Here’s the latest on actions taken by the President’s Working Group on Financial Markets.
An update was recently issued from the U.S. Department of the Treasury. Published on June 30, 2022, after a meeting of the group,
“Readout: Secretary of the Treasury Janet L. Yellen’s Meeting with the President’s Working Group on Financial Markets, the OCC, FDIC and CFPB on Stablecoins” highlights are provided here.
We’ve included reporting from the American Bankers Association’s Banking Journal, and background on the “Executive Order on Ensuring Responsible Development of Digital Assets” which was issued on March 9, 2022 by President Biden.
Summary of U.S. Treasury Readout: Working Group on Financial Markets
According to the readout:
“U.S. Secretary of the Treasury Janet L. Yellen convened principals representing the President’s Working Group on Financial Markets, in addition to the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB), today to discuss stablecoin risks and how legislation could contribute to the existing regulatory framework.
The participants discussed developments since the President’s Working Group, the Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation released the Report on Stablecoins. The Secretary commended the steps that individual agencies have taken within the scope of their mandates and authorities. Secretary Yellen emphasized how recent events have underscored the urgent need to ensure that stablecoin arrangements are subject to a federal framework on a consistent and comprehensive basis.
Secretary Yellen highlighted the need to continue to constructively engage in serious legislative efforts to promptly put in place a regulatory framework for stablecoins that would address current and future risks, such as those related to runs, safety and soundness, consumer protection, the payment system and the concentration of economic power, while complementing existing authorities with respect to market integrity, investor protection, and illicit finance.”
American Bankers Association (ABA) Weighs In
The ABA Banking Journal offered the following report, in an article published after the readout, titled, “Yellen reiterates need for consistent regs on stablecoins.” It offered this summary:
After several weeks of upheaval in the cryptocurrency market — including prominent stablecoins like TerraUSD and USDD breaking their U.S. dollar pegs — Treasury Secretary Janet Yellen reiterated her call for a regulatory framework for stablecoins.
The ABA has called on policymakers to address gaps in federal regulation of stablecoins and to ensure consistent treatment of banks and nonbanks that engage in stablecoin activity. “ABA believes that customers who choose to access digital asset markets, including stablecoins, will be best served when they can do so through fully regulated banks where they are afforded robust consumer protection,” the association said in statement for the record to the House Financial Services Committee in February.
The American Banking Association issued the following statement on the issue in a Banking Journal summary, “Digital asset regulation must support, not hinder private-sector innovation.” It included a comment letter which the national association sent to the Department of Commerce.
Background on Working Group and President Biden’s Executive Order
Naehas has been tracking this and related developments, in an effort to continue to serve as a resource to financial service companies in regulated and as-yet unregulated industries, from banking to fintech to digital assets and cryptocurrency. To that end, a March article titled, “Crypto in the Spotlight (Part 1)” included the Executive Order and details on the move toward regulations for digital currency. An excerpt follows:
The Executive Order issued by President Biden on March 9, called for research and reporting by a broad range of departments and agencies. Specifically, the Executive Order noted: Within 180 days of the date of this order, 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 submit to the President a report on the future of money and payment systems, including the conditions that drive broad adoption of digital assets; the extent to which technological innovation may influence these outcomes; and the implications for the United States financial system, the modernization of and changes to payment systems, economic growth, financial inclusion, and national security.
The article also cited a Thompson Reuters article which reported on the Executive Order, which summarized related activity and statements on the issue: This (issuance of Executive Order by President Biden) followed the Federal Reserve Statement issued January, 2022, “Money & Payments: The U.S. Dollar in the Age of Digital Transformation.”
In the midst of the obvious global attention on cryptocurrency, it all adds up to one thing: regulations are coming. Compliance will be critical. And while no one seems quite certain when or how that will play out, those firms which will be impacted are in hot pursuit of ways and means to ensure they’ve got resources to manage whatever regulatory compliance programs the government will be establishing,” noted reporters Andrea Shalal and Katanga Johnson.
Tapping Resources Amidst Rate Changes
As with the Federal Reserve and its Federal Open Market Committee (FOMC) meetings, and the decisions impacting interest rates and, as such, the Prime Rate, the Naehas team will continue to monitor and report on relevant updates.
Additional resources on managing regulatory compliance and reducing risk amidst these fast-incoming changes are readily available for finserv executives and those involved in marketing, compliance, disclosure management and risk management. Best practices for leveraging technology and automation, intelligent reviews, content orchestration and offer management, are housed on the Naehas website Resource section. Read, watch and learn – from a range of articles, videos and case studies – to gain impactful benefits which enhance compliance, reduce risk and reduce cycle time.