HFS markup – SAB 121
At yesterday’s abbreviated House Financial Services markup (video is here), the Committee sent two digital asset-related bills to the House floor.
The House Joint resolution rescinding the Securities and Exchange Commission’s (SEC) controversial Staff Accounting Bulletin 121 (SAB 121) sponsored by Reps. Mike Flood (R, NE) and Wiley Nickel (D, NC) was approved by a final tally of 31-20… all Republicans and 3 Democrats (Rep. Nickel, Rep. Ritchie Torres (NY), Rep. Josh Gottheimer (NJ)) voted for the bill.
From the Majority press release:
- “H.J.Res.109, providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Securities and Exchange Commission relating to “Staff Accounting Bulletin No. 121,” offered by Rep. Mike Flood (NE-01), overturns the SEC’s SAB 121. By overturning SAB 121, the Resolution will ensure consumers are protected by removing roadblocks that prevent highly regulated banks from acting as custodians of digital assets.”
Video of Rep. Flood’s hearing comments are here as he makes a detailed case for the bill with Members.
Jake Chervinsky, formerly of Blockchain Association and currently Chief Legal Officer of Variant Fund, was heartened by the “good news” of the bill’s passage out of committee but noted on X, “Bad news: that’s likely the end of the story in Congress. Getting repeal done is nearly impossible. Lawsuit or bust.”
Chervinsky doesn’t see the bill taken up by the Democrat-controlled Senate or signed into law by the White House.
what you should know: It will be interesting to see the strategy employed in the Senate by the joint resolution’s sponsor Senator Cynthia Lummis (R, WY). Is there a sympathetic Democrat who can help? Perhaps. Senate Finance Chair Ron Wyden (D, OR) partnered on a Congressional letter regarding the SEC X account hack with Sen. Lummis in early January. Continue reading “SAB 121 Joint Resolution Approved By Financial Services; New Amicus Brief For Kraken”
Chair Stabenow is back
Politico’s Meredith Lee Hill reports that Senate Agriculture Chair Debbie Stabenow (MI), a key pro-crypto Democrat in the Senate, is ready to deal with crypto issues again after concluding some finer points of the amorphous Farm bill.
Ms. Hill tweeted yesterday on X that Stabenow “confirms she’s back to crypto work amid an impasse in farm bill talks Stabenow, a member of Dem [leadership], said there’s ‘interest’ in both chambers to address crypto this yr + she’s ‘seeing where we can get agreement.'” Read more in Politico (subscription).
This appears to be an opportunity for the House’s digital asset market structure bill to find a “safe space” in what has been a generally reluctant, Democrat-controlled Senate.
It doesn’t seem farfetched that Senate Ag Ranking Member John Boozman (R, AR) is also supportive of crypto legislation today given his past support for Digital Commodity Consumer Protection Act (DCCPA).
what you should know: All work stopped on crypto and DCCPA in Senate Agriculture when FTX imploded in November 2022. There was a post-mortem hearing in December 2022 with former Stabenow counsel and CFTC Chair Rostin Behnam -and that was it.
(Let alone all the Democrats running for cover due to FTX CEO Sam Bankman Fried’s “radioactive” campaign donations.)
Unlike Senate Banking where Chair Sherrod Brown (D, OH) is a roadblock to digital assets legislation for Senators like Sen. Cynthia Lummis (R, WY), Senate Ag with Chair Stabenow’s renewed interest may breath life into Sen. Kirsten Gillibrand’s (D, NY) digital asset efforts. Gilllibrand sits on Senate Ag, and is co-sponsoring the Responsible Financial Innovation Act [S.2281] with Sen. Lummis.
Stabenow announced her retirement from the Senate in January 2023. She’ll hold her current seat until this January 2025. Continue reading “Senator Stabenow ‘Back To Crypto Work’ In Senate Agriculture; Crypto PAC Pours On Funds”
Yesterday, House Financial Services (HFS) Chair Patrick McHenry (R, NC) formally announced the reintroduction of the “Financial Services Innovation Act of 2024” [H.R.7440] framing the creation of new offices for financial innovation across banking regulators as “sandboxes.”
The bill was previously introduced by the Chair in December 2022 in the 117th Congress.
From the Chair McHenry press release, “Budding fintech firms currently operate in fear of heavy-handed penalties brought down by regulators that have failed to work with Congress to provide clear rules of the road. That’s why I’m reintroducing the Financial Services Innovation Act. This commonsense legislation will give entrepreneurs an opportunity to test legal and regulatory waters before taking new products and services to market. Innovators have long flocked to American markets…”
what you should know: McHenry’s bill will be up for a vote at tomorrow’s HFS markup. How Democrats will line up on the bill is unknown, but if it’s anything like the markups last July for the stablecoin [H.R.4766] and digital asset market structure [H.R.4763] bills, five to six Democrats seem possible at a minimum such as Reps. Jim Himes (CT), Ritchie Torres (NY) and Josh Gottheimer (NJ). Continue reading “New Sandbox Legislation Promises Protection For Innovation; Digital Assets AML Bills”
Cruz joins CBDC bill
Yesterday, Senator Ted Cruz (R, TX) brought his “upper house” seal of approval to anti-CBDC (Central Bank Digital Currency) sentiments currently being driven by Majority Whip Tom Emmer (R, MN) and his “CBDC Anti-Surveillance State Act” [H.R.5403] which includes 97 Republican co-sponsors.
Republicans see opportunity with the CBDC issue in the 2024 general election says Fox Business.
Senator Cruz, the Ranking Member on Senate Commerce, shares with Fox that he and five “Senate colleagues, including Bill Hagerty (R, TN), Rick Scott (R, FL), Ted Budd (R, NC), Mike Braun (R, IN), and Kevin Cramer (R, NC), will sponsor a new bill called the Central Bank Digital Currency Anti-Surveillance State Act.” Read more.
Commodity Futures Trading Commission (CFTC) Commissioner Kristin Johnson may be getting a new job. Politico reported yesterday that she’s under consideration for Assistant Secretary for Financial Institutions at Treasury. Read more from Politico (subscription).
Commissioner Christy Goldsmith Romero (D) has also been rumored for the position.
Commissioner Johnson, a Democrat, has been active on issues related to digital assets including public speaking at events such as Blockchain Association’s Policy Summit last November (her remarks). When she first arrived at the Commission in 2022, she moderated a CFTC webcast titled “Digital Assets and Financial Inclusion.” Continue reading “Cruz Joins Emmer On Anti-CBDC Crusade; Reps. Flood And Nickel Talk SAB 121 With Consumers”
So much for the “emergency.”
Late Friday, the “emergency” survey of cryptocurrency miners’ energy usage to be undertaken by the Department of Energy’s Energy Information Administration (EIA) was put on a 4-week hold… at a minimum. Read more in Reuters. Another court loss for anti-crypto advocates.
It was less than a month ago that the EIA at the behest of the White House’s Office of Management and Budget (OMB) had announced that crypto mining was a threat to the energy grid, hence the need for an emergency survey.
See the EIA survey (PDF).
The public release of its results was said to be a cause for serious concern by complainants Riot Platforms and Texas Blockchain Council.
District Court Judge Alan Albright was unequivocal in his motion for a temporary restraining order (TRO): “The Court believes that Plaintiffs (i.e. TBC and Riot Platforms) are likely to succeed in showing that the facts alleged by Defendants to support an emergency request fall far short of justifying such an action. As a result, the determination likely violates the APA as ‘arbitrary, capricious, [or] an abuse of discretion.'” (h/t @lee_bratcher)
See Judge Albright’s “Order on Motion for TRO.”
Perianne Boring, CEO of industry organization Chamber of Digital Commerce said on X, “This is a victory for all proponents of freedom and rule of law.” The Digital Chamber has supported the lawsuit.
what you should know: Another day, another rules violation. Friday’s court order echoes the findings of the Government Accountability Office (GAO) last October where the Securities and Exchange Commission’s controversial Staff Accounting Bulletin 121 violated the Congressional Review Act (CRA), “which adopts the definition of rule under the Administrative Procedure Act (APA) but excludes certain categories of rules from coverage.” Continue reading “Anti-Crypto Loses In Court Again; Digital Assets Joins The Election Agenda”
Federal Reserve Governor Christopher Waller, a Republican, spoke at a banking conference in the Bahamas last Thursday about the dominance of the U.S. dollar and saw a role for U.S. Dollar-backed stablecoins.
Noting decentralized finance’s (DeFi) inherent use of stablecoins, Waller writes, “About 99 percent of stablecoin market capitalization is linked to the U.S. dollar, meaning that crypto-assets are de facto traded in U.S. dollars. So it is likely that any expansion of trading in the DeFi world will simply strengthen the dominant role of the dollar.”
Waller makes note of Euro-backed stablecoins and the increasing use of the Chinese renminbi but concludes unequivocally, “I do not expect to see the U.S. dollar lose its status as the world’s reserve currency anytime soon, nor even see a significant decline in its primacy in trade and finance. Recent developments that some have warned could threaten that status have, if anything, strengthened it, at least so far.”
Read the speech (Feb. 15).
- U.S. Regulators Do Have Some Control Over Stablecoin Tether: JPMorgan (Feb. 17) – CoinDesk
what you should know: The Republican House Financial Services Committee X account tweeted in reaction to Waller on Friday, “The proliferation and adoption of well-regulated, dollar-denominated stablecoins will bolster the dollar’s status as the global reserve currency.” Waller’s statement is more fuel on the fire to support the “Clarity for Payment Stablecoins Act” [H.R.4766], which is awaiting a House floor vote. Continue reading “Fed Governor Waller Supporting Stablecoins; White Hats Get Behind Security Alliance”
As a member of the House Financial Services (HFS) Committee and proud representative of his district in the Bronx, New York, Rep. Ritchie Torres (D, NY) has been at the front of lines of the evolution of the U.S. financial system in the 118th Congress.
And though he’s a staunch supporter of the Democratic Party, Torres has been unafraid to break with his Caucus’ leadership when he has believed it’s in the best interests of his constituency. Digital assets has been one such beneficiary of his independence.
Congressman Torres voted in support of the stablecoin and digital asset market structure bills at markup hearings last July, co-sponsored the bipartisan Keep Innovation In America Act of 2023 [H.R.1414], signed on to support numerous bipartisan Congressional letters on digital assets and consistently delivered engaged, tough questioning of U.S. government regulators at public hearings.
After the conclusion of an HFS Subcommittee for Digital Assets, Financial Technology and Inclusion hearing on illicit finance earlier today, Rep. Torres discussed his views on digital assets and Congress with blockchain tipsheet.
- The progressive case for digital assets
- Where “Big Tech” fits in
- Stablecoin legislation
- The SEC and crypto
- Congressional generational divide
- On the industry
- SAB 121
The interview has been lightly edited for clarity. Continue reading “Interview: Rep. Ritchie Torres Making Progressive Case For Digital Assets”
Following up on a hearing from last November, the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion held yesterday, “Crypto Crime in Context Part II: Examining Approaches to Combat Illicit Activity.” See the on-demand webcast.
Led by Chair French Hill (R, AR) and Ranking Member Steven Lynch (D, MA), industry witnesses included the following (click name for prepared testimony):
- Caroline Hill, Senior Director of Global Policy, Circle
- Michael Mosier, Co-Founder, Arktouros
- Grant Rabenn, Director, Financial Crimes Legal, Coinbase
- Ari Redbord, Global Head of Policy, TRM Labs
- Carole House, Senior Fellow, Atlantic Council
Of note, Ms. House was the behind-the-scenes creator of President Joseph Biden‘s Digital Assets Executive Order released in March 2022.
The Subcommittee also previewed a slew of new legislation – see it on the hearing page – including a study requiring Treasury, SEC and CFTC to look at decentralize finance (DeFi).
(Will HFS Chair Patrick McHenry (R, NC) hold another HFS markup soon?)
In his opening remarks, Chair Hill noted that crypto was not a primary source of financing for terrorists – traditioinal finance was the culprit. Hill referenced Treasury Undersecretary Brian Nelson’s testimony on the previous day in front of the HFS full committee. But, Hill admitted any use of crypto in illicit finance is too much and pointed to the digital asset market structure bill as a solution.
The bill awaits a House floor vote after passing through a markup last July.
Ranking Member Lynch spoke next and said that digital assets were “vulnerable” to illicit finance. Overall in his opening statement, Lynch’s tone was more muted on digital assets than past hearings by a key member of Democratic leadership on HFS. He said that he favored promoting responsible innovation. Continue reading “Illicit Finance Gets Another Hearing From HFS Digital Assets Subcommittee”