New Stablecoin Bill Attracts Criticism; Fed Releases CBDC Research -With A Footnote

corralling the critics

stablecoin bill – criticism

Former House Financial Services (HFS) and Senate Banking Committee witnesses – with both pro- and anti-crypto POVs – issued sharp criticism of the “Lummis-Gillibrand Payment Stablecoins Act” introduced yesterday by Senators Cynthia Lummis (R, WY) and Kirsten Gillibrand (D, NY).

Columbia University professor and Zero Knowledge Consulting founder Austin Campbell, who appeared as an industry witness at the April 2023 HFS Digital Assets Subcommittee hearing “Understanding Stablecoins’ Role in Payments and the Need for Legislation”, sees problems with the Lummis-Gillibrand stablecoin bill.

On X, Campbell begins with the “nerdy” issue of the bill’s stablecoin reserve requirements which including physical cash, bank deposits, “90 day or less T-Bills, and repurchase agreements of up to 7 days,” according to Campbell.

He then breaks out at least four areas of concern beginning with: “First, we have a serious technical problem, which is applying the limitation to specific T-bills instead of the portfolio: always do the portfolio people! You don’t want someone going all the way out to 90 days with everything. 60 day or less weighted average maturity for the entire portfolio, please.”

Read Campbell’s tweet thread. Continue reading “New Stablecoin Bill Attracts Criticism; Fed Releases CBDC Research -With A Footnote”

New Stablecoin Bill From Lummis-Gillibrand; FAA Reauthorization Is Stablecoin Goal

stablecoin bill from Lummis-Gillibrand

Senate stablecoin bill

Yesterday, the long-rumored stablecoin bill from Senators Cynthia Lummis (R, WY) and Kirsten Gillibrand (D, NY) was revealed with a robust public roll-out. PunchBowl News’ Brendan Petersen importantly noted about the purpose of the bill, “It’s a move designed in part to nudge along separate negotiations in the House.” Read Punchbowl’s coverage.

Called “the Lummis-Gillibrand Payment Stablecoin Act,” the bill is different than the stablecoin section of the Senators’ much broader “Responsible Financial Innovation Act.” [S.2281].

Politico reported yesterday that the Lummis-Gillibrand stablecoin bill uses an updated version of the House’s stablecoin bill before it hit a political tripwire. Read that one.

Sen. Lummis issued a detailed, press release in support of the bill explaining key points of the bill such as:

    • “Protects consumers by requiring stablecoin issuers to maintain one-to-one reserves and prohibiting unbacked, algorithmic stablecoins.”
    • “Prevents illicit or unauthorized use of stablecoins by issuers and users.”
    • “Creates federal and state regulatory regimes for stablecoin issuers that preserves the dual banking system.”

more tips:

what you should know: In a Congressional version of “Bad Boys 2” starring Sens. Lummis and Gillibrand, “Stablecoins just got real… (video).”

It’s time to land the plane.

Continue reading “New Stablecoin Bill From Lummis-Gillibrand; FAA Reauthorization Is Stablecoin Goal”

Ransomware Hearing Highlights Challenges For Businesses; Dems Take Heat On Crypto

ransomware hearing

ransomware hearing

Vice Chair Elaine Kim (R, CA) took over for an ailing Chair Blaine Leutkemeyer (R, MO) yesterday at the “Held for Ransom: How Ransomware Endangers Our Financial System” hearing under the auspices of House Financial Services National Security, Illicit Finance, and International Financial Institutions Subcommittee.

See the hearing page including video.

With testimony that included phrases such as “payment killchain” and “big game hunting,” Members received a 2-hour barrage on the latest in cybersecurity and its intersection with ransomware.

See witness’ opening, prepared testimony (click name for PDF):

Though not discussed in detail, the looming centerpiece of the hearing was the “Ransomware and Financial Stability Act” co-sponsored by Chair Patrick McHenry (R, NC) and Rep. Brittany Pettersen (D, CO). See it (PDF).

Concerns about the risk to national security due to ransomware were voiced by multiple Members on both sides of the aisle.  In general, digital assets and crypto were not the main focus of the hearing, nor were they seen as the root cause of ransomware.

During the Q&A, Vice Chair Kim began Member questioning by asking about “the level of coordination [among law enforcement] required to respond to the ransomware attacks?”

Chainalysis’ Jacqueline Koven answer was hopeful -due to crypto’s traceability:

Yes. From reported incidents involving cryptocurrency addresses, law enforcement is able to understand the entire ransomware supply chain. We can understand the malware used,  the access and even where they launder their funds. It’s an incredible lead to understanding these networks better and being able to disrupt not only where they cash out, but the other entities involved in the supply chain.

More observations:

    • Rep. Andy Barr (R, KY) noted the need to grown a cybersecurity workforce.
    • Rep. Bill Foster (D, IL) raised his “license plate” idea again -an idea which he tried to insert into last July’s markup for digital wallets as part of the digital asset market structure bill. This time, Foster advocated for a nationwide, secure digital identity.
    • With one of his questions, Rep. Zach Nunn (R, IA) brought to light the “ransomware-as-a-service” business that allows “people with a very minimal skill set to perpetrate something that’s very dangerous to all of us.”
    • Rep. Monica De La Cruz (R, TX), like other Members, emphasized the concerning, negative, impact ransomware has on small business.

Continue reading “Ransomware Hearing Highlights Challenges For Businesses; Dems Take Heat On Crypto”

Crypto Tech ‘Decreases Utility’ For Illicit Finance – BlackRock; Warren Challenges CFTC Behnam

Revisiting FTX and CFTC's meetings

BlackRock on illicit finance, crypto

This is a technology that presumably could actually decrease the utility for illicit finance,” says Samara Cohen in reference to blockchain technology. She should know as a BlackRock senior managing director and the company’s chief investment officer of its ETF & Index Investments -which includes the recent launch of the company’s Bitcoin spot market ETF.

Cohen appeared on Bloomberg’s “Masters in Business” podcast with host Barry Ritholtz this week and had pointed remarks on regulation and the surprising “take” – compared to some in Congress – on illicit finance and the benefits of crypto’s underlying technology. During the course of the podcast, it’s obvious that BlackRock has a committed, long-term view on digital assets.

Highlights include: (lightly edited for clarity)

On why it took so long for a Bitcoin spot market ETF to appear :

Ms. Cohen: “First, I think the narrative from investors really grew over the past few years. The infrastructure in the crypto world was also evolving, but regulation and policy has been evolving as well and still has a long ways to go. So I think regulators needed to – and the SEC, in particular – needed to hear from investors [and] work through the operating model. And then also remember, (…) this SEC has a very ambitious equity market structure agenda on their plate. And that’s really been their priority. But, ultimately, investor demand and desire or access in an ETF won out.”

On what investors are looking for with a crypto ETF:

Ms. Cohen: “The convenience of ETFs is incredibly compelling for investors. They understand the ecosystem. Now, importantly, with Bitcoin ETFs, the institutional grade custody is really important for investors as well.”

“To your question about the the crypto ecosystem separate from ETFs, I think there are a lot of questions there around how that evolves. In terms of what we’ve seen so far. Is it the technology that’s created it? Or is it really the fact that there have been no guardrails around the ecosystem that is built around it? I would say the technology has a lot of promise in terms of its transparency and auditability. This is a technology that presumably could actually decrease the utility for illicit finance (51:52). However, we would really need a regulatory and policy environment supporting it. And I think that’s where there are a lot of questions, particularly in the US around future direction.”

Hear the podcast on Apple Podcasts. Continue reading “Crypto Tech ‘Decreases Utility’ For Illicit Finance – BlackRock; Warren Challenges CFTC Behnam”

Senate Crypto Caucus Convenes; Reviewing Oil Versus Digital Assets Sanctions

crypto caucus

crypto caucus – Senate

The Senate version of the House’s dormant Congressional Blockchain Caucus awakened last week with a revealing photo op. Known as the “Financial Innovation Caucus,” it was originally founded by Sen. Cynthia Lummis (R, WY) and Kyrsten Sinema (I, AZ)see the Caucus landing page.

The Caucus’ X account announced in a tweet on Friday that senators had gathered together with a16z crypto venture investor Chris Dixon, who released a new web3 book at the beginning of the year called, “Read, Write, Own”:

“This week, [Chris Dixon] joined the Financial Innovation Caucus for a bipartisan discussion about the importance of crypto assets and the need for the U.S. to be a world leader in regulatory clarity for crypto assets.”

Sen. Lummis office confirmed to blockchain tipsheet:

“Since she arrived in the Senate in 2021, Senator Lummis has been committed to helping educate her colleagues on a host of issues related to bitcoin, crypto, web3 and blockchain in general. Mr. Dixon recently published a new book on the evolution of the internet as well as the role blockchain technology can play in countering the overreach of big tech, so Senator Lummis invited him to meet with her colleagues to discuss.”

“The overreach of big tech” – that’s something that appeals to both sides of the Senate aisle

Senators who were present for the Caucus meeting included:

    • Sen. Lummis and Sen. Kirsten Gillibrand (D, NY) who co-sponsor the Lummis-Gillibrand Responsible Financial Innovation Act (RFIA) [S.2281]
    • Rep. Wiley Nickel (D, NC) – A member of House Financial Services, Nickel has supported both the stablecoin [H.R.4766] and digital asset market structure [H.R.4763] bills awaiting votes on the House Floor.
    • Sen. Ted Budd (R, NC) – He supported digital assets legislation consistently as a Member of House Financial Services and became a Senator in the 118th Congress.
    • Sen. John Thune (R, SD) – co-sponsor of the now-defunct Digital Commodity Consumer Protection Act (DCCPA) [S.4670] from the 117th Congress. Thune is also the Senate Minority Whip.
    • Sen. John Cornyn (R, TX) – considered pro-crypto and has sponsored introduction of legislation dealing with crypto’s use on the Dark Web [S.1728].
    • Sen. John Barrasso (R, WY) – Sen. Lummis fellow Wyoming Senator. Member of the Senate Finance Committee where Lummis-Gillibrand’s RFIA is currently assigned. Also, he’s Ranking Member of Senate Energy and Natural Resources.
    • Sen. Ron Johnson (R, WI) – Member of Senate Finance Committee.
    • Sen. Roger Marshall (R, KS) – Member of Senate Agriculture with Sen. Gillibrand. See more below.

Continue reading “Senate Crypto Caucus Convenes; Reviewing Oil Versus Digital Assets Sanctions”

IRS Featuring Digital Assets; Congress Eyes Legislative Vehicle For Stablecoins


the digital asset question

With the IRS’ tax deadline this coming Monday, yesterday’s issue of the IRS Newswire newsletter (see it) reminded taxpayers that they need to report crypto as well as any other digital asset transactions on their tax return. The newsletter says, “The Internal Revenue Service reminds taxpayers they must answer the digital asset question and report all digital asset related income when they file their 2023 federal income tax return. Taxpayers should also keep these reporting guidelines in mind for 2024.”

If you haven’t heard about “the question,” it is labeled “Digital Assets” and is located 8 lines from the top of tax filing form, Form 1040. See it (PDF).

The question reads, “At any time during 2023, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?” “Yes” or “no” are your choices for response.

Read the IRS digital assets info page.

what you should know: Rep. Brad Sherman (D, CA) must love the IRS’ special attention to digital assets in Form 1040. Sherman has been critical of Treasury in the past regarding not moving fast enough to tax the “crypto bros” especially as it relates to the gray area of the crypto “wash sale” rule. At a June 2023 House Financial Services hearing with Treasury, Sherman told Secretary Yellen, “The SEC has proved they’re not afraid of the crypto bros. I know you’re not afraid of the crypto bros. I hope the IRS is not afraid of them. When are we going to see these regulations so that if you make a profit on selling your crypto you at least have to pay taxes on it?” Continue reading “IRS Featuring Digital Assets; Congress Eyes Legislative Vehicle For Stablecoins”

‘Transformative’ Uniswap And DeFi Prepare For SEC Battle; TradFi’s Illicit Finance Problem

fighting for defi

SEC targets Uniswap, DeFi

Wells Notice alert…

It appears that much like Coinbase and Kraken, decentralized crypto exchange Uniswap, has received a warning – a Wells Notice – that a formal action against the company by the Securities and Exchange Commission (SEC) is imminent.

According to Uniswap, the charge appears to be that the company is running an unregistered exchange. See the Uniswap blog post which provides a full-throated Uniswap defense on why they aren’t culpable: “We are confident that the products we offer are not just legal – they are transformative.”

Fortune’s Jeff John Roberts discusses the news, “The impending Uniswap lawsuit comes at a time when the crypto industry has loudly complained the SEC has been operating in bad faith when it comes to the sector, pursuing enforcement actions despite clear rules while failing to account for crypto’s distinct blockchain-based technology.” Read more.

Uniswap  COO Mary-Catherine Leder commented on X yesterday after the news broke, “Uniswap is an upgrade to the financial system, whether the SEC recognizes it or not. I bought my first bitcoin in 2011, started BlackRock’s crypto efforts in 2015 and left TradFi in 2021 to go all in on DeFi as COO of Uniswap Labs. I did that because I believe onchain markets will be better markets.”

She continued, “The tech can be complex, but the values are simple. Traditional markets rely on who you know. In DeFi, access is equal. $2 [trillion] in volume, no hacks. 16m wallets. Self-serve markets on blockchains are a technical reality, and they aren’t going away. It’s a better system, and we’re going to fight to protect it.” See her tweet.

more tips:

what you should know: This impending enforcement action by the SEC could be introducing a wild card among voters in November – the DeFi vote. It seems inconceivable that this action will incite anyone from the anti-crypto side of voters. But, pro-crypto voters – particularly the subset using DeFi – could be further encouraged to seek favorable candidates and platforms.

Continue reading “‘Transformative’ Uniswap And DeFi Prepare For SEC Battle; TradFi’s Illicit Finance Problem”

Rallying The Crypto Troops For The Election; More House Financial Services Hearings

More hearings

rallying the troops

CoinDesk’s Jesse Hamilton covered the appearance of Senator Cynthia Lummis (R, WY) at yesterday’s Bitcoin Policy Institute conference in Washington, D.C.

According to Hamilton, Lummis “said that the high-stakes Ohio election that could decide both the Senate majority and the leadership of the Senate Banking Committee (Chair Sherrod Brown (D, OH)) is likely to dig into cryptocurrency issues, and she encouraged industry insiders to make sure it does.” Read more.

Sen. Lummis is a member of the Senate Banking Committee and has openly supported Brown’s opponent for his U.S. Senate seat in November, Bernie Moreno.

more tips:

    • From Bitcoin Policy Institute conference: Key Congressman McHenry Is Bullish U.S. Stablecoin Law Will Pass This Year – CoinDesk

new hearings

House Financial Services Chair Patrick McHenry (R, NC) announced two new hearings for next week – both with potential implications for digital assets.

On the morning of Tuesday, April 16, HFS’ National Security, Illicit Finance, and International Financial Institutions Subcommittee led by Chair Blaine Luetkemeyer (R, MO) will hold a hearing titled, “Held for Ransom: How Ransomware Endangers Our Financial System”.  See hearing page. Continue reading “Rallying The Crypto Troops For The Election; More House Financial Services Hearings”