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White House’s proposed crypto framework will have ‘global implications’: Fmr. CFPB director

White House’s proposed crypto framework will have ‘global implications’: Fmr. CFPB director

A new report out from the white house setting a framework for cryptocurrency regulation now this framework outlines several action items including how to crack down on fraud in the digital asset space we’re here to discuss this release is kathy kraninger solidus labs vp of regulatory affairs and former consumer protection financial bureau director.

Good to have you back on the show so first off in terms of this framework how far does it go in terms of addressing some of the concerns they have about how crypto is classified and who should be overseeing it so thank you so much for having me with you again great to be here and a really banner day.

Frankly there is a lot to absorb in the reports that were issued today talking about 180 days after president biden issued his executive order looking at agencies across the government to come together on a whole of government approach for how to think about digital assets and digital asset markets and blockchain.

Technology the industry has been saying there are a wide range of considerations here and the administration responded on that so u.s competitiveness national security financial uh crime consumer protection so all of those things being taken into account and really formulating u.s policy as the u.s goes forward in a global marketplace and.

Assesses its role and so certainly one of the things that that i take away from it is exactly that that there are global implications here and certainly when you look at issues like the can the concept of a u.s central bank digital currency being issued you know that digital dollar what does that look like and what are the.

Considerations one of them is continued strength of the us dollar and our interests from a national security standpoint and u.s competitive standpoint and what about for consumers obviously we have this this framework coming about but for consumers who they see the headlines about some of these exchanges.

What sort of protections do we get much detail on that side well first and foremost it’s consistent with what the administration’s been doing and saying you know there there are laws that apply today to this activity fraud is illegal theft is illegal and so there is a reiteration that agencies.

Should take enforcement actions consistent with current law uh and and that’s certainly an important aspect of things in addition to that uh recognition of again pulling other agencies into play and looking at coordinated actions one of the ways you do that is through bodies like the financial literacy and education council.

I was the vice chair of that group it is government-wide and the importance of educating investors and the general public about how to engage with digital assets and the protections that you noted some that are there some that are not and you also have a lot of deceptive advertising that that happens in traditional finance.

It happens outside of finance you know there’s definitely an aspect of education to that and enforcement to that to go after entities that are engaged in deception so that’s called out in the report as well and something that certainly consumers should watch out for.

And the last piece i would mention is just around some of the things that we know consumers have tended to come to expect in banking so deposit insurance uh we know that there are entities that were you know engaged in advertising that made it sound as though the assets would be.

Protected just like they would be if you were engaging with bank deposits and so that kind of activity is not acceptable and you see recent enforcement actions by the fdic and the occ and others around exactly those types of things so that’s the use of existing law to enforce in those ways it’s.

Important in terms of future protections there’s some discussion of it you know we’re still digging into all of the details there a lot of it having to do with future payment systems and future cross-border activity with respect to transactions and what consumers.

Should look for in those cases and how we can bring technology about that will really be beneficial to consumers and reduce some of those risks kathy lots of discussion in this framework about the u.s central bank a digital currency what does though that mean for existing crypto currencies so there was definitely acknowledgement.

That congress needs to provide authority uh for the cbdc and it’s continued work frankly around what are the benefits what specifically should that look uh look like and we saw that in the comments this morning that uh there was urgency around continued research and framing this out a little bit more so i took that to mean you know decisions not.

Yet made the report does lay out i think fairly clearly some of the dimensions about that whether the benefit for example of a wholesale cbdc so enabling really interbank transfers to be more efficient to be settled more quickly cross-border type dynamics again between financial institutions that’s the role i.

See uh frankly for a u.s cbdc potentially i think there are a lot of things to work through on this front though and still very much a role for the the private sector in payments uh you know that’s the system the u.s has always had we’re used to that the private sector does bring great capabilities so that’s you know whether.

That’s for stable coins or again other uh technical mechanisms uh there is an important partnership here with respect to the financial system we’ve built up over decades and those private sector and government roles should continue in my opinion and so i think there is at least the.

Acknowledgment of that balance in in the report that was issued on the future payments and also will be interesting to see how these companies and investors involved in this space respond to this framework kathy crannon great to have you thanks so much for joining us