
imposed to effectively address illicit finance risks related to digital
assets and vulnerabilities?
4. What regulatory changes would help better mitigate illicit
financing risks associated with digital assets?
5. How can the U.S. government improve state-state and state-
federal coordination for AML/CFT regulation and supervision for digital
assets?
6. What additional steps should the U.S. government consider to
combat ransomware?
7. What additional steps should the U.S. government consider to
address the illicit finance risks related to mixers and other
anonymity-enhancing technologies?
8. What steps should the U.S. government take to effectively
mitigate the illicit finance risks related to DeFi?
C. Global Implementation of AML/CFT Standards
1. How can Treasury most effectively support consistent
implementation of global AML/CFT standards across jurisdictions for
digital assets, including virtual assets and virtual asset service
providers (VASP)?
2. Are there specific countries or jurisdictions where the U.S.
government should focus its efforts, through bilateral outreach and
technical assistance, to strengthen foreign AML/CFT regimes related to
virtual asset service providers?
D. Private Sector Engagement and AML/CFT Solutions
1. How can Treasury maximize public-private and private-private
information sharing on illicit finance and digital assets?
2. How can the U.S. Department of the Treasury, in concert with
other government agencies, improve guidance and public-private
communication on AML/CFT and sanctions obligations with regard to
digital assets?
3. How can Treasury encourage the use of collaborative analytics to
address illicit financing risks associated with digital assets while
also respecting due process and privacy?
4. What technological solutions designed to improve AML/CFT and
sanctions compliance are being used by the private sector for digital
assets? Can these technologies be employed to better identify and
disrupt illicit finance associated with digital assets and if so, how?
5. Are there additional steps the U.S. Government can take to
promote the development and implementation of innovative technologies
designed to improve AML/CFT compliance with respect to digital assets?
6. How can law enforcement and supervisory efforts related to
countering illicit finance in digital assets better integrate private
sector resources?
7. How can Treasury maximize the development and use of emerging
technologies like blockchain analytics, travel rule solutions, or
blockchain native AML/CFT solutions, to strengthen AML/CFT compliance
related to digital assets?
8. How can financial institutions offering digital assets better
integrate
[[Page 57558]]
controls focused on fiat currency and digital asset transaction
monitoring and customer identification information to more effectively
identify, mitigate, and report illicit finance risks?
E. Central Bank Digital Currencies (CBDC)
1. How can Treasury most effectively support the incorporation of
AML/CFT controls into a potential U.S. CBDC design?
IV. Notes
The term ``digital asset'' refers to all CBDCs, regardless of the
technology used, and to other representations of value, financial
assets and instruments, or claims that are used to make payments or
investments, or to transmit or exchange funds or the equivalent
thereof, that are issued or represented in digital form through the use
of distributed ledger technology. Some examples of digital assets
include cryptocurrencies, stablecoins, and CBDCs. Regardless of the
label used, a digital asset may be, among other things, a security, a
commodity, a derivative, or other financial product. Digital assets may
be exchanged across digital asset trading platforms, including
centralized and decentralized finance platforms, or through peer-to-
peer technologies.\2\
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\2\ <a href="https://www.federalregister.gov/documents/2022/03/14/2022-05471/ensuring-responsible-development-of-digital-assets">https://www.federalregister.gov/documents/2022/03/14/2022-05471/ensuring-responsible-development-of-digital-assets</a>.
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The term ``virtual asset'' refers to a subset of digital assets
that does not include CBDCs or representations of other financial
assets, such as digitized representations of existing securities or
deposits.
The term ``virtual asset service provider'' as defined by FATF,
means any natural or legal person who is not covered elsewhere under
the FATF Recommendations, and as a business conducts one or more of the
following activities or operations for or on behalf of another natural
or legal person:
i. exchange between virtual assets and fiat currencies;
ii. exchange between one or more forms of virtual assets;
iii. transfer of virtual assets;
iv. safekeeping and/or administration of virtual assets or
instruments enabling control over virtual assets; and
v. participation in and provision of financial services related to
an issuer's offer and/or sale of a virtual asset.
Scott Rembrandt,
Deputy Assistant Secretary, Office of Terrorist Financing and Financial
Crimes, U.S. Department of the Treasury.
[FR Doc. 2022-20279 Filed 9-19-22; 8:45 am]
BILLING CODE 4810-AK-P
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