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Majority Leader Schumer Wants Digital Asset Guardrails; Sen. Marshall No Longer Co-Sponsors DAAMA

Sen. Chuck Schumer

Senator Marshall relents

With pressure likely building after former President Donald Trump’s embrace of crypto in recent weeks, Senator Roger Marshall (R, KS) quietly removed his name as a co-sponsor of Senator Elizabeth Warren’s (D, MA) “Digital Asset Anti-Money Laundering Act” [S.2669] on Wednesday according to Congress.gov.

The Warren/Marshall bill had originally been introduced (post-FTX) late in the 117th Congress and then reintroduced in February 2023 in the 118th Congress.

Previously, conservative organizations such as Club for Growth (see the March 2023 letter) challenged the Senator on his decision to co-sponsor and may have also played a part in Marshall’s change of heart.

Sen. Marshall was seen engaging in a Senator Cynthia Lummis (R, WY) Senate Innovation Caucus meeting in April with a16z crypto investor and author Chris Dixon.

h/t @alexandergrieve

what you should know: Senator Lindsey Graham (SC), a strong Trump supporter, is the only Republican co-sponsor left. It would not be surprising to see his name drop off next.

Senate – Majority Leader

Senate Democratic leadership continued to position yesterday that they want a digital asset regulatory framework.

Politico’s Eleanor Mueller reported on X yesterday that Senate Majority Leader Chuck Schumer (D, NY) told her that “he hopes to pass a crypto bill this year. ‘We’d like to get something done,’ he said. ‘We’d like to have appropriate guardrails.'” Read more (subscription).

Ms. Mueller also confirms that Senate Agriculture Chair Debbie Stabenow (D, M) is still aiming for a markup of a new version of the “Digital Commodities Consumer Protection Act” (DCCPA 2.0) next Wednesday – while Senator Warren doesn’t approve of the bill’s illicit finance provisions on money laundering.

more tips:

    • Today, we announce that Chris Lehane, Paul Clement, and Christa Davies are joining Coinbase’s Board of Directors – Coinbase

Senate – donations

Leader Schumer’s comments speak to the fact that Dem leadership may want to call off the “donation dogs,” too.

The voluminous, crypto campaign “donation dogs” appear to be having impact on Congressional races and even the race for the White House -see former President Donald Trump at Bitcoin 2024 tomorrow. Meanwhile, Dems are led at the conference by Reps. Wiley Nickel (D, NC) and Ro Khanna (D, CA) – Khanna voted to keep SAB 121 in the initial vote and then was one of only a couple of Dems who switched to supporting an override of President Biden’s veto in the vote earlier this month. Continue reading “Majority Leader Schumer Wants Digital Asset Guardrails; Sen. Marshall No Longer Co-Sponsors DAAMA”

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House Leaves For Campaign Trail Today; Senate Banking Aims For Nominations Vote Next Week

House leaves early

House leaves early

The House of Representatives are leaving early for summer break. According to Roll Call, Members are ready to campaign after a “tumultuous two weeks” which has an included the assassination attempt on former President Donald Trump, the VP Kamala Harris‘ ascension to Democratic Presidential nominee and President Joe Biden bowing out of another term.

Divisive debates within the Republican caucus over appropriations bills may have also contributed to the early exit says Roll Call.

Legislation lovers should be advised that “The outlook is similarly grim come September, the focus will shift to passing a stopgap funding measure to avoid a partial government shutdown when the new fiscal year begins Oct. 1. “

The House returns on Monday, September 9. See calendar.

House leaves early – no DeFi

The House Financial Services Committee announced yesterday that they’re postponing the hearing on Decentralized Finance (DeFi) which was scheduled for next Tuesday, July 30, is now “postponed.”

No new date has been announced. Continue reading “House Leaves For Campaign Trail Today; Senate Banking Aims For Nominations Vote Next Week”

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Rep. Mike Flood Reflects On Efforts To Rescind The SEC’s SAB 121, Next Steps

Rep. Mike Flood on SAB 121 next steps

Rep. Mike Flood (R, NE), a freshman Member of the House Financial Services (HFS) Committee, has led a relentless charge in the 118th Congress to rescind the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121. And, in spite of the recent veto override setback, he still sees opportunity.

“SAB 121,” as it is known, precludes traditional finance firms from offering custody services for crypto due to arguably, onerous reserve requirements courtesy of the SEC.

Put another way, the bulletin effectively prevents regulated banks from touching digital assets and, consequently, prevents digital assets from being under the U.S. financial system umbrella.

In May, Rep. Flood’s  joint resolution [H.J.R.109] passed both Houses of Congress with bipartisan support in a watershed moment for digital assets only to be vetoed by President Biden. Earlier this month, the veto override vote in the House failed…

So now what?

Yesterday, blockchain tipsheet caught up with Congressman Flood on SAB 121:

    • Initial reaction to the veto
    • Efforts to increase Dem support, post-veto
    • Next steps for rescinding SAB 121
    • On the SEC working on one-off basis with TradFi companies
    • House Appropriations line item on SAB 121
    • State of bipartisanship in the 118th Congress
    • The next Congress and digital assets legislation
    • Flyover Fintech event on October 21

The interview has been lightly edited for clarity.

blockchain tipsheet: What was your reaction to the veto of House Joint Resolution 109 rescinding the SEC’s SAB 121?

Rep. Mike Flood: Well, I wasn’t surprised.

During the debate on the Floor, before we actually voted for it [on May 9], the White House put out a preemptive notice that they intended to veto it and Ranking Member Maxine Waters (D, CA) was waving that around during the debate and trying to remind our Members that the President intended to veto it.

Nevertheless, it got 21 votes from Democrats in the House and 12 votes in the Senate – one of them being Majority Leader [Chuck] Schumer (D, NY).

I think the support from Congressman Wiley Nickel (D, NC) and others shows that this does not need to be a partisan issue, and it clearly is NOT partisan.

There should be a path forward where Republicans and Democrats could agree on – not just repealing this – broader regulatory certainty for digital assets.

I think that during that debate, one of the criticisms that the Ranking Member had was, “Well, maybe this isn’t the right way to take down SAB 121 using the Congressional Review Act.”

Okay. Then, why isn’t my other bill moving? -I had a bill to change it in the Federal code and repeal it…

But, I wasn’t surprised with the veto. Continue reading “Rep. Mike Flood Reflects On Efforts To Rescind The SEC’s SAB 121, Next Steps”

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Illicit Finance Bill Passes The House -Again; Senator Lummis Promises Surprise For Bitcoin Audience

Rep. Zach Nunn

House Floor – illicit finance

The “Financial Technology Protection Act” [H.R.2969] sponsored by Rep. Zach Nunn (R, IA) and co-sponsored by Rep. Jim Himes (D, CT) easily passed the House yesterday afternoon by voice vote.

The Senate version of this bill [S.1340], sponsored by Senator Ted Budd (R, NC) and co-sponsored by Senator Kirsten Gillibrand (D, NY), sits idly in Senate Banking currently.

what you should know: In that the bill establishes a working group within government and establishes a public-private partnership to study the use of digital asset in illicit finance, it seems likely that Senate Banking Chair Sherrod Brown (D, OH) would perceive S.1340 as an “industry bill” given its limited elements even though it’s been around since 2018. Considering Chair Brown’s past pronouncements on industry bills, it appears unlikely to ever make it to a markup in the 118th Congress.

big things

Senator Cynthia Lummis (R, WY), who is scheduled to appear at this week’s Bitcoin 2024 conference said on X yesterday, “₿ig things are in store this week. Stay tuned!” Continue reading “Illicit Finance Bill Passes The House -Again; Senator Lummis Promises Surprise For Bitcoin Audience”

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Tornado Cash And Crypto Mixing Today: An Interview With DEF’s Amanda Tuminelli

for staff: tornado cash

In Congress, crypto mixing and its privacy-enhancing use of blockchain technology has been a troubling innovation for some Members. Case and point: crypto mixer Tornado Cash has been front-and-center in illicit finance deliberations within the U.S. government and was sanctioned in 2022 by U.S. Treasury.

Last Friday, blockchain tipsheet sat down with Amanda Tuminelli, Chief Legal Officer of decentralized finance advocacy firm DeFi Education Fund (DEF). We discussed both the latest and the “basics” in crypto mixing as well as the Department of Justice’s indictment in August 2023 of Tornado Cash software developers Roman Storm and Roman Seminov.

Roman Storm is currently in custody and his case has been delayed until later in the year in the Southern District of New York. Roman Seminov remains at large.

Also, last October, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced a Notice of Proposed Rule Making (NPRM) – see it – that identified crypto mixer transactions as a source of money laundering. DeFi Education responded with a formal comment (PDF).

With lawmakers and their staffs in mind, blockchain tipsheet’s interview with Ms. Tuminelli covered:

    • why crypto mixers are controversial
    • the lawful purpose of mixers
    • balancing AML regimes and mixers
    • crypto wallets and identifiers
    • overview on indictment of Storm and Seminov
    • Dutch court convicts Tornado Cash developer Alexei Pertsez
    • scenarios pending U.S. court decisions
    • unlicensed money transmitting
    • crypto mixing 5-10 years from now

The transcript has been lightly edited for clarity.

blockchain tipsheet: Why have crypto mixers become controversial?

Amanda Tuminelli: I think that many lawmakers are concerned that “mixing” automatically means unlawful conduct or a national security concern. And it has become fraught with national security issues because of the DPRK (North Korea) using Tornado Cash or the allegations that various terrorist groups are using mixing services in order to fund their activities. I think that is happening. And we absolutely are not here to support that in any way.

But, there is a disproportionate focus on those groups using mixers. And I think their focus should be more properly on the technology: what is mixing and what is it really going on under the hood, and who in the mixing tech stack is the appropriate person to regulate. Continue reading “Tornado Cash And Crypto Mixing Today: An Interview With DEF’s Amanda Tuminelli”

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President Biden Opts-Out Of Re-Election Bid; Trump To Appear At Bitcoin Conference This Week

Biden opts-out

President Biden

President Joe Biden formally announced his intention to step away from running for another term as President yesterday. He stated his intention to remain in office through the end of his term in January.

See the letter.

Republican leadership, such as House Majority Whip Tom Emmer (R, MN) who called him “unfit,” asked that the President step down immediately yesterday.

what you should know: The opportunity for substantive policy discussions on any topic before the election in November would seem to be even more unlikely. But, Brendan Pedersen delivers some hopium to the crypto universe in yesterday’s Punchbowl News’ The Vault newsletter as House Agriculture digital assets subcommittee chair Rep. Dusty Johnson (R, SD) tells him, “I wouldn’t want us to pull the shades on the 118th quite yet.”

Bitcoin conference Thursday

If having former President Donald Trump as a speaker isn’t enough, Bitcoin 2024 conference organizers on Friday suggested they’re about to unveil yet another surprise (speaker) as Fox Business’ Eleanor Terrett prognosticated on X that it could be entrepreneur Elon Musk, a prolific “donatoor” to the former President’s campaign. Continue reading “President Biden Opts-Out Of Re-Election Bid; Trump To Appear At Bitcoin Conference This Week”

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Presidential Veto Override Vote Fails, But Bipartisan Support Remains; Noms Hearing Drama

override vote

veto override fails

Yesterday, the House voted again to rescind the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121 via House Joint Resolution 109 sponsored by Rep. Mike Flood (R, NE) -and *this time* proponents had to override President Joe Biden’s veto in late May, too.

A vote with a 2/3 majority of House members was required for override – 275 total votes.

The vote was over and done in a few minutes and failed with 228 votes in favor to override the President’s veto and 184 against overriding the veto.

    • 21 votes *for* override were Democrats. Some Dems switched sides from the May vote. More below.
    • All 184 Republican votes were *for* override except for Rep. Drew Ferguson (R, GA) (Rep. Ferguson erred on his vote and later corrected it. He voted for the resolution in May and also sponsored a digital asset tax bill with Rep. Wiley Nickel (D, NC) in April).

See the override’s final tally on the House Clerk’s website.

In May, there were two fewer Members of Congress voting and the resolution passed the House 228-182.

See the May tally on the House Clerk’s website. Continue reading “Presidential Veto Override Vote Fails, But Bipartisan Support Remains; Noms Hearing Drama”

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SAB 121 Resolution Veto Override Vote Delayed; Nomination Hearing Brings Potential Fireworks

Noms

SAB 121 resolution delayed

The H.J.R. 109 veto override vote was delayed in the House last night until today at 10:30 a.m. (or later). You can watch it here.

In the interim, you can read House Financial Services (HFS) Chair Patrick McHenry’s (R, NC) remarks during yesterday’s debate time on the House Floor titled, “This Administration Would Rather Play Politics and Side with Power Hungry Bureaucrats Over the American People.” Read it.

HFS Ranking Member Maxine Waters (D, CA) responded with her own remarks titled, “This Resolution Is Part of a Long List of Efforts by Industry and Its Allies to Attack the Good Work of the SEC, Which Has Made Significant Progress in Protecting Investors, Maintaining Fair, Orderly, and Efficient Markets, and Facilitating Capital Formation.” Read that one.

Debate video can be found on the House Clerk’s website here.

If the veto override is successful in both houses of Congress, H.J.R.109 would remove certain reserve requirements – instigated by the SEC’s Staff Accounting Bulletin 121 (SAB 121) – on crypto custody for regulated banks.

what you should know: In advance of yesterday’s almost-vote, HFS Chair McHenry appeared on CNBC and challenged Dems to vote to override. See it.
Continue reading “SAB 121 Resolution Veto Override Vote Delayed; Nomination Hearing Brings Potential Fireworks”