The U.S. Treasury Department provided details of an “International Digital Asset Engagement Framework” 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 the infrastructure supporting CBDCs could involve both public and private participants.
According to the Treasury, the public-private approach of CBDCs “…presents opportunities for U.S. companies to lead the development of these technical systems and for the U.S. government, in collaboration with G7 partners, to encourage the development technology that would support a CBDC…” Nearly two years ago, Fed Chairman Jay Powell told Congress that the private sector should not be included in the design of a CBDC. is something that central banks have to design. The private sector is not involved in creating the money supply, it’s something the central bank does,” Powell said.
The Treasury also reflected on the importance of the United States being technologically competitive with other countries when it comes to digital asset technologies. According to the Treasury fact sheet, the United States should “…counter and respond to efforts by foreign adversaries to impose standards and promote their protocols.” China has made progress with its own central bank digital currency and its underlying protocol known as the “Blockchain Services Network” also continues to develop.
The framework also doubles down on how the United States should strengthen its leadership in the global financial system as well as technological and economic competitiveness, and should strive to be a benchmark for technology globally as well. As the exact framework has not been made public, the description provided seems to indicate that the United States needs to look at ways to lead the CBDC’s global digital infrastructure that is being developed by leveraging private sector companies, respond to the challenges of foreign adversaries developing their own protocols, and lead in competitiveness and standards for digital asset technology globally.
Positive reaction from a major digital asset and blockchain trade association
I met Sandra Ro, CEO of the Global Blockchain Business Council (GBBC), and asked her to develop a framework for how the United States should engage internationally on digital assets. “The GBBC views the Framework for International Engagement on Digital Assets as a clear and positive step forward in U.S. engagement and leadership in driving responsible digital asset innovation. We are delighted to see that the framework emphasizes global coordination between the public and private sectors in the development and adoption of global principles and standards – a crucial step in realizing the technology’s potential and benefits. for society,” Ro said.
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 said that GBBC also supports the US work of other standards bodies. Ro urged, “…the United States to work with emerging digital asset standards organizations, as well as groups that give voice to small nations, who often don’t get a seat at the global table. policy-making, but who will benefit a lot from technology.” According to the GBBC website, the organization is already working on a global standards mapping initiative.
Key relationships for the US mentioned in the Treasury fact sheet included the G7 on developing a CBDC, the G20 to help engage with other major economies for cross-border payments, and the Council Financial Stability Board (FSB) as a forum to continue and push for the work of monitoring, identifying and promoting a common understanding of global financial stability risks related to digital assets. Finally, which will come as no surprise to industry insiders, is Treasury’s commitment to working with the Financial Action Task Force (FATF) to help countries implement the FATF standards for virtual assets.