Request for Information and Comment on Digital Assets and Related Technologies, 40213-40216 [2021-15948]
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Federal Register / Vol. 86, No. 141 / Tuesday, July 27, 2021 / Notices
necessary for the proper performance of
the functions of the Department,
including whether the information will
have practical utility; (2) if the
information will be processed and used
in a timely manner; (3) the accuracy of
the agency’s estimates of the burden and
cost of the collection of information,
including the validity of the
methodology and assumptions used; (4)
ways to enhance the quality, utility and
clarity of the information collection; and
(5) ways to minimize the burden of the
collection of information on those who
are to respond, including the use of
automated collection techniques or
other forms of information technology.
FOR FURTHER INFORMATION CONTACT:
Crystal Rennie by telephone at 202–
693–0456 or by email at DOL_PRA_
PUBLIC@dol.gov.
SUPPLEMENTARY INFORMATION: The
Bloodborne Pathogen Standard is an
occupational safety and health standard
that prevents occupational exposure to
bloodborne pathogens. The standard’s
information collection requirements are
essential components that protect
workers from occupational exposure.
The information is used by employers
and workers to implement the
protection required by the Standard.
OSHA compliance officers will use
some of the information in their
enforcement of the Standard. For
additional substantive information
about this ICR, see the related notice
published in the Federal Register on
April 15, 2021 (86 FR 19904).
This information collection is subject
to the PRA. A Federal agency generally
cannot conduct or sponsor a collection
of information, and the public is
generally not required to respond to an
information collection, unless the OMB
approves it and displays a currently
valid OMB Control Number. In addition,
notwithstanding any other provisions of
law, no person shall generally be subject
to penalty for failing to comply with a
collection of information that does not
display a valid OMB Control Number.
See 5 CFR 1320.5(a) and 1320.6.
DOL seeks PRA authorization for this
information collection for three (3)
years. OMB authorization for an ICR
cannot be for more than three (3) years
without renewal. The DOL notes that
information collection requirements
submitted to the OMB for existing ICRs
receive a month-to-month extension
while they undergo review.
Agency: DOL–OSHA.
Title of Collection: Bloodborne
Pathogens Standard.
OMB Control Number: 1218–0180.
Affected Public: Private Sector:
Businesses or other for-profits.
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Total Estimated Number of
Respondents: 701,563.
Total Estimated Number of
Responses: 26,841,471.
Total Estimated Annual Time Burden:
5,720,498 hours.
Total Estimated Annual Other Costs
Burden: $52,516,112.50.
Authority: 44 U.S.C. 3507(a)(1)(D).
Crystal Rennie,
Senior PRA Analyst.
[FR Doc. 2021–15932 Filed 7–26–21; 8:45 am]
BILLING CODE 4510–26–P
NATIONAL CREDIT UNION
ADMINISTRATION
Agency Information Collection
Activities: Proposed Collection;
Comment Request; Capital Planning
and Stress Testing
National Credit Union
Administration (NCUA).
ACTION: Notice and request for comment.
AGENCY:
The National Credit Union
Administration (NCUA), as part of a
continuing effort to reduce paperwork
and respondent burden, invites the
general public and other Federal
agencies to comment on the following
extension of a currently approved
collection, as required by the Paperwork
Reduction Act of 1995.
DATES: Written comments should be
received on or before September 27,
2021 to be assured consideration.
ADDRESSES: Interested persons are
invited to submit written comments on
the information collection to Dawn
Wolfgang, National Credit Union
Administration, 1775 Duke Street, Suite
6032, Alexandria, Virginia 22314; email
at PRAComments@NCUA.gov. Given the
limited in-house staff because of the
COVID–19 pandemic, email comments
are preferred.
FOR FURTHER INFORMATION CONTACT:
Address requests for additional
information to Mackie Malaka at the
address above or telephone 703–548–
2279.
SUMMARY:
OMB Number: 3133–0199.
Title: Capital Planning and Stress
Testing, 12 CFR part 702, subpart E.
Type of Review: Extension of a
currently approved collection.
Abstract: To protect the National
Credit Union Share Insurance Fund
(NCUSIF) and the credit union system,
the largest Federally Insured Credit
Unions (FICUs) must have systems and
processes to monitor and maintain their
capital adequacy. The rule requires
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covered credit unions to develop and
maintain a capital plan and submit this
plan to NCUA by March 31 of each year.
The rule applies to all FICUs that report
$10 billion or more in assets on their
March 31 Call Report.
Affected Public: Private Sector: Notfor-profit institutions.
Estimated No. of Respondents: 18.
Estimated No. of Responses per
Respondent: 1.
Estimated Total Annual Responses:
18.
Estimated Burden Hours per
Response: 223.89.
Estimated Total Annual Burden
Hours: 4,030.
Request for Comments: Comments
submitted in response to this notice will
be summarized and included in the
request for Office of Management and
Budget approval. All comments will
become a matter of public record. The
public is invited to submit comments
concerning: (a) Whether the collection
of information is necessary for the
proper execution of the function of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden of the collection of
information, including the validity of
the methodology and assumptions used;
(c) ways to enhance the quality, utility,
and clarity of the information to be
collected; and (d) ways to minimize the
burden of the collection of the
information on the respondents,
including the use of automated
collection techniques or other forms of
information technology.
By Melane Conyers-Ausbrooks,
Secretary of the Board, the National
Credit Union Administration, on July
20, 2021.
Dated: July 22, 2021.
Dawn D. Wolfgang,
NCUA PRA Clearance Officer.
[FR Doc. 2021–15924 Filed 7–26–21; 8:45 am]
BILLING CODE 7535–01–P
NATIONAL CREDIT UNION
ADMINISTRATION
[NCUA 2021–0102]
SUPPLEMENTARY INFORMATION:
PO 00000
40213
Request for Information and Comment
on Digital Assets and Related
Technologies
National Credit Union
Administration (NCUA).
ACTION: Notice; request for information
and comment.
AGENCY:
The NCUA Board (Board) is
gathering information and soliciting
comments from interested parties
SUMMARY:
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40214
Federal Register / Vol. 86, No. 141 / Tuesday, July 27, 2021 / Notices
regarding the current and potential
impact of activities connected to digital
assets and related technologies on
federally insured credit unions (FICUs),
related entities, and the NCUA. The
NCUA is broadly interested in receiving
input on commenters’ views in this
area, including current and potential
uses in the credit union system, and the
risks associated with them.
DATES: Comments must be received on
or before September 27, 2021 to ensure
consideration.
ADDRESSES: You may submit comments
by any one of the following methods
(Please send comments by one method
only):
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments
for NCUA Docket 2021–0102.
• Fax: (703) 518–6319. Include
‘‘[Your name] Comments on ‘‘Request
for Information and Comment on Digital
Assets and Related Technologies.’’
• Mail: Address to Melane ConyersAusbrooks, Secretary of the Board,
National Credit Union Administration,
1775 Duke Street, Alexandria, Virginia
22314–3428.
• Hand Delivery/Courier: Same as
mailing address.
Public Inspection: You may view all
public comments on the Federal
eRulemaking Portal at https://
www.regulations.gov as submitted,
except for those we cannot post for
technical reasons. NCUA will not edit or
remove any identifying or contact
information from the public comments
submitted. Due to social distancing
measures in effect, the usual
opportunity to inspect paper copies of
comments in the NCUA’s law library is
not currently available. After social
distancing measures are relaxed, visitors
may make an appointment to review
paper copies by calling (703) 518–6540
or emailing OGCMail@ncua.gov.
FOR FURTHER INFORMATION CONTACT:
Policy and Analysis: Scott Borger,
Senior Financial Modeler and Todd
Sims, National Payment Systems
Officer, Office of National Examinations
and Supervision, (703) 518–6640; Legal:
Thomas Zells, Senior Staff Attorney,
Office of General Counsel, (703) 518–
6540; or by mail at National Credit
Union Administration, 1775 Duke
Street, Alexandria, VA 22314.
SUPPLEMENTARY INFORMATION:
I. Background
NCUA Overview
The NCUA is an independent federal
agency that insures shares at FICUs,
protects the members who own credit
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unions, and charters and regulates
federal credit unions (FCUs). The NCUA
is charged with protecting the safety and
soundness of credit unions and, in turn,
the National Credit Union Share
Insurance Fund (NCUSIF) through
regulation and supervision. The NCUA’s
mission is to ‘‘provide, through
regulation and supervision, a safe and
sound credit union system, which
promotes confidence in the national
system of cooperative credit.’’ 1 The
NCUA also works to protect credit
union members and consumers.
Consistent with these aims, the NCUA
has statutory responsibility for a wide
variety of regulations that protect the
credit union system, members, and the
NCUSIF.
Decentralized Finance, Digital Assets,
and Related Technologies
Decentralized Finance (DeFi) is the
broad category of applications adopting
peer-to-peer networks, Distributed
Ledger Technology (DLT), and related
uses, such as smart contracts, to create
digital assets like cryptocurrency and
crypto-assets, clearing and settlement
systems, identity management systems,
and record retention systems.2 As noted,
DLT is the digital process to record
transactions that are behind many of
these innovations. DLT consists of a
shared electronic database where copies
of the same information are stored on a
distributed network of computers. This
shared immutable digital ledger both
ensures the data cannot be altered and
serves to add new information to the
database. Information is only added to
the distributed ledger when consensus
is reached that the information is valid.
As a result, any attempt to modify the
information on one computer will not
impact the information on other
computers. ‘‘Blockchains’’ are one type
of distributed ledger. In a blockchain, a
chronological record of all transactions
is created and stored on the ledger by
sequentially grouping all transactions
together in blocks.
Digital assets can be transferred
between two people without an
1 https://www.ncua.gov/about-ncua/missionvalues.
2 There are a number of terms used to describe
DLT-based tokens, including virtual currencies,
cryptocurrencies, crypto-assets, utility tokens, and
digital assets. There are a variety of reasons these
terms have evolved including the fact that these
digital tokens fail to exhibit the qualities of a
currency, and therefore, should not be confused by
a term like cryptocurrencies. The term DeFi
recognizes that because DLT has been used to
develop a broader set of financial products beyond
value transfer mechanisms, DeFi encompasses a
broader range of different digital and financial
products including settlement systems, security-like
and equity-like financial instruments, non-fungible
tokens, and discount tokens.
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intermediary. However, as a practical
matter, most members of the public do
not have a means of converting dollars
into digital assets on their own.
Software developers and entrepreneurs
have created exchanges to facilitate the
exchange of dollars for digital assets and
digital wallets to provide customers a
convenient way to store their encryption
keys required to verify ownership of
their digital assets. These entities serve
as intermediaries in the new digital
ledger payment systems.
Since the introduction of DLT,
thousands of projects have used the
technology to lower the cost of verifying
ownership, storing distributed data, or
tracking information. The projects have
covered everything from tracking
ownership in national land registries to
tracking the history of a product in the
food supply chain. While DeFi offers a
number of potential benefits and
opportunities for the credit union
system, it also presents several risks, for
example: (1) The permanent nature of
the transactions necessitates questions
about consumer recourse for fraudulent
financial activities; (2) the ability to
source funds for new projects has the
downside of individuals or groups
manipulating the price of tokens; (3) the
storage of digital assets poses risks of
lost or stolen cryptographic keys; and
(4) the ability to transfer value through
peer-to-peer networks creates
unregulated money transmitters that
could provide liquidity to those who
want to launder money or participate in
tax-avoidance schemes.
The NCUA is publishing this request
for information with the aim of engaging
the broad credit union industry and
other stakeholders and learning how
emerging DLT and DeFi applications are
viewed and used. The NCUA hopes to
learn how the credit union community
is using these emerging technologies
and gain additional feedback as to the
role the NCUA can play in safeguarding
the financial system and consumers in
the context of these emerging
technologies. The accelerating pace of
change information technology brings,
coupled with the widespread diffusion
of computing power and the growing
importance of networks, is raising new
opportunities and challenges. In order
to continue to fulfill its mandate to
maintain a safe and sound credit union
system and protect credit union
members, the NCUA is working to better
understand the implications of these
changes and the associated benefits or
challenges that may exist.
II. Request for Comment
The Board seeks comments on the
current and potential impact of
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activities related to DLT and DeFi on the
credit union system. The NCUA is
broadly interested in receiving input on
parties’ views in this area, including
current and potential uses. Commenters
are also encouraged to discuss any and
all relevant issues they believe the
Board should consider with respect to
these technologies and related matters.
The Board reiterates that this request for
information does not modify any
existing requirements applicable to
FICUs and does not grant FICUs any
new authorities or limit any existing
authorities. The request for information
does not speak to the permissibility or
impermissibility of any specific activity.
Questions Regarding Usage and the
Marketplace
1. How are those in the credit union
system currently using or planning to
use DLT and DeFi applications?
2. What, if any, DLT or DeFi
applications are those in the credit
union system currently engaging in or
considering? Please explain, including
the nature and scope of the activity.
More specifically:
a. What, if any, types of specific
products or services related to these
technologies are those in the credit
union system currently offering or
considering offering to members? Are
credit union members asking for
specific products or services related to
these technologies?
b. To what extent are those in the
credit union system engaging in or
considering DeFi applications or
providing services related to digital
assets that have direct balance sheet
impacts?
c. To what extent are those in the
credit union system engaging in or
considering DLT for other purposes,
such as to facilitate internal operations?
d. To what extent, if any, are those in
the credit union system aware of crossjurisdiction or cross-border transactions
related to DLT and digital assets.
3. In terms of the marketplace, where
do those in the credit union system see
the greatest demand for DeFi
application services, and who are the
largest drivers for such services?
4. Are there new developments that
might affect use of DeFi applications by
those in the credit union system in the
future?
5. Are DeFi applications a competitive
threat for those in the credit union
system?
6. What concerns, if any, do those in
the credit union system have related to
current statutory or regulatory
limitations on their ability to utilize
DeFi applications? Are there any
changes that would influence the credit
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union system’s ability to utilize DeFi
applications?
7. Apart from anything listed in this
Request for Information, what other
actions should the NCUA take? Please
be as precise as possible, including, but
not limited to, necessary regulatory
changes, additional guidance, and legal
opinions.
Operational Questions
8. What are the advantages and
disadvantages of FICUs developing DLT
and DeFi projects through third-party
relationships versus through a credit
union service organization (CUSO)?
9. How dependent will FICUs be on
third-party software and open-source
libraries for their own DLT projects?
Questions Regarding Risk and
Compliance Management
10. To what extent are existing risk
and compliance management
frameworks designed to identify,
measure, monitor, and control risks
associated with various DLT and DeFi
applications? Do some DLT and DeFi
applications more easily align with
existing risk and compliance
management frameworks compared to
others? Do, or would, some DLT and
DeFi applications result in FICUs
developing entirely new or materially
different risk and compliance
management frameworks?
11. What unique or specific risks are
challenging to measure, monitor, and
control for various DLT and DeFi
applications? What unique controls or
processes are or could be implemented
to address such risks?
12. What unique benefits or risks to
operations do FICUs consider as they
analyze various DLT and DeFi
applications?
13. How are FICUs integrating, or how
would FICUs integrate, operations
related to DLT and DeFi applications
with legacy FICU systems?
14. Please identify any potential
benefits, and any unique risks, of
particular DLT and DeFi applications to
FICUs and their members.
15. What impact will DLT and DeFi
applications have on FICUs’ earnings?
How will FICUs ensure they account for
any negative impact, such as potential
lost interchange income as peer-to-peer
transactions grow?
16. How are those in the credit union
system integrating these new
technologies into their existing
Information Technology environment
securely, including existing
cybersecurity functions and data
privacy/data protection policies? How
are the risks in this area being
evaluated?
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40215
17. What considerations have
commenters given to how to maintain
continued compliance with State and
Federal laws and regulations that may
be applicable to various DLT and DeFi
applications, including, but not limited
to, those governing securities, Bank
Secrecy Act (BSA) and anti-money
laundering, and consumer protection?
Have those obligations, or uncertainty
related to potential obligations,
impacted commenters DLT and DeFi
activities? How do commenters’ DLT
and DeFi activities address
requirements in these areas?
18. How specifically do DLT and DeFi
projects in the credit union system
address BSA and Know Your Customer
(KYC) requirements?
19. How can FICUs address fraud and
other consumer protections with an
immutable digital ledger? How can
FICUs ensure continued compliance
with any applicable consumer
protection requirements that may arise
with various DLT and DeFi
applications, such as obligations related
to fair lending, electronic funds
transfers, and funds availability?
20. If utilizing, or planning to utilize,
any of these or related technologies,
what steps have been taken in providing
the services and what has been done to
ensure the services are being utilized
safely and in compliance with all
applicable laws and regulations? Please
describe:
a. The process for developing a sound
business case and presenting it to the
board of directors for approval;
b. The process for ensuring the
consideration of all of the risks and risk
categories;
c. The level of due diligence
performed on any vendors or third
parties and whether the vendors were a
new entry in the market or an
established technology provider;
d. The process for assessing the
quality and level of internal information
systems and technology staff to support
systems and applications; and
e. The process for developing internal
oversight of the program.
Questions Regarding Supervision and
Activities
21. Are there any unique aspects the
NCUA should consider from a
supervisory perspective?
22. Are there any areas in which the
NCUA should clarify or expand existing
supervisory guidance to address these
activities?
23. The NCUA’s Part 721 application
procedures may be applicable to certain
DLT activities.3 Is additional clarity
3 12
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Federal Register / Vol. 86, No. 141 / Tuesday, July 27, 2021 / Notices
needed? Would any changes to NCUA’s
regulations be helpful in addressing
uncertainty surrounding the
permissibility of particular types of DLT
activity, in order to support FICUs
considering or engaging in such
activities?
Questions Regarding Share Insurance
and Resolution
24. Are there any steps the NCUA
should consider to ensure FICU
members can distinguish between
uninsured digital asset products and
insured shares?
25. Are there distinctions or
similarities between stablecoins
(cryptocurrencies that are backed by a
currency like the U.S. Dollar and are
designed to have a stable value
compared to other cryptocurrencies)
and stored value products where the
underlying funds are held at FICUs and,
for which pass-through share insurance
may be available to members in limited
scenarios?
26. If the NCUA were to encounter
any of the digital assets use cases in the
resolution process or in a
conservatorship capacity, what
complexities might be encountered in
valuing, marketing, transferring,
operating, or resolving the DeFi activity?
What actions should be considered to
overcome the complexities?
Additional Considerations
Commenters are invited to address
any other DLT and DeFi applications or
related information they seek to bring to
the NCUA’s attention. Commenters are
encouraged to provide the specific basis
for their comments and, to the extent
feasible, documentation to support any
comments.
Authority: 12 U.S.C. 1756 and 1784.
By the National Credit Union
Administration Board on July 22, 2021.
Melane Conyers-Ausbrooks,
Secretary of the Board.
[FR Doc. 2021–15948 Filed 7–26–21; 8:45 am]
BILLING CODE 7535–01–P
NATIONAL FOUNDATION ON THE
ARTS AND THE HUMANITIES
lotter on DSK11XQN23PROD with NOTICES1
National Endowment for the Arts
60-Day Notice for ‘‘Applications From
Students for Agency Initiatives Poetry
Out Loud or the Musical Theater
Songwriting Challenge for High School
Students’’
National Endowment for the
Arts, National Foundation on the Arts
and the Humanities.
AGENCY:
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Notice of proposed collection;
comment request.
ACTION:
The National Endowment for
the Arts (NEA), as part of its continuing
effort to reduce paperwork and
respondent burden, conducts a
preclearance consultation program to
provide the general public and federal
agencies with an opportunity to
comment on proposed and/or
continuing collections of information in
accordance with the Paperwork
Reduction Act of 1995. This program
helps to ensure that requested data is
provided in the desired format;
reporting burden (time and financial
resources) is minimized; collection
instruments are clearly understood; and
the impact of collection requirements on
respondents is properly assessed.
Currently, the NEA is soliciting
comments concerning the proposed
information collection of: Applications
from Students for Agency Initiatives
Poetry Out Load or the Musical Theater
Songwriting Challenge for High School
Students.’’ A copy of the current
information collection request can be
obtained by contacting the office listed
below in the address section of this
notice.
DATES: Written comments must be
submitted to the office listed in the
address section below within 60 days
from the date of this publication in the
Federal Register. The NEA is
particularly interested in comments
that:
• Evaluate whether the proposed
collection of information is necessary
for the proper performance of the
functions of the agency, including
whether the information will have
practical utility;
• Evaluate the accuracy of the
agency’s estimate of the burden of the
proposed collection of information,
including the validity of the
methodology and assumptions used;
• Enhance the quality, utility, and
clarity of the information to be
collected; and
• Can help the agency minimize the
burden of the collection of information
on those who are to respond, including
through the electronic submission of
responses.
ADDRESS: Email comments to Daniel
Beattie, Director, Office of Guidelines
and Panel Operations, National
Endowment for the Arts, at: 202–682–
5688 or beattied@arts.gov.
FOR FURTHER INFORMATION CONTACT:
Daniel Beattie, Director of Guidelines
and Panel Operations, National
Endowment for the Arts, at: 202–682–
5688 or beattied@arts.gov.
SUMMARY:
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Dated: July 22, 2021.
Daniel Beattie,
Director, Guidelines and Panel Operations,
Administrative Services, National
Endowment for the Arts.
[FR Doc. 2021–15976 Filed 7–26–21; 8:45 am]
BILLING CODE 7537–01–P
NATIONAL SCIENCE FOUNDATION
Sunshine Act Meeting
The National Science Board’s
Committee on Awards & Facilities
hereby gives notice of the scheduling of
a teleconference for the transaction of
National Science Board business, as
follows:
TIME AND DATE: Tuesday, August 3, 2021,
from 10:45–11:45 a.m. EDT.
PLACE: This meeting will be held by
teleconference through the National
Science Foundation, 2415 Eisenhower
Avenue, Alexandria, VA 22314.
STATUS: Closed.
MATTERS TO BE CONSIDERED: The agenda
of the teleconference is: Committee
Chair’s Opening Remarks; approval of
Prior Minutes; Action Item: Rubin
Observatory Management Reserve;
Action Item: Arecibo Observatory Cleanup Costs Award; Committee Chair’s
Closing Remarks.
CONTACT PERSON FOR MORE INFORMATION:
Point of contact for this meeting is:
Chris Blair, cblair@nsf.gov, 703/292–
7000. Meeting information and updates
may be found at https://www.nsf.gov/
nsb/meetings/notices.jsp#sunshine.
Please refer to the National Science
Board website www.nsf.gov/nsb for
general information.
Chris Blair,
Executive Assistant to the National Science
Board Office.
[FR Doc. 2021–16104 Filed 7–23–21; 4:15 pm]
BILLING CODE 7555–01–P
NATIONAL SCIENCE FOUNDATION
Sunshine Act Meeting
The National Science Board’s
Committee on External Engagement
hereby gives notice of the scheduling of
a teleconference for the transaction of
National Science Board business as
follows:
TIME AND DATE: Tuesday, August 3, 2021,
from 11:00–11:45 a.m. p.m. EDT.
PLACE: This meeting will be held by
teleconference through the National
Science Foundation.
STATUS: Open.
MATTERS TO BE CONSIDERED: The agenda
of the teleconference is: Opening
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]]>Agencies
[Federal Register Volume 86, Number 141 (Tuesday, July 27, 2021)]
[Notices]
[Pages 40213-40216]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15948]
-----------------------------------------------------------------------
NATIONAL CREDIT UNION ADMINISTRATION
[NCUA 2021-0102]
Request for Information and Comment on Digital Assets and Related
Technologies
AGENCY: National Credit Union Administration (NCUA).
ACTION: Notice; request for information and comment.
-----------------------------------------------------------------------
SUMMARY: The NCUA Board (Board) is gathering information and soliciting
comments from interested parties
[[Page 40214]]
regarding the current and potential impact of activities connected to
digital assets and related technologies on federally insured credit
unions (FICUs), related entities, and the NCUA. The NCUA is broadly
interested in receiving input on commenters' views in this area,
including current and potential uses in the credit union system, and
the risks associated with them.
DATES: Comments must be received on or before September 27, 2021 to
ensure consideration.
ADDRESSES: You may submit comments by any one of the following methods
(Please send comments by one method only):
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments for NCUA Docket 2021-
0102.
Fax: (703) 518-6319. Include ``[Your name] Comments on
``Request for Information and Comment on Digital Assets and Related
Technologies.''
Mail: Address to Melane Conyers-Ausbrooks, Secretary of
the Board, National Credit Union Administration, 1775 Duke Street,
Alexandria, Virginia 22314-3428.
Hand Delivery/Courier: Same as mailing address.
Public Inspection: You may view all public comments on the Federal
eRulemaking Portal at https://www.regulations.gov as submitted, except
for those we cannot post for technical reasons. NCUA will not edit or
remove any identifying or contact information from the public comments
submitted. Due to social distancing measures in effect, the usual
opportunity to inspect paper copies of comments in the NCUA's law
library is not currently available. After social distancing measures
are relaxed, visitors may make an appointment to review paper copies by
calling (703) 518-6540 or emailing [email protected].
FOR FURTHER INFORMATION CONTACT: Policy and Analysis: Scott Borger,
Senior Financial Modeler and Todd Sims, National Payment Systems
Officer, Office of National Examinations and Supervision, (703) 518-
6640; Legal: Thomas Zells, Senior Staff Attorney, Office of General
Counsel, (703) 518-6540; or by mail at National Credit Union
Administration, 1775 Duke Street, Alexandria, VA 22314.
SUPPLEMENTARY INFORMATION:
I. Background
NCUA Overview
The NCUA is an independent federal agency that insures shares at
FICUs, protects the members who own credit unions, and charters and
regulates federal credit unions (FCUs). The NCUA is charged with
protecting the safety and soundness of credit unions and, in turn, the
National Credit Union Share Insurance Fund (NCUSIF) through regulation
and supervision. The NCUA's mission is to ``provide, through regulation
and supervision, a safe and sound credit union system, which promotes
confidence in the national system of cooperative credit.'' \1\ The NCUA
also works to protect credit union members and consumers. Consistent
with these aims, the NCUA has statutory responsibility for a wide
variety of regulations that protect the credit union system, members,
and the NCUSIF.
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\1\ https://www.ncua.gov/about-ncua/mission-values.
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Decentralized Finance, Digital Assets, and Related Technologies
Decentralized Finance (DeFi) is the broad category of applications
adopting peer-to-peer networks, Distributed Ledger Technology (DLT),
and related uses, such as smart contracts, to create digital assets
like cryptocurrency and crypto-assets, clearing and settlement systems,
identity management systems, and record retention systems.\2\ As noted,
DLT is the digital process to record transactions that are behind many
of these innovations. DLT consists of a shared electronic database
where copies of the same information are stored on a distributed
network of computers. This shared immutable digital ledger both ensures
the data cannot be altered and serves to add new information to the
database. Information is only added to the distributed ledger when
consensus is reached that the information is valid. As a result, any
attempt to modify the information on one computer will not impact the
information on other computers. ``Blockchains'' are one type of
distributed ledger. In a blockchain, a chronological record of all
transactions is created and stored on the ledger by sequentially
grouping all transactions together in blocks.
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\2\ There are a number of terms used to describe DLT-based
tokens, including virtual currencies, cryptocurrencies, crypto-
assets, utility tokens, and digital assets. There are a variety of
reasons these terms have evolved including the fact that these
digital tokens fail to exhibit the qualities of a currency, and
therefore, should not be confused by a term like cryptocurrencies.
The term DeFi recognizes that because DLT has been used to develop a
broader set of financial products beyond value transfer mechanisms,
DeFi encompasses a broader range of different digital and financial
products including settlement systems, security-like and equity-like
financial instruments, non-fungible tokens, and discount tokens.
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Digital assets can be transferred between two people without an
intermediary. However, as a practical matter, most members of the
public do not have a means of converting dollars into digital assets on
their own. Software developers and entrepreneurs have created exchanges
to facilitate the exchange of dollars for digital assets and digital
wallets to provide customers a convenient way to store their encryption
keys required to verify ownership of their digital assets. These
entities serve as intermediaries in the new digital ledger payment
systems.
Since the introduction of DLT, thousands of projects have used the
technology to lower the cost of verifying ownership, storing
distributed data, or tracking information. The projects have covered
everything from tracking ownership in national land registries to
tracking the history of a product in the food supply chain. While DeFi
offers a number of potential benefits and opportunities for the credit
union system, it also presents several risks, for example: (1) The
permanent nature of the transactions necessitates questions about
consumer recourse for fraudulent financial activities; (2) the ability
to source funds for new projects has the downside of individuals or
groups manipulating the price of tokens; (3) the storage of digital
assets poses risks of lost or stolen cryptographic keys; and (4) the
ability to transfer value through peer-to-peer networks creates
unregulated money transmitters that could provide liquidity to those
who want to launder money or participate in tax-avoidance schemes.
The NCUA is publishing this request for information with the aim of
engaging the broad credit union industry and other stakeholders and
learning how emerging DLT and DeFi applications are viewed and used.
The NCUA hopes to learn how the credit union community is using these
emerging technologies and gain additional feedback as to the role the
NCUA can play in safeguarding the financial system and consumers in the
context of these emerging technologies. The accelerating pace of change
information technology brings, coupled with the widespread diffusion of
computing power and the growing importance of networks, is raising new
opportunities and challenges. In order to continue to fulfill its
mandate to maintain a safe and sound credit union system and protect
credit union members, the NCUA is working to better understand the
implications of these changes and the associated benefits or challenges
that may exist.
II. Request for Comment
The Board seeks comments on the current and potential impact of
[[Page 40215]]
activities related to DLT and DeFi on the credit union system. The NCUA
is broadly interested in receiving input on parties' views in this
area, including current and potential uses. Commenters are also
encouraged to discuss any and all relevant issues they believe the
Board should consider with respect to these technologies and related
matters. The Board reiterates that this request for information does
not modify any existing requirements applicable to FICUs and does not
grant FICUs any new authorities or limit any existing authorities. The
request for information does not speak to the permissibility or
impermissibility of any specific activity.
Questions Regarding Usage and the Marketplace
1. How are those in the credit union system currently using or
planning to use DLT and DeFi applications?
2. What, if any, DLT or DeFi applications are those in the credit
union system currently engaging in or considering? Please explain,
including the nature and scope of the activity. More specifically:
a. What, if any, types of specific products or services related to
these technologies are those in the credit union system currently
offering or considering offering to members? Are credit union members
asking for specific products or services related to these technologies?
b. To what extent are those in the credit union system engaging in
or considering DeFi applications or providing services related to
digital assets that have direct balance sheet impacts?
c. To what extent are those in the credit union system engaging in
or considering DLT for other purposes, such as to facilitate internal
operations?
d. To what extent, if any, are those in the credit union system
aware of cross-jurisdiction or cross-border transactions related to DLT
and digital assets.
3. In terms of the marketplace, where do those in the credit union
system see the greatest demand for DeFi application services, and who
are the largest drivers for such services?
4. Are there new developments that might affect use of DeFi
applications by those in the credit union system in the future?
5. Are DeFi applications a competitive threat for those in the
credit union system?
6. What concerns, if any, do those in the credit union system have
related to current statutory or regulatory limitations on their ability
to utilize DeFi applications? Are there any changes that would
influence the credit union system's ability to utilize DeFi
applications?
7. Apart from anything listed in this Request for Information, what
other actions should the NCUA take? Please be as precise as possible,
including, but not limited to, necessary regulatory changes, additional
guidance, and legal opinions.
Operational Questions
8. What are the advantages and disadvantages of FICUs developing
DLT and DeFi projects through third-party relationships versus through
a credit union service organization (CUSO)?
9. How dependent will FICUs be on third-party software and open-
source libraries for their own DLT projects?
Questions Regarding Risk and Compliance Management
10. To what extent are existing risk and compliance management
frameworks designed to identify, measure, monitor, and control risks
associated with various DLT and DeFi applications? Do some DLT and DeFi
applications more easily align with existing risk and compliance
management frameworks compared to others? Do, or would, some DLT and
DeFi applications result in FICUs developing entirely new or materially
different risk and compliance management frameworks?
11. What unique or specific risks are challenging to measure,
monitor, and control for various DLT and DeFi applications? What unique
controls or processes are or could be implemented to address such
risks?
12. What unique benefits or risks to operations do FICUs consider
as they analyze various DLT and DeFi applications?
13. How are FICUs integrating, or how would FICUs integrate,
operations related to DLT and DeFi applications with legacy FICU
systems?
14. Please identify any potential benefits, and any unique risks,
of particular DLT and DeFi applications to FICUs and their members.
15. What impact will DLT and DeFi applications have on FICUs'
earnings? How will FICUs ensure they account for any negative impact,
such as potential lost interchange income as peer-to-peer transactions
grow?
16. How are those in the credit union system integrating these new
technologies into their existing Information Technology environment
securely, including existing cybersecurity functions and data privacy/
data protection policies? How are the risks in this area being
evaluated?
17. What considerations have commenters given to how to maintain
continued compliance with State and Federal laws and regulations that
may be applicable to various DLT and DeFi applications, including, but
not limited to, those governing securities, Bank Secrecy Act (BSA) and
anti-money laundering, and consumer protection? Have those obligations,
or uncertainty related to potential obligations, impacted commenters
DLT and DeFi activities? How do commenters' DLT and DeFi activities
address requirements in these areas?
18. How specifically do DLT and DeFi projects in the credit union
system address BSA and Know Your Customer (KYC) requirements?
19. How can FICUs address fraud and other consumer protections with
an immutable digital ledger? How can FICUs ensure continued compliance
with any applicable consumer protection requirements that may arise
with various DLT and DeFi applications, such as obligations related to
fair lending, electronic funds transfers, and funds availability?
20. If utilizing, or planning to utilize, any of these or related
technologies, what steps have been taken in providing the services and
what has been done to ensure the services are being utilized safely and
in compliance with all applicable laws and regulations? Please
describe:
a. The process for developing a sound business case and presenting
it to the board of directors for approval;
b. The process for ensuring the consideration of all of the risks
and risk categories;
c. The level of due diligence performed on any vendors or third
parties and whether the vendors were a new entry in the market or an
established technology provider;
d. The process for assessing the quality and level of internal
information systems and technology staff to support systems and
applications; and
e. The process for developing internal oversight of the program.
Questions Regarding Supervision and Activities
21. Are there any unique aspects the NCUA should consider from a
supervisory perspective?
22. Are there any areas in which the NCUA should clarify or expand
existing supervisory guidance to address these activities?
23. The NCUA's Part 721 application procedures may be applicable to
certain DLT activities.\3\ Is additional clarity
[[Page 40216]]
needed? Would any changes to NCUA's regulations be helpful in
addressing uncertainty surrounding the permissibility of particular
types of DLT activity, in order to support FICUs considering or
engaging in such activities?
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\3\ 12 CFR part 721.
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Questions Regarding Share Insurance and Resolution
24. Are there any steps the NCUA should consider to ensure FICU
members can distinguish between uninsured digital asset products and
insured shares?
25. Are there distinctions or similarities between stablecoins
(cryptocurrencies that are backed by a currency like the U.S. Dollar
and are designed to have a stable value compared to other
cryptocurrencies) and stored value products where the underlying funds
are held at FICUs and, for which pass-through share insurance may be
available to members in limited scenarios?
26. If the NCUA were to encounter any of the digital assets use
cases in the resolution process or in a conservatorship capacity, what
complexities might be encountered in valuing, marketing, transferring,
operating, or resolving the DeFi activity? What actions should be
considered to overcome the complexities?
Additional Considerations
Commenters are invited to address any other DLT and DeFi
applications or related information they seek to bring to the NCUA's
attention. Commenters are encouraged to provide the specific basis for
their comments and, to the extent feasible, documentation to support
any comments.
Authority: 12 U.S.C. 1756 and 1784.
By the National Credit Union Administration Board on July 22,
2021.
Melane Conyers-Ausbrooks,
Secretary of the Board.
[FR Doc. 2021-15948 Filed 7-26-21; 8:45 am]
BILLING CODE 7535-01-P
