12 that would delegate most of this authority to the CFTC. Simultaneously, there are some in the crypto community calling for the creation of a whole new regulatory agency dedicated to digital asset supervision, though this seems far less likely. Regardless of which entity ultimately ends up with regulatory authority, it is imperative that it develops clear definitions of digital asset products that are based on the risk that each category of digital asset carries. Working with the banking agencies, any prospective crypto regulator must also ensure a level playing field between bank and non-bank entities in the digital asset markets and establish clear guidelines for risk management and consumer protection. Payments system access? Another key question is the extent to which nonbank crypto firms should have access to the payment system. The Federal Reserve took a significant step toward answering this question in midAugust when it finalized a framework for assessing which entities may be granted payment system access. This framework creates a tiered system for evaluating incoming requests, and under it, institutions that engage in novel activities would undergo a more extensive review. Access to the payments system is a significant privilege with many responsibilities. As the Fed begins evaluating new requests for access, we’ll be watching carefully to ensure that these new guidelines appropriately account for the inherent risks that come with some of these new financial players. Is there a use case for a CBDC? Finally, there’s the question of a central bank digital currency and whether there’s a use case for it in the U.S. As ABA told policymakers in several comment letters and testimonies over the last year, our view is that no such case exists – for every problem that proponents say a CBDC could solve, the fact is that there are already solutions available that don’t involve a government-created currency. Financial inclusion is just one example: banks are already making great strides to bring more unbanked households into the financial system by offering Bank On-certified accounts. Not only would a CBDC be duplicative of private-sector solutions that already exist, but it also has the potential to have an incredibly damaging effect on bank balance sheets and the flow of credit to households and businesses if the Federal Reserve were to become a competitor for bank deposits. These ongoing debates underscore an urgent need for a fair, well-calibrated regulatory framework for digital assets that promote responsible innovation while minimizing systemic risk and protecting consumers. And that’s a framework we’ll continue to fight for. n Continued from page 11 BANK NEWS NMBA Welcomes New Associate Member Upgrade, Inc. The New Mexico Bankers Association is pleased to welcome a new Associate Member, San Francisco-based digital banking company Upgrade, Inc. Upgrade has facilitated $16 billion in loans with financial partners and a seasoned consumer lending team. Upgrade partners with banks, who purchase their facilitated loans, including personal loans, cards, and auto refi loans, to solve for margin compression, balance sheet diversification, excess liquidity deployment, and fee income replacement. Upgrade’s asset purchase program incorporates with existing ALM strategies and is flexible with custom credit criteria, national or geographic, no minimum commitment, 30-day average onboarding, and loan servicing. n
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