The US Department of the Treasury provided details of an ‘international framework for engagement on digital assets’ that was submitted to the White House as required by the Administration’s Executive Order on Digital Assets. In the press release providing a ‘Fact Sheet’ on the new international framework, the suggestion that infrastructure supporting CBDCs could involve both public and private participants.
According to Treasury, the a public-private approach to CBDCs “… presents opportunities for US companies to lead in the development of these technical systems and for the US Government, working with G7 partners, to encourage technological development that would support a CBDC … ”Almost two years ago, Chair Jay Powell of the Fed testified to Congress that the private sector should not be included in the design of a CBDC. “I do think this is something that the central banks have to design. The private sector is not involved in creating the money supply, that’s something the central bank does, ”said Powell.
Treasury also leaned into the importance of the US being technologically competitive with other countries with respect to digital asset technologies. According to Treasury’s Fact Sheet, the US should “… counter and respond to efforts by foreign adversaries to drive standards and promote their protocols.” China has made strides with its own central bank digital currency and its underlying protocol known as the ‘Blockchain Services Network’ continues to expand as well.
The framework also doubles down on how the US needs to reinforce its leadership in the global financial system as well as technological and economic competitiveness, and should strive to be a standard-setter for the technology globally as well. As the exact framework was not made public, the description provided seems to indicate that the US needs to lean into ways to lead the global CBDC digital infrastructure that is developed by leveraging private sector companies, responding to the challenges of foreign adversaries developing their own protocols , and lead on competitiveness and standards for digital asset technology globally.
Positive Reaction From A Leading Digital Asset and Blockchain Trade Association
I caught up with Sandra Ro, CEO of the Global Blockchain Business Council (GBBC), and asked her to take on a framework for how the US should engage internationally on digital assets. “GBBC views the Framework for International Engagement on Digital Assets as a clear, positive step forward in US engagement and leadership in driving responsible innovation of digital assets. We are pleased to see the framework’s focus on global coordination among the public and private sectors in the development and adoption of global principles and standards – a critical step in realizing the technology’s potential and benefits to society, ”said Ro.
Last May, the GBBC merged with another blockchain industry association called Global Digital Finance (GDF). According to GBBC, this creates the world’s largest member institution for blockchain and digital assets. In addition to Ro’s comments on the public-private focus, she also stated that GBBC also supported the US working work other standard-setting bodies. Ro urged, “… the US to collaborate with emerging digital assets standards setting organizations, as well as groups that give voice to smaller nations, who do not often get a seat at the global policymaking table but stand to benefit a great deal from the technology. ” According to the GBBC website, the organization is already working on a Global Standards Mapping Initiative.
Key relationships for the US mentioned in Treasury’s Fact Sheet included the G7 on the development of a CBDC, the G20 to help engage with other major economies for cross-border payments, and the Financial Stability Board (FSB) as a forum to pursue and push for work to monitor, identify, and foster a shared understanding of global financial stability risks from digital assets. Finally, which will come as no surprise to industry insiders, was the commitment from Treasury to work with the Financial Action Task Force (FATF) to support countries in implementing the FATF standards for virtual assets.