Oversight needed for digital assets marketplace

July 5, 2022

In a letter to the Department of Commerce’s International Trade Administration, CUNA said it supports developing a comprehensive regulatory framework governing digital assets that protects consumers, financial institutions, and the economy. CUNA sent the letter in response to the federal agency’s request to comment on Developing a Framework on Competitiveness of Digital Asset Technologies (RFC).  

“Credit unions are actively evaluating their options in the digital asset marketplace to best meet the needs of their members and to ensure the continued safety and soundness of their institutions,” the letter reads.  

The letter makes the case for digital assets to provide an entry point for the unbanked and underbanked to receive quality, reliable financial services from a credit union. The letter also lays out the circumstances under which a central bank digital currencies (CBDC) should be considered:  

  • With congressional authorization and a clear structure and novel purpose; 

  • Through an intermediated model that preserves the direct relationship between consumers and financial institutions; and 

  • In a way that sufficiently mitigates the acute risk of deposit substitution and its cascading effects on the financial system. 

The letter also expresses credit union support on the “whole-of-government” approach outlined in President Biden’s Executive Order to ensure appropriate oversight and regulation of the marketplace and to prevent regulatory arbitrage by fintechs and other unregulated entities providing financial services to consumers.