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EMTECH Comments on White House Executive on Digital Assets & CBDC EMTECH March 14, 2022
EMTECH Comments on White House Executive on Digital Assets & CBDC

EMTECH, a leader in modern central banking technology with Central Bank Digital Currency (CBDC) and Digital Regulatory Sandbox solutions, welcomes the White House Executive Order and applauds the guidance to explore a central bank digital currency.


As a leader in modern central banking technology with Central Bank Digital Currency (CBDC) and Digital Regulatory Sandbox solutions, we welcome the White House Executive Order and applaud the guidance to explore a central bank digital currency. 

Proponents of inclusive, modern and resilient financial markets including EMTECH cheer this next phase of the digitization of finance and money. As we have seen over the past ten (10) years, the inefficiencies in the current financial systems and persistent level of unbanked and underbanked populations have pushed millions around the world to use alternative, often risky, digital assets for payments.  

Moreover, the opportunity of new wealth creation is an undeniable potential benefit that has attracted millions of investors in digital financial assets. The openness and decentralization nature of those structures have made it easier for some to build wealth, though it is still complicated and/or impractical to many more.  In more complicated ways, the concept of “security” tokens vs “utility” tokens will make for a smart debate of how to define and regulate each given unique risk profile.

It was encouraging that the President’s Executive Order considers the need to modernize the U.S. payment infrastructure. As a US-based tech company, and a small business like many others who employ people in the U.S. and abroad, EMTECH experiences first hand how domestic and cross border payments are both slow and expensive. The time delay in bank to bank settlement impacts not only American families and small businesses, but people around the world. It matters even more given 60% of the world reserves depends on the U.S. Dollar. Done right, a modern payment infrastructure has the power to unlock billions of capital tied along the value chain of transferring money every day. For example, in 2021, the US Automated Clearing House (ACH) processed about 29B transactions totaling $73T. The average settlement time for each transaction is 2 business days, a considerably lengthy period of time. 

As noted in EMTECH CEO Carmelle Cadet’s testimony to Congress in June 2021, we believe blockchain and distributed ledger technology (DLT) offer many benefits and help address challenges that regulators and central banks have struggled to address for decades. A U.S. CBDC designed as a modern digital cash infrastructure addresses inefficiencies with real time settlement and lower cost on an open common distributed ledger, using a digital representation of the U.S. Dollar.

As this next phase of financial infrastructure modernization around the world begins, it will be critical for central banks to effectively assess the risk of various business models and develop new regulatory approaches that prioritize risk-based regulation for consumer protection, Anti Money Laundering, inclusion and to lower cost of payments. There are many combinations that will deliver those outcomes, but carry different risks (counterparty, liquidity, FX, operational, etc..). 

As mentioned in this Executive Order, new regulatory approaches are anticipated to emerge for this new era, and as such, we will echo a recommendation we delivered as part of our written testimony as well: the most effective tool the U.S. Central Bank and fellow regulators can deploy to accelerate their study and understanding of digital assets innovation, is a digital sandbox to test new digital assets solutions in the market faster and safely. 

EMTECH has developed the industry-leading, award-winning solution, the Digital Regulatory Sandbox™, which allows central banks and regulators of a country to digitally learn from emerging solutions going to market in order to modernize their regulatory environments and test a CBDC safely. Such a modern digital platform can help move forward a regulatory agency in months instead of years. This is an actionable tool to drive sound innovation for the outcomes of financial inclusion, stability, security and resilience here, and with your peers abroad. 

Regulatory innovation and CBDC in this new era have the opportunity to be catalysts for resilience, instead of one size fits all regulation that contributes to new inefficiencies. EMTECH stands ready to engage U.S. regulatory agencies to help power a modern regulatory environment and financial inclusion by design.

New York, NY