August 8, 2022

Hon. Nellie Liang
Under Secretary for Domestic Finance
Department of the Treasury
1500 Pennsylvania Avenue NW
Washington, D.C. 20220

Re: Ensuring Responsible Development of Digital Assets

Dear Under Secretary Liang:

The Securities and Financial Markets Association (“SIFMA”) appreciates the opportunity to respond to the Treasury Department’s Request for Comment (“RFC”) on “Ensuring Responsible Development of Digital Assets.”1 SIFMA and its members support the development of safe, regulated, digital asset markets, and are encouraged by the work underway as directed by the Executive Order 14067 of March 9, 2022, entitled “Ensuring Responsible Development of Digital Assets” (hereafter “the Executive Order”).2 This effort is an important step towards a better understanding of the evolving digital assets marketplace and its prospects; how responsible innovation can serve investors; and more generally how the United States can ensure that it retains the same leadership role in digital asset capital markets as it has in the “traditional” capital markets space.

In its RFC, the Treasury Department outlined an insightful range of questions on the development of the digital assets sector in the U.S. and its impact on the broader capital markets and investors. In our response, SIFMA will focus on two broad themes underlying these questions: 1) the opportunities digital assets offer, looking at the benefits which regulated financial institution participation can provide to the development of these markets as well as introducing some of the use cases that market participants are developing; and 2) the risks in the digital asset sector, looking at the how SIFMA members understand and approach risk in the digital asset sector, and a discussion of some specific risks that we see shaping its development, with a particular focus on their policy and regulatory context.

1 87 Fed. Reg. 40881, “Ensuring Responsible Development of Digital Assets,” A Notice by the Treasury Department, July 8, 2022. Available at: https://www.federalregister.gov/documents/2022/07/08/2022-14588/ensuring-responsible-development-of-digital-assets-request-for-comment.

2 “Ensuring Responsible Development of Digital Assets,” A Presidential Document by the Executive Office of the President, March 14, 2022. Available at: https://www.federalregister.gov/documents/2022/03/14/2022 05471/ensuring-responsible-development-of-digital-assets.