ABA Calls for ‘Consistent Taxonomy’ for Digital Assets

Digital assets will require a “consistent taxonomy” to be applied by regulators, the American Bankers Association (ABA) has said.

In a letter to the Federal Deposit Insurance Corporation (FDIC), responding to a request for information and comment on digital assets, the ABA said clarity was needed as to what types of digital asset activity are allowed for banks.

Regulation of bank and non-bank entities engaged in digital asset activities was also required, the association stated.

Activities discussed in the letter included custodial services for digital assets, partnerships with digital asset companies, and capital treatment of stablecoins and other digital assets.

Earlier this week, the ABA released a report on cryptocurrency for bankers, addressing emerging regulatory issues around the asset class.

The report stated: “Because of the novel nature and rapid development of crypto, the regulatory framework surrounding the space is constantly evolving. A main focus for regulators has been the desire to promote responsible innovation while protecting against risks.

“However, the uncertain regulatory treatment of many crypto assets and the novelty of the business models can often create unclear or disparate requirements that may leave significant gaps in regulation and oversight.”

Responding to the FDIC, the ABA also highlighted potential risks to consumers. It argued that non-bank financial groups operating in the digital asset space were not currently subject to regulation and therefore could “expose counterparties to harm”.

Earlier this month the American CryptoFed was legally recognized in the state of Wyoming, acting as the first decentralized autonomous organisation in the US.

Back in May, non-profit The Digital Project announced five pilot programmes exploring the design and use of a central bank digital currency, in a move to accelerate research into the adoption of a potential “digital dollar”.