ABA Perspective Breaking Down the Debate of Digital Assets
As I traveled the country this summer speaking at various state bankers association conventions, I’d always ask this question of my audience: How many of you have clients and customers who are asking you about cryptocurrencies and digital assets? And nearly everywhere I went, nearly every hand would go up.
Rob Nichols, President and CEO American Bankers Association
Te interest in cryptocurrencies and digital assets is undeniable — even in the face of recent volatility in digital asset markets. Americans want them: from the casual dabbler to the serious investor, from Gen Zers to boomers, everyone it seems wants a bite at the crypto apple. Many banks want to engage, too — as digital assets become more popular, those banks are exploring ways to meet the needs of customers who want their bank to be the custodian of these assets.
I’ve written previously about the merits of banks being able to take on custodial roles for digital assets — there are many — and the need for a
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regulatory architecture that will support them taking on these roles if they choose. Tat’s an area where ABA continues to advocate for banks’ ability to enter the digital asset space in a safe and sound manner. But it’s just one of the debates that are currently brewing over crypto. Tere are several others that bankers should be aware of.
WHO SHOULD REGULATE? One key quandary facing policymakers right now is: what’s the right way to regulate crypto, and to which agency should that authority be delegated?
Currently, the Securities and Exchange Commission and the Commodity Futures Trading Commission are both vying for the role of crypto cop. Two separate bills have been introduced this summer — one by Sens. Cynthia Lummis, R-Wy., and Kirsten Gillibrand, D-N.Y., and another by Sens. Debbie Stabenow, D-Mich., and John Boozman, R-Ark. — that would delegate most
of this authority to the CFTC. Simultaneously, there are some in the crypto community who are calling for the creation of a whole new regulatory agency dedicated to digital asset supervision, though this seems far less likely.
Regardless of which entity ultimately ends up with regulatory authority, it is imperative that it develops clear definitions of digital asset products that are based on the risk that each category of digital asset carries. Working with the banking agencies, any prospective crypto regulator also must ensure a level playing field between bank and nonbank entities in the digital asset markets and establish clear guidelines for risk management and consumer protection.
PAYMENTS SYSTEM ACCESS? Another key question is the extent to which nonbank crypto firms should have access to the payment system. Te Federal Reserve took a significant step toward
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