ABA, BPI weigh in on White House effort to set digital asset R&D priorities

ABA and the Bank Policy Institute filed a comment letter today with the White House Office of Science and Technology Policy in response to requests for input to inform the establishment of digital asset research and development priorities.

The groups urged policymakers to distinguish among digital assets, cryptocurrencies and tokenized assets, as well as the underlying distributed ledger technology and blockchain infrastructure, which may differ in use across functions and activities. They also encouraged the administration to acknowledge existing bank innovations and the rules and safeguards already in place that allow banks to innovate safely. “Banks continue to lead the way in responsible innovation in the financial services sector while nonbank crypto firms continue to collapse,” ABA and BPI wrote.

The letter recommended clear definitions of products and underlying technologies, noting that traditional bank products or services using distributed ledger technology (DLT) or blockchain are often categorized into a single group and are treated the same as nonbank-issued cryptocurrencies, which present very different risks. The groups also asked the administration to acknowledge banks’ ability to manage digital asset risks and called for further study on how banks appropriately manage risks presented by permissioned DLT, blockchain or other novel technologies in connection with traditional banking products and for internal recordkeeping.

Additionally, the associations said more research could be done to understand how to best mitigate illicit finance risks associated with digital asset transactions, and how new technologies can facilitate the creation of verifiable credentials, identify specific cybersecurity standards or approaches for interacting with permissionless or public blockchains and examine interoperability blockchain standards for banks