In response to a Treasury probe over the presidential executive order, the payments company urged designers to take banks’ interests in mind while creating digital assets.

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Operator of payment systems in the United States The Clearing House has responded to a Treasury Department request for feedback on “digital-asset-related illicit financing and national security threats, as well as the publicly disclosed action plan to minimize the risks.” The Clearing House discovered substantial security and serious hazards linked with digital assets, but was concerned that banks should have equal access to the market as nonbanks.

The Treasury Department released its request for comments on September 20 as part of its ongoing response to President Joe Biden’s Executive Order 14067, “Ensuring Responsible Development of Digital Assets,” issued on March 9, 2022. The Clearing House addresses some of the Treasury’s questions in its 22-page response letter, and it highlights five main points that it sees as ways to mitigate national security and illicit finance risks posed by privately issued non-bank digital assets (many cryptocurrencies and stablecoins) and U.S. government tokens (CBDCs). On November 10, the letter, dated November 3, was made public.

The Clearing House advocated for a government prudential framework with rules for digital asset service providers that are functionally identical to those for depository financial institutions. Furthermore, banks “should be no less capable than nonbanks of engaging in digital-asset-related operations.”

The corporation is unequivocal about CBDC, stating:

The hazards involved with the prospective issuance of a CBDC in the United States outweigh the potential advantages, and it should thus be concluded that a CBDC is not in the national interest.

If the United States decides to implement a CBDC, the company writes that “the foundational requirements in place to prevent criminal and illicit use of commercial bank money must be applied to a U.S. CBDC in such a way that criminal actors are not incentivized to use CBDC.”

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In any case, the Clearing House sees limited appeal for a CBDC in the United States:

Intermediaries must have a clear business case for assuming customer identification/identity verification, AML/CFT screening, and sanctions compliance obligations, especially since the risks associated with such assumption may be unsupported by the low margins typically associated with the provision of custodial services in the absence of fees.

23 banks and payment companies own the Clearing House. It was established in 1853.

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