The Federal Reserve, the European Central Bank, The People’s Bank of China, The Bank of Japan, and all other major central banks are carefully designing their CBDCs. Not a surprise this subject was heavily covered in the document. They want to make sure that businesses like centralized exchanges will be operating as such and safeguard the US leading financial and technological innovation. Much of the document has investor protections left up in the air until there is more regulatory clarity. Who is going to oversee certain jurisdictions and how is authority going to be structured? These are all questions left to be answered. Protecting investors is an important aspect for the administrations and delegating that is going to be a cross agency issue. “ Research shows that illicit activity accounts for less than 1 percent of transactions.” Coinbase This section also expands on the importance for mitigating “illicit finance” and national security risks “posed by the misuse of digital assets.” However, Coinbase covered this subject last year in their blog.Īll the same “concerns” raised by Treasury Secretary Janet Yellen were mentioned here in this article, “money laundering, cybercrime and ransomware, narcotics and human trafficking, and terrorism and proliferation financing” The United States has an interest in ensuring that it remains at the forefront of responsible development and design of digital assets and the technology that underpins new forms of payments and capital flows in the international financial system” “We must reinforce United States leadership in the global financial system and in technological and economic competitiveness, including through the responsible development of payment innovations and digital assets. Creating an appropriate environment that promotes developing the digital asset space. Much like Gary Gensler, protecting investors, consumers, and businesses is the “top priority”. There was also a mention on “human rights” in the policy section to be seen in terms of equity, banking the unbanked for equal access, and the right to be the bearer of your financial assets. They’re behind in CBDC development, but have been more welcoming in terms of supporting crypto innovation with an emphasis on AML/KYC. Setting up the US for leading financial innovation is a common theme found in the document. China tested a larger setting for the Digital Yuan, DC/EP (Digital Currency/Electronic Payment). Now, we are in the midst of their development, testing, and full scale use like we saw in China during the Beijing Olympics. Up until very recently the idea of this was thought to be “crazy” by the general public. They are “pegged” to those currencies on a 1:1 ratio so they maintain their equivalence. $1 of CBDC is worth the same as a $1 bill or $1 in a bank account. The CBDC is both issued and backed by the central bank. “Monetary authorities” have been testing and collecting information on a framework and use case for CBDCs and researching digital assets.Ī central bank digital currency (CBDC) is a digital claim on central bank “money”. An acknowledgement of both the institutional and individual adoption of crypto that has been on display these past few years. Throughout the article phrases like “the rise of digital assets”, “increased use of digital assets”, and “adoption of digital assets” occur 18 different times. The most important sections of the article involve policy, objectives, CBDCs, mitigating risk, limiting “illicit finance”, and international cooperation. It is mostly a lot of statements regarding future planning, and nothing happening immediately. The document is over 5000 words and roughly 15 pages long, this article will cover the relevant highlights for you. It is clear that there will be a lot of development occurring over the next 6 -12 months. The “ Executive Order on Ensuring Responsible Development of Digital Assets” was released today.
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