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TCH Comments on Treasury Department’s Notice and Request for Comment on Digital Assets and Digital-Asset-Related Illicit Finance and National Security Risks

The Clearing House Association, L.L.C. (TCH) submitted comments in response to the Treasury Department’s notice and request for comment on “Ensuring Responsible Development of Digital Assets” and digital-asset-related illicit finance and national security risks. In its letter, TCH addressed digital-asset-related illicit finance and national security risks, ways to mitigate these risks, the Treasury Department’s “Action Plan to Address Illicit Financing Risks of Digital Assets” (Action Plan), and ways in which to support anti-money-laundering/countering-the-financing-of-terrorism (AML/CFT) controls in the design of a potential U.S. CBDC. With regard to privately-issued digital assets and private token-based cryptocurrency, TCH opined that a comprehensive federal prudential framework applying standards to digital assets service providers that are equivalent to those that apply to depository financial institutions when engaged in functionally similar activities is essential. TCH also commented that banks, which are subject to comprehensive regulatory and supervisory frameworks, should be no less able to engage in digital-asset-related activities than nonbanks. With regard to a potential U.S. CBDC, TCH expressed its belief that the risks associated with the possible issuance of a CBDC in the U.S. outweigh its potential benefits. TCH further commented that if the U.S. should nevertheless proceed with a CBDC, the foundational requirements in place to prevent criminal and illicit use of commercial bank money must be applied to a U.S. CBDC in such a way that criminal actors are not incentivized to use CBDC. 

To read the full comment letter, click here.