Emmer leads bipartisan group in seeking federal regulatory framework for digital assets

A bipartisan effort led by U.S. Rep. Tom Emmer (R-MN) aims to determine how the Federal Reserve will support domestic financial innovation and widespread adoption of decentralized digital assets.

“The Fed’s work with other regulators to support domestic innovation and widespread digital asset adoption is imperative,” wrote Rep. Emmer and six of his colleagues in a Sept. 28 letter sent to Federal Reserve Chairman Jerome Powell. 

Specifically, the lawmakers expressed concern with Powell’s July 14 statement during testimony before the U.S. House Financial Services Committee that the biggest supporting argument for a Fed-issued digital currency is that it could eliminate the need for private-sector innovation.

“It’s imperative that we get this right or we risk losing the momentum of this technology altogether,” Rep. Emmer said in a statement. “Our government should never be in the business of thwarting innovation.”

Rep. Emmer and his six colleagues, who included U.S. Reps. Glenn “GT” Thompson (R-PA) and Ro Khanna (D-CA), requested that the chairman answer several questions, such as what steps the Fed is taking to coordinate with other federal regulators on the development of policy guidance for digital assets and other related policy issues to ensure the United States remains a leader in financial innovation.

The lawmakers also want to know how the Fed, on its own or in coordination with regional Federal Reserve Banks, will provide regulatory clarity to banks that want to offer cryptocurrency or other digital asset custody to their customers, according to their letter.

Additionally, Rep. Emmer and the members asked when the Fed plans to release the discussion paper exploring the design of an American central bank digital currency (CBDC), as well as how it intends to highlight the importance of preserving a marketplace of private payment networks.

“Since cryptocurrency networks facilitate a myriad of applications, from decentralized identity to decentralized file storage, do you believe a CBDC would make such applications, and the cryptocurrencies that power them, obsolete?” they asked Powell.

“Empowering individual Americans to become everyday investors should be our highest priority — decentralized digital assets provide that opportunity,” said Rep. Emmer. “The Federal Reserve must work to support domestic innovation.”