NCRC To Regulators: Act Now To Establish A Coherent Regulatory Regime For Digital Assets

Regulators should act expeditiously to protect consumers who hold digital assets, the National Community Reinvestment Coalition (NCRC) wrote to the Treasury Department in a comment filed Monday.

“We are past the point of speculating that digital assets might end up hurting people someday. Consumers are being hurt now, so it is important that regulators act now,” said NCRC President and CEO Jesse Van Tol. “Crypto markets have shown to be unstable, fraught with misleading and confusing information and prone to volatility and contagion.” 

Most digital assets currently fall in a regulatory gap, outside the purviews of either the Securities and Exchange Commission (SEC) or Commodities and Futures Trading Commission (CFTC). They meet neither the SEC’s definition of securities nor the CFTC’s definition of derivatives. For an effective response, agencies should develop a coordinated approach that protects consumers when they buy or hold digital assets.

In the comment, NCRC contends that under certain circumstances, insured depositories could issue stablecoins and permit their exchange inside a consortium of other insured depositories. These stablecoin deposits would remain subject to community reinvestment obligations and the accounts in which they were held would have full Regulation E protections. 

NCRC urges policymakers to address cyber security threats, contagion risks, and determine when a digital asset is “too big to fail.”

The comment notes that even digital assets that appear to be safe, such as a stablecoin that is fully backed by risk-free assets, are not safe if they are held in an unregulated trading platform. It states that non-bank stablecoin issuers or trading platforms should be subject to heightened regulatory scrutiny, including being prohibited from making loans, supervised for safety and soundness criteria and required to establish a subsidiary inside the US that is subject to Federal Reserve supervision. 

NCRC also called on regulators to require issuers of digital assets to provide regular reports on their diversity, equity, and inclusion efforts. These reports would be released to the public and would cover employment metrics, commitments for procurement from women and minority-owned businesses, and data on the demographics of their account holders. 

The full comment can be read here.

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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