The United States payment systems operator, The Clearing House has released its response to a Treasury Department request for comment on “illicit funding and national security risks related to digital assets, as well as the published action plan to mitigate the risks.” The Clearing House considered that digital assets pose serious security risks, but was concerned that banks have the same opportunities to participate in the market as non-banks.
The Treasury Department issued its request for comment on September 20 as part of its ongoing response to President Joe Biden’s Executive Order 14067 of March 9, 2022, “Ensuring Responsible Development of Digital Assets.” In its 22-page response letter, The Clearing House addresses some of the issues raised by Treasury, highlighting five main points it considers ways to mitigate national security and illicit funding risks posed by non-bank digital assets issued from privately (many cryptocurrencies and stablecoins) and US government tokens (CBDC). The letter, dated November 3, was made public on November 10.
leaders from #fintech and traditional financial services agree: a government token (central bank digital currency #CBDC) is a “perilous societal prospect” https://t.co/AO1Jo2Gm8L
— The Clearing House (@TCHtweets) October 28, 2022
The Clearing House called for a federal prudential framework with standards for digital asset service providers that are equivalent to those for depository financial institutions that conduct functionally similar activities. Furthermore, banks “should be no less capable of engaging in digital asset-related activities than non-banks.”
The company does not mince words to talk about the possible American CBDC:
“The risks associated with the potential issuance of a CBDC in the US outweigh its potential benefits, and therefore a CBDC must be determined not to be in the national interest.”
In the event that the United States decides to implement a CBDC, “Existing fundamental requirements to prevent criminal and illicit use of commercial bank money should be applied to a US CBDC in such a way that criminal actors are not incentivized to use the CBDC,” write the company
In any case, The Clearing House sees limited appeal for an American CBDC:
“Intermediaries must have a clear business case for assuming customer identification/verification, AML/FT monitoring and sanctions compliance obligations, particularly as the risks associated with such assumption may, without commission, not be backed by the low margins typically associated with providing custody services.
The Clearing House is owned by 23 banks and payment companies. It was founded in 1853.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.