Introduction
Thank you for inviting me to join you today to talk about recent reports led by Treasury as part of President Biden’s Executive Order on Ensuring Responsible Development in Digital Assets. My remarks today will focus primarily on how digital assets could alter the future money and payments system in the US, and recommendations in the report to prepare for that. But I will first take a few minutes to talk about the here-and-now of digital assets—how they are currently being used and their effects on consumers, investors, and businesses. And next month, the Financial Stability Oversight Council will issue a report on the financial stability risks of digital assets and regulatory gaps.
Crypto-assets
For the report titled “Crypto-assets: Implications for Consumers, Investors, and Businesses,” the charge was to focus specifically on current use cases for crypto assets, and especially use by and effects on more vulnerable communities. A main finding of the report is that the most prevalent current uses of crypto-assets are for trading, lending, and borrowing. Use of crypto-assets to deliver other types of financial services, like payments at lower cost, higher speed, and without intermediaries, has not materialized yet.
The report finds significant areas of concern. There are frequent instances of operational failures, market manipulation, frauds, thefts, and scams. Consumers and investors are exposed to improper conduct in…
