ABA seeks level playing field in digital asset regulation

Lawmakers and regulators should adhere to the principle of “same activity, same risk, same regulation” when developing a framework for digital asset regulation, seeking to apply existing financial system safeguards to the digital asset ecosystem and filling in gaps with new legislation, the American Bankers Association said today in a statement for the record during a hearing of the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion.

ABA said banks have long provided safe and well-regulated custody services to investors in securities and other assets. It also noted that banks stand ready to innovate, but banking regulators do not appear to have appropriately distinguished between traditional bank activities using distributed ledger technology or blockchain, such as tokenizing existing bank liabilities or securities, and nonbank-issued cryptocurrencies, which present very different risks given the inherent design of the various activities. “Banks are responsibly evaluating this technology, and we urge Congress and regulators not to throw the proverbial baby out with the bathwater by restricting banks’ ability to leverage DLT in a safe and sound manner,” the association wrote.