U.S. President Trump’s Working Group on Digital Asset Markets published its regulatory and legislative proposals aimed at strengthening America’s leadership in digital financial technology. The recommendations span six key areas: creating a fit-for-purpose regulatory framework through Congressional action including Commodity Futures Trading Commission (CFTC) oversight spot markets for non-security digital assets and embracing decentralized finance (DeFi) technology; modernizing banking regulations by ending “Operation Choke Point 2.0” and clarifying permissible bank activities in custody and stablecoin issuance; strengthening the dollar’s role through implementation of the GENIUS Act creating federal stablecoin regulations and banning central bank digital currencies (CBDCs); combating illicit finance by modernizing anti-money laundering rules while protecting self-custody rights; ensuring fair taxation by reducing compliance burdens and treating digital assets as a distinct asset class; and enabling immediate trading at the federal level through regulatory clarity on registration, custody, and trading requirements. [Read more at the White House]
Notably, the report recommends amendments to the process by which the Federal Reserve grants master account access. A Fed master account is a deposit account maintained by a bank or other type of depository institution at a regional Reserve Bank and provides a gateway to the Fed’s balance sheet. Depository institutions and other eligible entities use deposits held in their master account for the settlement of interbank payments. Some state chartered banks that have applied for a master account have expressed frustration with the transparency of the Fed’s assessment process and negative outcomes, seemingly on account of their digital asset-related activities. The working group proposes that the Fed provide more clarity and transparency regarding the master account access process, and that expected timelines for assessing requests a master account should be clarified and defined in regulation. Also, the Fed should be prohibited from denying master account and Fed services access solely because the applicant engages in digital asset-related activities.
Upcoming Speaking Engagements:
The CB+DC Conference (Nassau, Bahamas, September 9-11) is a premier gathering centered on CBDCs, tokenized assets, and stablecoins. It provides a forum for central bankers, commercial bankers, technology innovators, policymakers, and academics to explore the latest advancements in digital currency, engage with experts and peers, and discuss the future of digital currency. [Register here but before you do, email me at john@kiffmeister.com for a 15% discount]
I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.