In March, US President Joe Biden issued an executive order to the US Treasury Department. It had been tasked with the responsibility of developing a regulatory framework for cryptocurrencies and on Thursday, it fulfilled its obligation.
On Thursday, a fact sheet that boasted the title ‘Framework for International Engagement on Crypto Assets’ was published by the US Department of Treasury. According to the sheet, the president has been provided with a framework aimed at ensuring interagency cooperation with their foreign counterparts in accordance with the executive order that had been issued back on March 9th this year.
The framework delivered by the Secretary of Treasury is aimed at ensuring the collaboration of international allies in order to develop international standards that can be used for the regulation and oversight of crypto assets.
According to the Treasury, the risks to financial stability and arbitrage opportunities spring up because of uneven supervision, compliance, and regulation across different jurisdictions. This obviously puts investors, consumers, markets, and businesses at risk.
Working with others
The Treasury Department asserted that investigating illegal digital asset transactions that are usually conducted overseas, such as in the case of money laundering related to cybercrime, or even ransomware payments, can become a challenge in the United States. This is because of inadequate anti-money laundering (AML) and combating the financing of terrorism (CFT) supervision, regulation, and enforcement in other countries.
Therefore, the Treasury stated that it was necessary for the United States to work with international partners and to take the lead in discussions of digital payment architectures and central bank digital currencies (CBDCs). It added that this international collaboration should focus on all the challenges associated with digital assets, including investor and consumer protection, financial stability, terrorist financing, money laundering, business risks, sanctions evasion, proliferation financing, and other illegal activities.
Some of the prominent international engagements were highlighted in the fact sheet, which includes the Financial Action Task Force (FATF), the International Monetary Fund (IMF), the Financial Stability Board (FSB), The World Bank, the Organization for Economic Cooperation and Development (OECD), other Multilateral Development Banks (MDBs) and the Egmont Group of Financial Intelligence Units (FIUs).
The Treasury said that the framework comprises of everything that the core democratic values of the US are respected with respect to digital assets development. Plus, it also ensures the protection of investors, consumers, and businesses and preserves the connectivity of the global financial system and its architectural interoperability. Lastly, it also maintains the efficiency and reliability of the international monetary and global financial system.
The need for developing crypto regulation has become evident in recent months. President Joe Biden issued the executive order in March after Russia had invaded Ukraine back in February. There were claims of Russia using cryptocurrencies for evading the sanctions that had been imposed against it by western nations. This has made it even more crucial to focus on developing regulations for governing the crypto market.