Regulators hear update on digital assets work, including progress on report being prepared

An update on preliminary work performed in response to President Joe Biden’s (D) executive order on development of digital assets, including the progress of a report, was presented to members of the Financial Stability Oversight Council (FSOC) at its meeting Friday, according to the Treasury Department.

In a readout, Treasury said the panel, chaired by Treasury Secretary Janet Yellen and which includes the leadership of all federal financial institution regulators, heard the update from Treasury staff responding to the Ensuring Responsible Development of Digital Assets executive order, issued in early March. That order envisions a “coordinated and comprehensive approach” to digital asset policy, and is widely viewed as a first step toward regulation of stablecoins, cryptocurrencies and other devices.

Among other things, the order urges regulators to “ensure sufficient oversight,” develop rules to address regulatory gaps, and explore use of a U.S. central bank digital currency (CBDC) while encouraging the Federal Reserve to continue its assessment of the digital pay vehicle.

At Friday’s meeting, the panel also heard about progress of an FSOC report being prepared in response to the order.

Also discussed at Friday’s session: Asset valuations, nonfinancial and financial leverage, funding risk and other financial stability developments. The panel also received an update from staff of the Federal Reserve and the Commodity Futures Trading Commission (CFTC) on commodity market developments.

The group met in executive session (no public, including reporters, allowed) by videoconference.

READOUT: Financial Stability Oversight Council Meeting on April 8, 2022