DeFi Is Among Next Legislative Targets For EU; Hagerty and Hill Voice SEC Suspicions

European Systemic Risk Board

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European DeFi

A new 77-page report from the European Systemic Risk Board (ESRB) offers up views and suggestions on decentralized finance (DeFi) and cryptocurrency policy. The ESRB explains it’s still early: “The following analysis of the current state of the crypto-asset world underscores findings by international standard-setters that currently the crypto-asset sector is too small and insufficiently integrated with the traditional financial system to pose any systemic risks.” Download it (PDF). Lots of helpful definitions beginning on page 66.

Ledger Insights notes in relation to the report: “With the EU’s MiCA legislation for crypto-assets now approved and about to come into force, the question has turned to the next iteration, which will likely cover DeFi, although it’s a few years off.” Read more.

more tips:

What is DeFi? – Coinbase Continue reading “DeFi Is Among Next Legislative Targets For EU; Hagerty and Hill Voice SEC Suspicions”

Digital Assets And The Law Meet At White Collar Crime Institute

White Collar Crime Institute

As part of its Continuing Legal Education curriculum for its members, the New York City Bar Association brought together several hundred attendees for the “White Collar Crime Institute” yesterday.

Crypto and digital assets were a major focus of the agenda which included arguably the most important state regulator in digital assets – New York Department of Financial Services Superintendent Adrienne Harris – and panel participants comprising state and federal regulators as well as digital asset industry legal counsel including:

    • Paul Grewal, Chief Legal Officer, Coinbase
    • Shamiso Maswoswe, Chief of the Investor Protection Bureau for the Office of the New York State Attorney General
    • Noah Perlman, Chief Compliance Offer, Binance,
    • Alixandra Smith, Deputy Chief, Criminal Division, Eastern District of New York
    • David Miller, counsel with Greenberg Traurig (panel moderator)

Below a selection of highlights from yesterday’s event…

Adrienne Harris, Superintendent, New York Department of Financial Services (NYDFS)

On NYDFS mandate:

“I have this dual mandate of regulation supervision and also economic development. I think the thing that surprises most people is to learn that New York both has the most rigorous regulatory framework for digital assets in the country -and probably in the world. If you look at investment in the US – venture capital and private equity investment in digital assets – most happens in New York, which is 2x Silicon Valley, 8x Miami (…). So we see that transparency, that regulatory certainty really helps protects consumers, but it also draws the economic activity.”

On other enforcement entities entering NYDFS’ jurisdiction (such as NY Attorney General):

“I think about it much more cooperatively. We work a lot with Federal law enforcement or U.S. Attorney’s offices, FinCEN, OFAC and after that, you know, the Attorney General in New York has some good authorities and she brought some good cases for unlicensed entities that have not come through the front door – so that’s a very important partnership. But, you know, the thing that’s really made New York a leader is that we have this clarity and transparency around the rules until now, as the federal government goes to put a framework in place for cryptocurrencies for stablecoins, they come to us….”

“There really isn’t a bill that comes through Congress that we’re not asked to weigh in on. There are jurisdictions here in the US and internationally, that come to DFS and say, “We want to provide that same clarity – maybe we want to have that same expertise – how do you build it?” As in the UAE – three weeks ago, there was [interest] to copy and paste what we’ve done in DFS.”

“Illinois, California, UK, Singapore, -they’re all really looking at what we do in [New York State in] different jurisdictions. So I think it’s really that transparency, that clarity and certainty…. We’ve issued guidance, so as the industry rapidly changes, we’re able to put guidance around activities… “Here are our regulatory expectations around blockchain analytics around. (…) And I think it’s that knowledge of the space -we’ve now built a team of 60 people that expertise that allows us to be so nimble go and given us a leadership position.”
Continue reading “Digital Assets And The Law Meet At White Collar Crime Institute”

International Crypto Asset Standards Floated; Hong Kong Unleashes Crypto June 1

Global Momentum for Digital Assets

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standardizing regulation

The Board of the International Organization of Securities Commissions (IOSCO) issued a new report on digital assets yesterday as the standards body asks for a final comment from the public by July 31 before it finalizes recommendations for its members. The 68-page “Crypto and Digital Asset (CDA) Recommendations” offers 18 policy recommendations which aspire to create “greater consistency with respect to regulatory frameworks and oversight in its member jurisdictions, to address concerns related to market integrity and investor protection arising from crypto-asset activities.” See the report (PDF).

IOSCO has been busy preparing structure for its digital asset recommendations to global regulators. In July of last year, it released “IOSCO Crypto-Asset Roadmap for 2022-2023.” Get it (PDF). And in March of last year, it released a report on Decentralized Finance (DeFi) intended to educate its members on DeFi. Get that one (PDF). The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission are members of IOSCO. Read more in Cointelegraph.

Hong Kong crypto

Hong Kong’s Securities and Futures Commission (SFC) is moving quickly to bring crypto under its regulatory umbrella and unlock crypto markets in the region. In a press release yesterday, the SFC’s Chief Executive Officer Julia Leung said, “Hong Kong’s comprehensive virtual assets regulatory framework follows the principle of ‘same business, same risks, same rules’ and aims to provide robust investor protection and manage key risks. This will enable the industry to develop sustainably and support innovation.”

CNBC reports on the news and how it aligns with Hong Kong’s desire to become a “crypto hub.” Read it. Continue reading “International Crypto Asset Standards Floated; Hong Kong Unleashes Crypto June 1”

Coinbase Begins Marketing Push Aimed At Policy; Apple Pay Integrates NFTs

Policy push by Coinbase

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Coinbase – stand with crypto

Digital assets platform Coinbase, which is currently embroiled in a dispute (or three) with the Securities and Exchange Commission (SEC), is planning on a national campaign to defend itself. Politico reports, “The push includes: four FTN (Face The Nation) spots featuring Coinbase CEO Brian Armstrong, a blanketing of advertising on Wall Street, a New York ‘State of Crypto’ summit in June and a national ‘Stand with Crypto’ day in Washington July 19.”  Read a bit more.

Coinbase – political impact

The Coinbase blog provides a clip of what’s to come as well as more details on the “Stand with Crypto” day in DC in July. See the post.

If Coinbase is successful with this marketing campaign beyond the beltway and with even a small part of the electorate, this could be of concern to Democrats in the lead-up to the general election in November 2024. Dems have largely embraced an anti-crypto position and seem to see it as a winning view as they seek to return President Biden to the White House for his second term.

Given the recently-developed partisan divide around digital assets, Coinbase’s public relations push in some ways is the equivalent of Republican campaign funding. Coinbase will no doubt try and align with pro-crypto Dems in an effort to diffuse a partisan “look.” Continue reading “Coinbase Begins Marketing Push Aimed At Policy; Apple Pay Integrates NFTs”

Rep. Torres Wants To Protect State Regulation; President Biden Denounces MAGA Crypto

Rep. Ritchie Torres

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state regulators – Torres

On Friday, Rep. Ritchie Torres (D, NY) reiterated his support of the digital assets regulatory regime in his state and its regulator the New York Department of Financial Services (NYDFS).

Torres tweeted Friday, “The evidence is crystal clear — state regulators like
@NYDFS have been far more effective at regulating cryptocurrencies than federal regulators. Watch my questioning during yesterday’s @FSCDems hearing aimed at developing a framework for stablecoin regulation and legislation.” See his Q&A (video) at last week’s stablecoin hearing.

Torres isn’t necessarily aligned with his Democratic caucus, which appears to prefer some form of Federal oversight when it comes to digital assets and stablecoins. Republicans, on the other hand, have embraced the “states rights” view.

state regulators – event

Meanwhile, the battle between NY Attorney General Letitia James’ office, which recently introduced its “CRPTO” legislation, and NYDFS and Superintendent Adrienne Harris who are caretaker’s of the New York BitLicense, may be heating up.

Harris and NY Assistant AG Kenneth Polite could shed more light on the battle, or lack thereof, this Wednesday at the “White Collar Crime Institute” event by the New York City Bar. Commodity Futures Trading Commission (CFTC) Commissioner Christy Goldsmith Romero will appear on Tuesday night. Continue reading “Rep. Torres Wants To Protect State Regulation; President Biden Denounces MAGA Crypto”

Stablecoin Legislation Discussion Takes Step Forward; Emmer And Soto Want Clarity

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stablecoin hearing

Two differing themes emerged from lawmakers at yesterday’s House Financial Services (HFS) Digital Assets Subcommittee stablecoin hearing at the Rayburn House Office Building. On the Republican side, states rights were a legislative focus whereas Democrats see the need for the involvement of the Federal Reserve. From a tone point-of-view, the Republicans led by Subcommittee Chair Rep. French Hill (R, AR) continue to position with an air of bipartisanship (read his opening remarks) while Democrats led by HFS Ranking Member Rep. Maxine Waters (D, CA) are generally more combative and remain dissatisfied with the majority’s views.

Digital Assets Subcommittee Ranking Member Steven Lynch put it bluntly saying state regulation for stablecoins feeds into crypto companies propensity for seeking out the least restrictive jurisdictions – “a race to the bottom,”  he said. Read more in The Block.

See the hearing video.

CoinDesk’s Jesse Hamilton notes the bright side in all this: “…this and other committees are showing that the stablecoin topic – and crypto more broadly – is important enough to have already warranted several congressional hearings in recent weeks. Most members in both the House and Senate seem to be advocating action, and if they can agree on a stablecoin compromise, it would be a major first step toward U.S. oversight of the industry.” Read more on CoinDesk.

Fox Business Eleanor Terrett commented on Twitter about her view of the hearing, “Seemed to be an overwhelming consensus that stablecoins are not securities and should not be regulated by the SEC, but possibly regulated at the state level.” Continue reading “Stablecoin Legislation Discussion Takes Step Forward; Emmer And Soto Want Clarity”

Tether Stablecoin Seeking Bitcoin Reserves Not Treasuries; Today’s Stablecoin Hearing


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stable Bitcoin

The issuers of the stablecoin Tether (Tether International Limited) announced a change in the way the company will manage their reserves going forward. Yesterday, the company elaborated on the Tether blog, “Starting this month, Tether will regularly allocate up to 15% of its net realized operating profits towards purchasing Bitcoin (BTC).” Read the post.

The company said it would self-custody all of its Bitcoin as a reflection of their belief in “not your keys, not your coins.”  Unspoken may be the potential for government censorship of the company and its stablecoin -hence the move  to Bitcoin and self-custody.

Does this mean Tether is moving away from other reserve types such as short-term U.S. Treasuries?

more tips:

Tether’s Latest Q1 2023 Assurance Report Shows Reserves Surplus At All-Time High of $2.44B, up $1.48B in Net Profit; New Categories for Additional Transparency Reveals Bitcoin and Gold Allocations – Tether, May 10

today’s hearing

Putting the ‘Stable’ in ‘Stablecoins:’ How Legislation Will Help Stablecoins Achieve Their Promise
9:00 AM in 2128 Rayburn House Office Building
House Financial Services’ Subcommittee on Digital Assets, Financial Technology and Inclusion
Committee Memo | Live Webcast Continue reading “Tether Stablecoin Seeking Bitcoin Reserves Not Treasuries; Today’s Stablecoin Hearing”

EU Powers Ahead With MiCA Regulation Approval; Congress Toils With Stablecoins

Markets in Crypto-Assets (MiCA)

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EU – MiCA regulation

In a vote of 27-0, the European Union’s Economic and Financial Affairs Council, which is comprised of the member states’ finance ministers, unanimously approved the continent’s ground-breaking Markets in Crypto-Assets legislation.

A statement fro the Council reads: “The new rules cover issuers of utility tokens, asset referenced tokens and so-called ‘stablecoins’. It also covers service providers such as trading venues and the wallets where crypto-assets are held. This regulatory framework aims to protect investors, preserve financial stability, while allowing innovation and fostering the attractiveness of the crypto-asset sector.” Read it all.

It’s hard to imagine the United States this far along.

The next and final step is for the bill to be published in the Official Journal of the European Union. Thereafter, MiCA will take effect in the middle of next year. Read more on the bill’s implications from Cointelegraph.

more tips:

Landmark crypto rules make exchanges liable for customer losses in EU – Ars Technica

EU – crypto taxes

Building on the MiCA legislation, the finance ministers also approved new legislation aimed at transparency in taxation of crypto assets beginning in 2026. “The Directive will improve Member States’ ability to detect and counter tax fraud, tax evasion and tax avoidance, by requiring all crypto-asset providers based in the EU – irrespective of their size – to report transactions of clients residing in the EU. Moreover, the updated Directive has been extended in scope to include reporting obligations of financial institutions regarding e-money and central bank digital currencies and the automatic exchange of information on advance cross-border rulings used by natural persons,” says a statement on the European Commission’s website. Read it.

Politico notes the other side of the crypto tax law – the EU wants to identify crypto users: “The new disclosure framework will help regulators understand where and whose money is circulating throughout the crypto market, as well as make it harder for Europeans to hide tax assets in said market.” Read more.

Continue reading “EU Powers Ahead With MiCA Regulation Approval; Congress Toils With Stablecoins”