Ensuring Responsible Development of Digital Assets; Request for Comment, 57556-57558 [2022-20279]

Download as PDF lotter on DSK11XQN23PROD with NOTICES1 57556 Federal Register / Vol. 87, No. 181 / Tuesday, September 20, 2022 / Notices and then click ‘‘submit.’’ This information collection can be located by searching by OMB control number ‘‘1557–0245’’ or ‘‘Guidance on Sound Incentive Compensation Policies.’’ Upon finding the appropriate information collection, click on the related ‘‘ICR Reference Number.’’ On the next screen, select ‘‘View Supporting Statement and Other Documents’’ and then click on the link to any comment listed at the bottom of the screen. • For assistance in navigating www.reginfo.gov, please contact the Regulatory Information Service Center at (202) 482–7340. FOR FURTHER INFORMATION CONTACT: Shaquita Merritt, OCC Clearance Officer, (202) 649–5490, Chief Counsel’s Office, Office of the Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219. If you are deaf, hard of hearing, or have a speech disability, please dial 7–1–1 to access telecommunications relay services. SUPPLEMENTARY INFORMATION: Under the PRA (44 U.S.C. 3501 et seq.), Federal agencies must obtain approval from OMB for each collection of information that they conduct or sponsor. ‘‘Collection of information’’ is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) to include agency requests and/or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of title 44 requires Federal agencies to provide a 60-day notice in the Federal Register concerning each proposed collection of information, including each proposed extension of an existing collection of information, before submitting the collection to OMB for approval. To comply with this requirement, the OCC is publishing notice of the renewal of the collection of information set forth in this document. Title: Guidance on Sound Incentive Compensation Policies. OMB Number: 1557–0245. Description: Under the guidance, each large national bank and Federal savings association should: (i) have policies and procedures that identify and describe the role(s) of the personnel and units authorized to be involved in developing and administering incentive compensation arrangements, identify the source of significant risk-related factors, establish appropriate controls governing these factors to help ensure their reliability, and identify the individual(s) and unit(s) whose approval is necessary for the establishment or modification of incentive compensation arrangements; (ii) create and maintain sufficient VerDate Sep<11>2014 17:48 Sep 19, 2022 Jkt 256001 documentation to permit an audit of the organization’s processes for developing and administering incentive compensation arrangements; (iii) have any material exceptions or adjustments to the incentive compensation arrangements established for senior executives approved and documented by its board of directors; and (iv) have its board of directors receive and review, on an annual or more frequent basis, an assessment by management of the effectiveness of the design and operation of the organization’s incentive compensation system in providing risktaking incentives that are consistent with the organization’s safety and soundness. The principles discussed in the guidance will vary with the size and complexity of a banking organization, and monitoring methods for small banks are not directly addressed by these four policies and procedures in the guidance. Type of Review: Regular. Affected Public: Business or other forprofit. Estimated Number of Respondents for Yearly Maintenance: 1,093 (38 large banks; 1,055 small banks). Estimated Number of Respondents for Setup: 1 large bank; 1 small bank. Estimated Burden per Respondent: 520 hours for large banks (480 hours for set up; 40 hours for yearly maintenance); 120 hours for small banks (60 hours for set up; 30 hours for yearly maintenance). Total Annual Burden: 33,740 hours. Frequency of Response: Annually. All comments will be considered in formulating the subsequent submission and become a matter of public record. Comments are invited on: (a) Whether the collection of information is necessary for the proper performance of the functions of the OCC, including whether the information has practical utility; (b) The accuracy of the OCC’s estimate of the information collection burden; (c) Ways to enhance the quality, utility, and clarity of the information to be collected; (d) Ways to minimize the burden of the collection on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) Estimates of capital or startup costs and costs of operation, maintenance, and purchase of services to provide information. Theodore J. Dowd, Deputy Chief Counsel, Office of the Comptroller of the Currency. [FR Doc. 2022–20302 Filed 9–19–22; 8:45 am] BILLING CODE 4810–33–P PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 DEPARTMENT OF THE TREASURY Ensuring Responsible Development of Digital Assets; Request for Comment Departmental Offices, Treasury. Request for comment. AGENCY: ACTION: SUMMARY: This notice invites interested members of the public to provide input pursuant to The Executive Order of March 9, 2022, ‘‘Ensuring Responsible Development of Digital Assets.’’ In particular, the Department invites comments on the digital-asset-related illicit finance and national security risks as well as the publicly released action plan to mitigate the risks. DATES: Comments must be received on or before November 3, 2022. ADDRESSES: You may submit comments via the Federal eRulemaking Portal: www.regulations.gov. Follow the instructions on the website for submitting comments. In general, all comments will be available for inspection at www.regulations.gov. Comments, including attachments and other supporting materials, are part of the public record. Do not submit any information in your comments or supporting materials that you consider confidential or inappropriate for public disclosure. FOR FURTHER INFORMATION CONTACT: Jon Fishman, Assistant Director, Office of Strategic Policy, Terrorist Financing and Financial Crimes, 202–622–5856, jonathan.fishman@treasury.gov. SUPPLEMENTARY INFORMATION: I. Background Executive Order 14067 of March 9, 2022, ‘‘Ensuring Responsible Development of Digital Assets’’ (hereafter ‘‘Executive Order’’) (87 FR 14143; March 14, 2022), outlines principal U.S. policy objectives with respect to digital assets.1 These principal policy objectives are: 1. Protection of consumers, investors, and businesses in the United States. 2. Protection of United States and global financial stability and the mitigation of systemic risk. 3. Mitigation of illicit finance and national security risks posed by misuse of digital assets. 4. Reinforcement of U.S. leadership in the global financial system and in technological and economic competitiveness, including through the responsible development of payment innovations and digital assets. 1 https://www.federalregister.gov/documents/ 2022/03/14/2022-05471/ensuring-responsibledevelopment-of-digital-assets. E:\FR\FM\20SEN1.SGM 20SEN1 Federal Register / Vol. 87, No. 181 / Tuesday, September 20, 2022 / Notices 5. Promotion of access to safe and affordable financial services. 6. Support of technological advances that promote responsible development and use of digital assets. Section 7(a) provides that digital assets have facilitated sophisticated cybercrime-related financial networks and activity, including through ransomware activity. The growing use of digital assets in financial activity heightens risks of crimes such as money laundering, terrorist and proliferation financing, fraud and theft schemes, and corruption. These illicit activities highlight the need for ongoing scrutiny of the use of digital assets, the extent to which technological innovation may impact such activities, and exploration of opportunities to mitigate these risks through regulation, supervision, publicprivate engagement, oversight, and law enforcement. Section 7(c) directs the Secretary of the Treasury, in consultation with the Secretary of State, the Attorney General, the Secretary of Commerce, the Secretary of Homeland Security, the Director of the Office of Management and Budget, the Director of National Intelligence, and the heads of other relevant agencies shall develop a coordinated action plan based on the Strategy’s conclusions for mitigating the digital-asset-related illicit finance and national security risks addressed in the updated strategy. The action plan shall address the role of law enforcement and measures to increase financial services providers’ compliance with anti-money laundering and countering the financing of terrorism (AML/CFT) obligations related to digital asset activities. lotter on DSK11XQN23PROD with NOTICES1 II. Objective In September 2022, the Treasury Department submitted this action plan to the White House and publicly released the report. The digital asset ecosystem is rapidly evolving, and the Department of the Treasury is committed to continuing to monitor emerging risks in partnership with other U.S. government agencies, foreign governments, and the private sector, which will inform other potential actions to mitigate these risks. Through this request for comment (RFC), Treasury is requesting input from the public to understand the public’s view on the emerging risks as well as what actions the U.S. government and Treasury Department should take to mitigate the risks. Through this RFC, Treasury also seeks to further understand how public-private collaboration may improve efforts to address the risks. VerDate Sep<11>2014 17:48 Sep 19, 2022 Jkt 256001 III. Request for Comments Treasury welcomes input on any matter that commenters believe is relevant to Treasury’s ongoing efforts to assess the illicit finance risks associated with digital assets as well as the ongoing efforts to mitigate the risks. Commenters are encouraged to address any or all of the following questions, or to provide any other comments relevant to the development of the report. When responding to one or more of the questions below, please note in your response the number(s) of the questions to which you are responding. In all cases, to the extent possible, please cite any public data related to or that support your responses. If data are available, but non-public, describe such data to the extent permissible. A. Illicit Finance Risks 1. Has Treasury comprehensively defined the illicit financing risks associated with digital assets? Please list any key illicit financing risks that we have not raised in this Action Plan or the National Risk Assessment. 2. How might future technological innovations in digital assets present new illicit finance risks or mitigate illicit finance risks? 3. What are the illicit finance risks related to non-fungible tokens? 4. What are the illicit finance risks related to decentralized finance (DeFi) and peer-to-peer payment technologies? B. AML/CFT Regulation and Supervision 1. What additional steps should the United States government take to more effectively deter, detect, and disrupt the misuse of digital assets and digital asset service providers by criminals? 2. Are there specific areas related to AML/CFT and sanctions obligations with respect to digital assets that require additional clarity? 3. What existing regulatory obligations in your view are not or no longer fit for purpose as it relates to digital assets? If you believe some are not fit for purpose, what alternative obligations should be imposed to effectively address illicit finance risks related to digital assets and vulnerabilities? 4. What regulatory changes would help better mitigate illicit financing risks associated with digital assets? 5. How can the U.S. government improve state-state and state-federal coordination for AML/CFT regulation and supervision for digital assets? 6. What additional steps should the U.S. government consider to combat ransomware? PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 57557 7. What additional steps should the U.S. government consider to address the illicit finance risks related to mixers and other anonymity-enhancing technologies? 8. What steps should the U.S. government take to effectively mitigate the illicit finance risks related to DeFi? C. Global Implementation of AML/CFT Standards 1. How can Treasury most effectively support consistent implementation of global AML/CFT standards across jurisdictions for digital assets, including virtual assets and virtual asset service providers (VASP)? 2. Are there specific countries or jurisdictions where the U.S. government should focus its efforts, through bilateral outreach and technical assistance, to strengthen foreign AML/CFT regimes related to virtual asset service providers? D. Private Sector Engagement and AML/ CFT Solutions 1. How can Treasury maximize public-private and private-private information sharing on illicit finance and digital assets? 2. How can the U.S. Department of the Treasury, in concert with other government agencies, improve guidance and public-private communication on AML/CFT and sanctions obligations with regard to digital assets? 3. How can Treasury encourage the use of collaborative analytics to address illicit financing risks associated with digital assets while also respecting due process and privacy? 4. What technological solutions designed to improve AML/CFT and sanctions compliance are being used by the private sector for digital assets? Can these technologies be employed to better identify and disrupt illicit finance associated with digital assets and if so, how? 5. Are there additional steps the U.S. Government can take to promote the development and implementation of innovative technologies designed to improve AML/CFT compliance with respect to digital assets? 6. How can law enforcement and supervisory efforts related to countering illicit finance in digital assets better integrate private sector resources? 7. How can Treasury maximize the development and use of emerging technologies like blockchain analytics, travel rule solutions, or blockchain native AML/CFT solutions, to strengthen AML/CFT compliance related to digital assets? 8. How can financial institutions offering digital assets better integrate E:\FR\FM\20SEN1.SGM 20SEN1 57558 Federal Register / Vol. 87, No. 181 / Tuesday, September 20, 2022 / Notices controls focused on fiat currency and digital asset transaction monitoring and customer identification information to more effectively identify, mitigate, and report illicit finance risks? DEPARTMENT OF THE TREASURY E. Central Bank Digital Currencies (CBDC) 1. How can Treasury most effectively support the incorporation of AML/CFT controls into a potential U.S. CBDC design? AGENCY: lotter on DSK11XQN23PROD with NOTICES1 IV. Notes The term ‘‘digital asset’’ refers to all CBDCs, regardless of the technology used, and to other representations of value, financial assets and instruments, or claims that are used to make payments or investments, or to transmit or exchange funds or the equivalent thereof, that are issued or represented in digital form through the use of distributed ledger technology. Some examples of digital assets include cryptocurrencies, stablecoins, and CBDCs. Regardless of the label used, a digital asset may be, among other things, a security, a commodity, a derivative, or other financial product. Digital assets may be exchanged across digital asset trading platforms, including centralized and decentralized finance platforms, or through peer-to-peer technologies.2 The term ‘‘virtual asset’’ refers to a subset of digital assets that does not include CBDCs or representations of other financial assets, such as digitized representations of existing securities or deposits. The term ‘‘virtual asset service provider’’ as defined by FATF, means any natural or legal person who is not covered elsewhere under the FATF Recommendations, and as a business conducts one or more of the following activities or operations for or on behalf of another natural or legal person: i. exchange between virtual assets and fiat currencies; ii. exchange between one or more forms of virtual assets; iii. transfer of virtual assets; iv. safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets; and v. participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset. Scott Rembrandt, Deputy Assistant Secretary, Office of Terrorist Financing and Financial Crimes, U.S. Department of the Treasury. [FR Doc. 2022–20279 Filed 9–19–22; 8:45 am] BILLING CODE 4810–AK–P 2 https://www.federalregister.gov/documents/ 2022/03/14/2022-05471/ensuring-responsibledevelopment-of-digital-assets. VerDate Sep<11>2014 17:48 Sep 19, 2022 Jkt 256001 Request for Information—State Small Business Credit Initiative (SSBCI) Technical Assistance Funds ACTION: Departmental Offices, Treasury. Request for information. SUMMARY: The State Small Business Credit Initiative (SSBCI) provides funds to States, Territories, the District of Columbia, and Tribal governments to enable these jurisdictions to support programs for small businesses. The Department of the Treasury (Treasury) is authorized to provide up to $500 million in support for small business technical assistance (TA) programs. Treasury invites the public to comment on how Treasury can use its authorities to fund TA to very small businesses (VSBs) and business enterprises owned and controlled by socially and economically disadvantaged individuals (SEDI-owned businesses) 1 applying to SSBCI credit and investment programs and other jurisdiction and Federal programs that support small businesses. Responses may be used to inform Treasury’s future actions. DATES: Responses must be received by October 20, 2022 to be assured of consideration. Please submit comments electronically through the Federal eRulemaking Portal: https:// www.regulations.gov. All comments should be captioned with ‘‘SSBCI Request for Information Comments.’’ Please include your name, organization (if applicable), and email addresses. Where appropriate, a comment should include a short executive summary. In general, comments received will be posted on https://www.regulations.gov without change, including any business or personal information provided. Comments received, including attachments and other supporting materials, will be part of the public record and subject to public disclosure. Do not enclose any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure. FOR FURTHER INFORMATION CONTACT: Jeffrey Stout, at (866) 220–9050 or ssbci_ information@treasury.gov. Further ADDRESSES: 1 SEDI-owned businesses are defined and described in SSBCI guidance. See State Small Business Credit Initiative Technical Assistance Grant Program Guidelines, https:// home.treasury.gov/system/files/136/SSBCITechnical-Assistance-Guidelines-April-2022.pdf; State Small Business Credit Initiative Capital Program Policy Guidelines, https:// home.treasury.gov/system/files/256/SSBCI-CapitalProgram-Policy-Guidelines-November-2021.pdf. PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 information may be obtained from the SSBCI website, https:// home.treasury.gov/policy-issues/smallbusiness-programs/state-small-businesscredit-initiative-ssbci. SUPPLEMENTARY INFORMATION: Purpose: This request for information (RFI) offers the public the opportunity to provide information on effective approaches for the delivery of TA through SSBCI. Specifically, Treasury requests information on how it can most effectively use its authority under 12 U.S.C. 5708(e)(1) and (3) to provide funds to jurisdictions and to contract with legal, accounting, and financial advisory firms to provide TA to qualifying businesses applying to SSBCI credit and investment programs run by jurisdictions and other jurisdiction and Federal programs that support small businesses. Background: The American Rescue Plan Act of 2021 (ARPA) reauthorized and amended the Small Business Jobs Act of 2010 (SSBCI statute) to provide $10 billion to fund SSBCI as a response to the economic effects of the COVID– 19 pandemic.2 Specifically, ARPA provided over $9 billion to fund small business programs of eligible jurisdictions (i.e., states, the District of Columbia, territories, and Tribal governments) and up to $500 million for TA to qualifying businesses. Under the SSBCI statute (12 U.S.C. 5708(e)), Treasury may deploy the $500 million for TA in three ways: 3 • TA funding to eligible jurisdictions: Treasury may provide funds to eligible jurisdictions to carry out a TA plan under which a jurisdiction will provide legal, accounting, and financial advisory services, either directly or contracted with legal, accounting, and financial advisory firms, with priority given to SEDI-owned businesses, to VSBs and SEDI-owned businesses applying for SSBCI capital programs and other jurisdiction or Federal programs that support small businesses. • TA funding to the Minority Business Development Agency (MBDA): Treasury may transfer amounts to the MBDA so that the MBDA may use such amounts in a matter it determines appropriate, including through contracting with third parties, to provide TA to SEDI-owned businesses applying to SSBCI capital programs and 2 ARPA, Public Law 117–2, sec. 3301, codified at 12 U.S.C. 5701 et seq. SSBCI was originally established in title III of the Small Business Jobs Act of 2010. Information about SSBCI is available at: https://home.treasury.gov/policy-issues/smallbusiness-programs/state-small-business-creditinitiative-ssbci. 3 12 U.S.C. 5708(e). E:\FR\FM\20SEN1.SGM 20SEN1

Agencies

[Federal Register Volume 87, Number 181 (Tuesday, September 20, 2022)]
[Notices]
[Pages 57556-57558]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20279]


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DEPARTMENT OF THE TREASURY


Ensuring Responsible Development of Digital Assets; Request for 
Comment

AGENCY: Departmental Offices, Treasury.

ACTION: Request for comment.

-----------------------------------------------------------------------

SUMMARY: This notice invites interested members of the public to 
provide input pursuant to The Executive Order of March 9, 2022, 
``Ensuring Responsible Development of Digital Assets.'' In particular, 
the Department invites comments on the digital-asset-related illicit 
finance and national security risks as well as the publicly released 
action plan to mitigate the risks.

DATES: Comments must be received on or before November 3, 2022.

ADDRESSES: You may submit comments via the Federal eRulemaking Portal: 
www.regulations.gov. Follow the instructions on the website for 
submitting comments.
    In general, all comments will be available for inspection at 
www.regulations.gov. Comments, including attachments and other 
supporting materials, are part of the public record. Do not submit any 
information in your comments or supporting materials that you consider 
confidential or inappropriate for public disclosure.

FOR FURTHER INFORMATION CONTACT: Jon Fishman, Assistant Director, 
Office of Strategic Policy, Terrorist Financing and Financial Crimes, 
202-622-5856, [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    Executive Order 14067 of March 9, 2022, ``Ensuring Responsible 
Development of Digital Assets'' (hereafter ``Executive Order'') (87 FR 
14143; March 14, 2022), outlines principal U.S. policy objectives with 
respect to digital assets.\1\ These principal policy objectives are:
---------------------------------------------------------------------------

    \1\ https://www.federalregister.gov/documents/2022/03/14/2022-05471/ensuring-responsible-development-of-digital-assets.
---------------------------------------------------------------------------

    1. Protection of consumers, investors, and businesses in the United 
States.
    2. Protection of United States and global financial stability and 
the mitigation of systemic risk.
    3. Mitigation of illicit finance and national security risks posed 
by misuse of digital assets.
    4. Reinforcement of U.S. leadership in the global financial system 
and in technological and economic competitiveness, including through 
the responsible development of payment innovations and digital assets.

[[Page 57557]]

    5. Promotion of access to safe and affordable financial services.
    6. Support of technological advances that promote responsible 
development and use of digital assets.
    Section 7(a) provides that digital assets have facilitated 
sophisticated cybercrime-related financial networks and activity, 
including through ransomware activity. The growing use of digital 
assets in financial activity heightens risks of crimes such as money 
laundering, terrorist and proliferation financing, fraud and theft 
schemes, and corruption. These illicit activities highlight the need 
for ongoing scrutiny of the use of digital assets, the extent to which 
technological innovation may impact such activities, and exploration of 
opportunities to mitigate these risks through regulation, supervision, 
public-private engagement, oversight, and law enforcement.
    Section 7(c) directs the Secretary of the Treasury, in consultation 
with the Secretary of State, the Attorney General, the Secretary of 
Commerce, the Secretary of Homeland Security, the Director of the 
Office of Management and Budget, the Director of National Intelligence, 
and the heads of other relevant agencies shall develop a coordinated 
action plan based on the Strategy's conclusions for mitigating the 
digital-asset-related illicit finance and national security risks 
addressed in the updated strategy. The action plan shall address the 
role of law enforcement and measures to increase financial services 
providers' compliance with anti-money laundering and countering the 
financing of terrorism (AML/CFT) obligations related to digital asset 
activities.

II. Objective

    In September 2022, the Treasury Department submitted this action 
plan to the White House and publicly released the report. The digital 
asset ecosystem is rapidly evolving, and the Department of the Treasury 
is committed to continuing to monitor emerging risks in partnership 
with other U.S. government agencies, foreign governments, and the 
private sector, which will inform other potential actions to mitigate 
these risks. Through this request for comment (RFC), Treasury is 
requesting input from the public to understand the public's view on the 
emerging risks as well as what actions the U.S. government and Treasury 
Department should take to mitigate the risks. Through this RFC, 
Treasury also seeks to further understand how public-private 
collaboration may improve efforts to address the risks.

III. Request for Comments

    Treasury welcomes input on any matter that commenters believe is 
relevant to Treasury's ongoing efforts to assess the illicit finance 
risks associated with digital assets as well as the ongoing efforts to 
mitigate the risks. Commenters are encouraged to address any or all of 
the following questions, or to provide any other comments relevant to 
the development of the report. When responding to one or more of the 
questions below, please note in your response the number(s) of the 
questions to which you are responding. In all cases, to the extent 
possible, please cite any public data related to or that support your 
responses. If data are available, but non-public, describe such data to 
the extent permissible.

A. Illicit Finance Risks

    1. Has Treasury comprehensively defined the illicit financing risks 
associated with digital assets? Please list any key illicit financing 
risks that we have not raised in this Action Plan or the National Risk 
Assessment.
    2. How might future technological innovations in digital assets 
present new illicit finance risks or mitigate illicit finance risks?
    3. What are the illicit finance risks related to non-fungible 
tokens?
    4. What are the illicit finance risks related to decentralized 
finance (DeFi) and peer-to-peer payment technologies?

B. AML/CFT Regulation and Supervision

    1. What additional steps should the United States government take 
to more effectively deter, detect, and disrupt the misuse of digital 
assets and digital asset service providers by criminals?
    2. Are there specific areas related to AML/CFT and sanctions 
obligations with respect to digital assets that require additional 
clarity?
    3. What existing regulatory obligations in your view are not or no 
longer fit for purpose as it relates to digital assets? If you believe 
some are not fit for purpose, what alternative obligations should be 
imposed to effectively address illicit finance risks related to digital 
assets and vulnerabilities?
    4. What regulatory changes would help better mitigate illicit 
financing risks associated with digital assets?
    5. How can the U.S. government improve state-state and state-
federal coordination for AML/CFT regulation and supervision for digital 
assets?
    6. What additional steps should the U.S. government consider to 
combat ransomware?
    7. What additional steps should the U.S. government consider to 
address the illicit finance risks related to mixers and other 
anonymity-enhancing technologies?
    8. What steps should the U.S. government take to effectively 
mitigate the illicit finance risks related to DeFi?

C. Global Implementation of AML/CFT Standards

    1. How can Treasury most effectively support consistent 
implementation of global AML/CFT standards across jurisdictions for 
digital assets, including virtual assets and virtual asset service 
providers (VASP)?
    2. Are there specific countries or jurisdictions where the U.S. 
government should focus its efforts, through bilateral outreach and 
technical assistance, to strengthen foreign AML/CFT regimes related to 
virtual asset service providers?

D. Private Sector Engagement and AML/CFT Solutions

    1. How can Treasury maximize public-private and private-private 
information sharing on illicit finance and digital assets?
    2. How can the U.S. Department of the Treasury, in concert with 
other government agencies, improve guidance and public-private 
communication on AML/CFT and sanctions obligations with regard to 
digital assets?
    3. How can Treasury encourage the use of collaborative analytics to 
address illicit financing risks associated with digital assets while 
also respecting due process and privacy?
    4. What technological solutions designed to improve AML/CFT and 
sanctions compliance are being used by the private sector for digital 
assets? Can these technologies be employed to better identify and 
disrupt illicit finance associated with digital assets and if so, how?
    5. Are there additional steps the U.S. Government can take to 
promote the development and implementation of innovative technologies 
designed to improve AML/CFT compliance with respect to digital assets?
    6. How can law enforcement and supervisory efforts related to 
countering illicit finance in digital assets better integrate private 
sector resources?
    7. How can Treasury maximize the development and use of emerging 
technologies like blockchain analytics, travel rule solutions, or 
blockchain native AML/CFT solutions, to strengthen AML/CFT compliance 
related to digital assets?
    8. How can financial institutions offering digital assets better 
integrate

[[Page 57558]]

controls focused on fiat currency and digital asset transaction 
monitoring and customer identification information to more effectively 
identify, mitigate, and report illicit finance risks?

E. Central Bank Digital Currencies (CBDC)

    1. How can Treasury most effectively support the incorporation of 
AML/CFT controls into a potential U.S. CBDC design?

IV. Notes

    The term ``digital asset'' refers to all CBDCs, regardless of the 
technology used, and to other representations of value, financial 
assets and instruments, or claims that are used to make payments or 
investments, or to transmit or exchange funds or the equivalent 
thereof, that are issued or represented in digital form through the use 
of distributed ledger technology. Some examples of digital assets 
include cryptocurrencies, stablecoins, and CBDCs. Regardless of the 
label used, a digital asset may be, among other things, a security, a 
commodity, a derivative, or other financial product. Digital assets may 
be exchanged across digital asset trading platforms, including 
centralized and decentralized finance platforms, or through peer-to-
peer technologies.\2\
---------------------------------------------------------------------------

    \2\ https://www.federalregister.gov/documents/2022/03/14/2022-05471/ensuring-responsible-development-of-digital-assets.
---------------------------------------------------------------------------

    The term ``virtual asset'' refers to a subset of digital assets 
that does not include CBDCs or representations of other financial 
assets, such as digitized representations of existing securities or 
deposits.
    The term ``virtual asset service provider'' as defined by FATF, 
means any natural or legal person who is not covered elsewhere under 
the FATF Recommendations, and as a business conducts one or more of the 
following activities or operations for or on behalf of another natural 
or legal person:
    i. exchange between virtual assets and fiat currencies;
    ii. exchange between one or more forms of virtual assets;
    iii. transfer of virtual assets;
    iv. safekeeping and/or administration of virtual assets or 
instruments enabling control over virtual assets; and
    v. participation in and provision of financial services related to 
an issuer's offer and/or sale of a virtual asset.

Scott Rembrandt,
Deputy Assistant Secretary, Office of Terrorist Financing and Financial 
Crimes, U.S. Department of the Treasury.
[FR Doc. 2022-20279 Filed 9-19-22; 8:45 am]
BILLING CODE 4810-AK-P
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