Quotes of the day
Today’s edition of blockchain tipsheet includes a selection of quotes from Members of Congress at yesterday’s Blockchain Association Policy Summit.
Rep. Ritchie Torres (D, NY) discussed next, possible steps for digital assets legislation: “In my view, the courts cannot provide you with the kind of comprehensive regulatory framework that you would need – only a statute can. But the courts can prompt legislative action. If either the Court of Appeals or the Supreme Court were to uphold the decision in the Ripple case, then that could create a powerful incentive for Congress to step in and to legislate a regulatory framework. But there needs to be a judicial rejection of ‘The Gensler Doctrine’ in order to prompt Congress to act legislatively -that’s my assessment of where the politics lies at the moment.”
Reacting to the Policy Summit’s featured keynote the day before – U.S. Treasury Deputy Secretary Wally Adeyemo (D) -, House Majority Whip Tom Emmer (R, MN) shared his thoughts yesterday on Treasury’s request for power over crypto: “Beware of the self proclaimed savior that rides in on the white horse and tells you, ‘I’m here to protect you.’”
Rep. Jim Himes (D, CT) says digital assets needs a better use case to help with legislative prospects: “Until the industry does a better job really showing that ‘we can take remittance fees down from 8% to two basis points,’ or show us any positive, world-improving application – the industry is not going to have the benefit of the doubt. The reason you need that is because – not so much on our side of the Capitol (House) – but on the other side of the Capitol (Senate), the ‘weather’ is uglier and people just need to start hearing about how this stuff is gonna make people’s lives better.”
And, New York Department of Financial Services (NYDFS) Superintendent Adrienne Harris (D) spoke to crypto’s challenges from the state purview: “… the two areas where the crypto and digital asset space continues to falter the most are around illicit finance and cybersecurity. That’s where we see the compliance apparatus really being its most immature. And we continue to work with companies through supervision, our exams and enforcement to make sure that those areas get up to snuff very quickly.”
Republicans’ Leadership Squabbles Delayed U.S. Crypto Bills Until 2024, Key Lawmakers Say – CoinDesk
SEC’s Hester Peirce doesn’t know what her agency is trying to accomplish – Blockworks
Continue reading “Congress Talks Digital Assets Legislation At Policy Summit; Treasury’s Power Grab Turns Heads”
another offshore USD stablecoin
Stablecoin issuer Paxos took another step with its global stablecoin strategy backed by US dollars and cash equivalents. The New York City-based company said yesterday it had received “In-Principle Approval” (IPA) for US dollar and other currency-backed stablecoins from the United Arab Emirate’s Financial Services Regulatory Authority (FSRA). The next step will be “full approval” – no timetable was given. Walter Hessert, Paxos Head of Strategy, said in a press release, “Our IPAs from the FSRA, on the heels of our IPA from the Monetary Authority of Singapore, solidify our commitment to pursuing international growth through regulated frameworks.”
what you should know: Pressure is building on U.S. Treasury and the Biden Administration – whether they like it or not – to address the growing offshore stablecoin market and bring that business onshore. In spite of the dispute between the White House and lawmakers around parallel (states) versus pre-emptive (federal) rights, this news lurches the U.S. another step closer to stablecoin law.
Treasury – stablecoins
In his opening remarks at Blockchain Association’s Policy Summit, Deputy Secretary of the Treasury Wally Adeyemo summarized three ways Treasury is looking to address digital assets and the challenges which it says exists with illicit financing: better sanctioning tools, illicit finance “authorities” and an updated regulatory approach for the international Financial Action Task Force (FATF). Treasury wants Congress’ help in all this.
Notably, Treasury is seeing a threat with the offshore movement of stablecoins, too, as Adeyemo said, “We cannot allow dollar-backed stablecoin providers outside the United States to have the privilege of using our currency without the responsibility of putting in place procedures to prevent terrorists from abusing their platform.” Read the remarks.
what you should know: Keep in mind, Paxos is based in New York State – the center of the storm when it come to the states rights versus federal pre-emption debate in stablecoins. Continue reading “Paxos To Launch USD Stablecoin In UAE; Treasury Worried About Offshore Stablecoins”
‘horse trading’ begins
Punchbowl News’ Brenden Pedersen reported on X yesterday that “Rep. Patrick McHenry (R-NC) has threatened to block the bipartisan FEND Off Fentanyl Act’s inclusion from the annual defense package if leading House crypto legislation isn’t included.” Sen. Chuck Schumer (D, NY) “flagged” McHenry’s threat in a lunch with Senate Democrats yesterday, according to Pedersen.
“Inside Patrick McHenry’s crypto scramble – The North Carolina Republican has made crypto his top priority as chair of the HFS Committee” – Politico
what you should know: Is it the stablecoin bill? Digital asset market structure bill? Both? “Ask for a lot, get a little” may be McHenry’s negotiation strategy. Pedersen promised updates… The digital assets Anti-Money-Laundering (AML) amendment in the NDAA could enter the mix, too. Read more on X from Politico’s Eleanor Mueller.
horse trading – Treasury
Deputy Treasury Secretary Wally Adeyemo has sent a letter to leaders of the Senate Banking and House Financial Services Committees asking for more power for his agency when it comes to digital assets. Politico’s Sam Sutton reports, “The letter, along with an accompanying term sheet with legislative proposals, marks a significant development in efforts to subject digital asset firms to the same anti-money laundering rules that apply to banks, asset managers and other traditional Wall Street institutions.” Read more.
what you should know: More “horse trading” from Democratic leadership and The White House. Continue reading “Negotiations Over Digital Assets Legislation Intensify On The Hill; New HFS Subcommittee Hearing”
digital yuan win
Has capitulation to the Digital Yuan as the new digital currency of the Internet begun? Ledger Insights reports that UK multinational Standard Chartered, which services Asia, Middle East and African markets, said that its bank in China “is amongst the first foreign banks to take part in the digital yuan business pilot. It has started providing digital RMB exchange and redemption services via City Bank Clearing.” Read it. No doubt there will be many such announcements in the days, months, years to come and with the full support of the Chinese government.
Singapore-based Temasek Holdings is believed to have a 17% stake in Standard Chartered.
what you should know: Can you say, “Threat to the global hegemony of the U.S. Dollar”? Hello, national security implications. If lawmakers need encouragement on digital assets legislation (i.e. the stablecoin bill, in particular), this is it. For some, this will renew focus on creating a U.S. Central Bank Digital Currency (CBDC), too.
With the settlement of U.S. government charges against cryptocurrency platform Binance announced last week (and the SEC’s still pending), Coinbase CEO Brian Armstrong sees light at the end of the tunnel for his industry. Armstrong told CNBC yesterday, “The enforcement action against Binance… that’s allowing us to kind of turn the page on that and hopefully close that chapter of history...” Read it. Armstrong was in the U.K. on Monday for the Global Investment Summit, an exclusive event which encourages foreign investment in the United Kingdom. He told CNBC that “he is ‘impressed’ with U.K. Prime Minister Rishi Sunak’s leadership when it comes to digital currencies and that Coinbase was investing more in the U.K. as a result.” Continue reading “Digital Yuan Gets Multinational Banking Partner; Spinning Out Of Binance”
grumbling about Gruenberg
The tenure of Martin Gruenberg at prudential bank regulator Federal Deposit Insurance Corporation (FDIC) remains on shaky ground as the agency’s embarrassing harassment scandal continues to envelop the Chairman, who is a Democrat. Last Wednesday, Republican members of the House Financial Services demanded he recuse himself from any internal investigation. Is Gruenberg’s resignation imminent? TradFi publication American Banker doesn’t think so – yet. The Biden Administration reportedly won’t bail on their appointee unless things get worse.
fintech fumble at OCC
The Office of the Comptroller of the Currency (OCC) appointed a much-heralded deputy comptroller and chief financial technology officer, Prashant Kumar Bhardwaj, last April. He was to be the first person at the OCC to specifically police fintech firms and the banks that power them – except his resume was allegedly a fraud. Read more in the Information.
Sometime between June and August, a few months after being hired, Bhardwaj was quietly replaced by an OCC insider.
Will OCC’s Acting Comptroller Michael Hsu, a Democrat, feel some Congressional heat soon?
What Happened to the OCC’s Chief Fintech Officer? (Sept. 10) – Fintech Business Weekly Continue reading “Grumbling About Gruenberg; OCC Takes A Fintech Hit”
With the news breaking late Friday that OpenAI CEO Sam Altman had been fired by his board, the media was scrambling to make sense of it: what it means for artificial intelligence, investing and the players involved.
Coinbase CEO Brian Armstrong, a Silicon Valley veteran, provided his “take” on X: “If this is really some EA (effective altruism), decel, AI safety coup at OpenAI, the board just torched $80B of value, destroyed a shining star of American capitalism, and will be sued to high heaven by investors. Every talented employee at OpenAI should quit and join Sam/Greg’s new thing (if they make one). This time, skip the woke non-profit board, eject the decels/EAs, maintain founder control, avoid nonsensical regulation, and just build. Accelerate progress. You are building something good for the world, don’t let anyone make you feel guilty for it and try to capture it for their own motives.” And that wasn’t all. Read more from Armstrong.
Sam Altman Not Returning As CEO Of OpenAI – The Wall Street Journal
Continue reading “Coinbase CEO Armstrong On OpenAI Drama; FDIC’s Gruenberg Under Pressure”
House Financial Services Ranking Member Maxine Waters (D, CA) says her side is ready to move along stablecoin legislation according to Politico. “We continue to be in a relationship on stablecoins (…) We want to get it. We’re working with them — our staffs are still working,” Waters tells Politico’s Jasper Goodman. Her suggestion is that “a deal” is possible by the end of the year. Read it.
what you should know: Back in March, the Ranking Member was optimistic about stablecoin legislation saying, “I believe the legislation could be passed when we get back to Congress… in [the space of] a few days.” And then in April at the first stablecoin hearing of the 118th Congress, she said the stablecoin bill had “no chance….” Are things really different this time? The pre-emptive (Federal floor, etc.) vs. states right issue is the main point of contention. But even solving this may not mean Dem leadership led by the White House – not Waters – is going to want a stablecoin bill to pass. Since FTX’s implosion, Dems have appeared to believe being “anti-crypto” is a winning position for the 2024 general election.
offshore USD stablecoins
As the United States arguably falls behind in creating a digital assets regulatory framework, more countries are opening up to the issuance of – local – U.S. dollar-backed stablecoins. Continue reading “Waters Says Stablecoin Bill Deal Possible ‘This Year’; Paxos Issues Offshore USD Stablecoin”
letter – SAB 121
Staff Accounting Bulletin 121 (SAB 121) was the topic of a new letter by pro-digital assets members of Congress sent yesterday to prudential regulators (OCC, Federal Reserve, FDIC and the National Credit Union Administration). See the letter (PDF). The letter raises the October 31 determination by the Government Accountability Office that SAB 121 was a clear overreach by the securities regulator.
So why mail the prudential regulators? Congress wants them to step up, publicly, and NOT enforce SAB 121 as the supporting press release explains, “The lawmakers are urging the regulators to clarify that SAB 121 is not enforceable considering the Government Accountability Office’s (GAO) finding that it constitutes a ‘rule’ for purposes of the Congressional Review Act (CRA).” Read the release.
The letter’s signers were bicameral and bipartisan and included House Financial Services (HFS) Chair Patrick McHenry (R, NC), Senator Cynthia Lummis (R, WY), Senator Kirsten Gillibrand (D, NY), Rep. French Hill (R, AR), Rep. Ritchie Torres (D, NY), Rep. Mike Flood (R, NE) and Rep. Wylie Nickel (D, NC). Continue reading “Congressional Letters Fly On Digital Assets; CFTC Chair Admits Regulation May Be ‘Many Years’ Away”