More work is needed to provide the regulatory certainty required to realize the promise of stablecoins and other digital assets, including ensuring that the same anti-money laundering regulations apply to equivalent financial activities, the American Bankers Association said today in a letter to Treasury Department officials.
The Treasury Department in recent months has sought public input on stablecoin implementation, particularly on tools or strategies that financial institutions can use to detect illicit activity involving digital assets. In its letter, ABA said it applauded regulators for taking steps to remove supervisory barriers to banks adopting and transacting in digital assets, and it welcomed passage of the Genius Act, which establishes a regulatory framework for stablecoins.
Still, ABA had several suggestions for regulators as they work to implement the Genius Act and seek to mitigate the use of digital assets in illicit finance. They include:
- Equivalent Bank Secrecy Act, or BSA, regulation — technology-neutral regulation— must apply to equivalent financial activity, whether conducted in digital or fiat currency.
- The rules must be modernized to regulate digital assets both in light of both traditional illicit finance risks, as well as the novel risks presented by their unique decentralized character.
- While the above reforms are in progress, banks need additional interim guidance to apply existing BSA regulatory obligations in the context of digital assets.
- Banks that choose to go beyond providing traditional banking services and act as digital market participants should be exempt from separate, duplicative or contradictory BSA regulation.
- Banks must be allowed to responsibly innovate without unnecessary regulatory barriers, so banks and other responsible actors can benefit from new tools and technology, and that bad actors cannot gain asymmetrical advantage in hiding their activities.
“By addressing these important issues, Treasury can empower banks to responsibly support the adoption of digital assets while mitigating illicit finance risks, and effectively providing customers with the products and services they find best fit their needs,” ABA said.
