On January 26, 2023, the White House’s Office of Science and Technology Policy (“OSTP”) published a request for information on opportunities and needs for research and development (“R&D”) related to digital assets (“RFI”).1 In particular, the RFI seeks public comment on the R&D that would be needed to develop a US Central Bank Digital Currency (“CBDC”).
Responses to the RFI must be submitted by March 3, 2023. Further, OSTP limits the length of comments to 10 pages, which puts a premium on incisive and concise comments. In this Legal Update, we focus on the information that OSTP is seeking through the RFI.
On March 9, 2022, President Biden signed an executive order titled “Ensuring Responsible Development of Digital Assets” (“Order”).2 The Order directed a broad range of federal agencies to recommend legislative and regulatory proposals to foster the development of, and address the risks presented by, digital assets and CBDC. Among those agencies, the OSTP has a broad mandate to advise the president on the effects of science and technology on domestic and international affairs.
As a part of complying with the Order, in September 2022, the OSTP published a technical evaluation of the technological infrastructure, capacity, and expertise necessary at relevant agencies to facilitate and support the introduction of a CBDC system. The evaluation indicated that there are unanswered questions regarding R&D on digital assets. It also recommended that the US government develop and periodically update a National Digital Assets R&D Agenda (“R&D Agenda”). This agenda would help identify R&D priorities for digital assets and direct federal resources and expertise toward advancing those priorities.
Request for Information
In the RFI, the OSTP notes that a focused R&D effort could help the US government better understand and design a CBDC. While the US government has not made a decision about whether it will pursue a CBDC, a focused R&D effort could help illustrate how to design a CBDC system in line with the White House’s September 2022 Policy Objectives for a US CBDC System.
On that basis, the RFI requests comment on federal R&D priorities related to digital assets, including R&D initiatives that could complement the Federal Reserve’s research and experimentation related to CBDCs. The RFI also requests that commenters explain how their suggestions for R&D on digital assets could help advance the policy priorities and recommendations outlined in the reports issued pursuant to the Order, such as with respect to climate change and energy usage.3
In particular, the RFI requests information on six specific R&D topics:
- Goals, sectors, or applications that could be improved with digital assets and related technologies: Sectors or applications where digital assets could provide significant value to the public or already are delivering benefits to the public.
- Goals, sectors, or applications where digital assets introduce risks or harms: Goals, sectors, or applications where digital assets might introduce risks or harms or already are manifesting risks or harms.
- Federal research opportunities that could be introduced or modified to support efforts to mitigate risks from digital assets: R&D that would allow companies to advance various public policy goals, such as building more environmentally sustainable digital assets, assisting law enforcement in countering illicit financial activity using digital assets, and enabling regulators to protect consumers from fraud.
- R&D that should be prioritized for digital assets: Federal research opportunities that could be used to (a) advance the development of digital assets or (b) protect communities and US national interests from risks or harms that digital assets might present.
- Opportunities to advance responsible innovation in the broader digital assets ecosystem: Opportunities for the United States to advance responsible innovation in the broader digital assets ecosystem.
- Other information that should inform the R&D Agenda: Any other information that is relevant for understanding and improving R&D efforts as they relate to digital assets.
It is important to remember that while the OSTP does not have rulemaking authority, its efforts often inform future legislative and regulatory efforts. This is particularly true when its efforts may be used to inform and persuade other agencies, such as by introducing additional viewpoints to the public conversation. Given the conservative positions taken regarding digital assets by many federal regulators, such as the US Securities and Exchange Commission, and the slow-moving assessment of a US CBDC by the Federal Reserve,4 it is noteworthy that the RFI speaks positively about the potential benefits of a well-designed CBDC in its solicitation of information. As a result, it will be important for the industry to use the RFI as another opportunity to explain why the federal government should take certain actions with respect to digital assets.
Additional Author Dean A. Corrado
1 88 Fed. Reg. 5043 (Jan. 26, 2023), https://www.federalregister.gov/documents/2023/01/26/2023-01534/request-for-information-digital-assets-research-and-development.
2 87 Fed. Reg. 14,143 (Mar. 14, 2022), https://www.federalregister.gov/documents/2022/03/14/2022-05471/ensuring-responsible-development-of-digital-assets.
4 The Federal Reserve released its discussion paper on the pros and cons of a US CBDC in January 2022 and continues to consider the national policy with respect to CBDCs. See Federal Reserve, Money and Payments: The U.S. Dollar in the Age of Digital Transformation (Jan. 20, 2022), https://www.federalreserve.gov/publications/january-2022-cbdc.htm.