Commerce Department lays out US path to global leadership on digital assets

A report to the White House from the US Department of Commerce sets out a framework for fostering US competitiveness in the digital asset industry.

The report is one of nine submitted from various federal agencies in response to President Joe Biden’s March 2022 executive order on Ensuring Responsible Development of Digital Assets. Together they comprise the White House First-Ever Comprehensive Framework for Responsible Development of Digital Assets released on September 16.  This alert is one of several DLA Piper will issue this week examining certain of these agency reports.

Citing regulatory and technological leadership as the “two key pillars of U.S. competitiveness,” the Commerce Department framework proposes four main areas for government action on digital assets: (1) adding clarity to the evolving US regulatory landscape; (2) enhancing international trade policy and trade promotion activities; (3) increasing collaboration with industry, academia, civil society, and other stakeholders; and (4) promoting research and development.  

1. US regulatory clarity

To help address the current regulatory uncertainty around digital assets in the US, the framework encourages all relevant independent regulatory agencies (eg, the Securities and Exchange Commission and the Commodity Futures Trading Commission) to allocate dedicated resources to digital asset-related matters. Such resources would enable the agencies to engage in greater enforcement coordination, industry engagement, and regulatory collaboration as they work to address current and emergent risks in the digital asset ecosystem.

2.  International trade policy and trade promotion

In connection with the US government’s broader global engagement on digital asset issues, the framework recommends three lines of effort by the Commerce Department.

First, the Department should advocate for “pro-competitive” policies in its engagements in international fora (eg, the Organization for Economic Cooperation and Development, Asia-Pacific Economic Cooperation, International Organization for Standardization, and World Bank).

Second, it should leverage the interagency Trade Promotion Coordinating Committee (chaired by the Secretary of Commerce) to develop a government-wide plan for enhancing US exports of digital asset products and services.

And third, the Department should promote the US government’s high-standard digital trade principles – covering issues like market access, data flows, and non-discriminatory treatment of digital products, among others – as specifically relevant for trade involving digital assets.

3.  Public-private engagement

To provide a standing forum for dialogue on digital asset issues with industry, academia, consumer advocates, and other federal departments and agencies, the framework suggests establishing a new federal advisory committee at the Commerce Department.

Among other things, this committee could advise the Secretary of Commerce on technological advancements, consumer and investor protection and education, financial inclusion for underserved communities, talent shortage and workforce development issues, modernizing payment systems (particularly cross-border systems), industry energy use and emissions, and industry and market measurement methodologies.

4.  Research and development

Finally, to bolster US technological leadership, the framework endorses the efforts of other federal agencies to promote research and development in the financial technology and digital asset spaces.

In particular, it supports the proposal by the White House Office of Science and Technology Policy for a National Digital Assets Research and Development Agenda, as well as initiatives by the Networking and Information Technology Research and Development program to coordinate federal agencies’ work on fintech topics, such as smart contracts, digital identity, digital asset token uses, and scaling distributed ledger technologies.

For more information on how the federal government can help cutting-edge US financial technology and digital asset firms find a foothold in global markets for their products and services, please contact the author.

For direct access to the seven reports which have released to date, please click the links below. DLA Piper is developing analyses of the additional reports and will release the analyses as they become available.

• Crypto-Assets: Implications for Consumers, Investors, and Businesses issued by the Department of the Treasury
• Responsible Advancement of U.S. Competitiveness in Digital Assets issued by the Department of Commerce
• Climate and Energy Implications of Crypto-Assets in the United States issued by the White House Office of Science and Technology
• How To Strengthen International Law Enforcement Cooperation For Detecting, Investigating, And Prosecuting Criminal Activity Related To Digital Assets issued by the Department of Justice
• The Future of Money and Payments issued by the Department of the Treasury
• Action Plan to Address Illicit Financing Risks of Digital Assets issued by the Department of the Treasury
• The Role of Law Enforcement in Detecting, Investigating, And Prosecuting Criminal Activity Related to Digital Assets issued by the Department of Justice

Please also see the other two alerts in this series, In overseeing digital assets, the CFTC should use its existing authority, White House fact sheet says and Responding to Biden Executive Order, OSTP report addresses climate and energy implications of digital assets and blockchain technology.