Category: Event Coverage

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CBDC Hearing Shows Diversity Of Opinion Among House Financial Services Democrats

CBDCs hearing

Today, the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion convened a hearing titled, “Digital Dollar Dilemma: The Implications of a Central Bank Digital Currency and Private Sector Alternatives.” View the hearing page.  And, see the video.

Just before the hearing began, Rep. Stephen Lynch (D, MA), who is also the Ranking Member of the HFS Digital Assets Subcommittee, drew the battle lines with Republicans beginning with an announcement about the creation of the Digital Dollar Caucus, a list of whose membership is expected within a week according to a spokesperson. The Ranking Member also reintroduced H.R. 5410, “the Electronic Currency and Secure Hardware (ECASH) Act, which would develop an electronic version of the U.S. Dollar for use by the American public.” Co-sponsors include Democrats Rep. Ayanna Pressley (MA), Rep. Rashida Tlaib (MI) and Rep. Jesus Garcia (IL) – none of whom are on the Digital Assets Subcommittee. Read the press release.

Digging into the text of the bill, the ECASH Act asks U.S. Treasury “to develop and pilot digital dollar technologies that replicate the privacy-respecting features of physical cash.” See it.

FedNow, stablecoins, ECASH, CBDCs.. the lines are blurring.

Lynch’s legislation mingled with the hearing’s other bills which were skeptical of a CBDC, at best, including: Majority Whip Rep. Tom Emmer’s [H.R. 1122] “CBDC Anti-Surveillance State Act,” the bipartisan “Power of the Mint Act” [H.R. 3402] and the “Digital Dollar Prevention Act” [H.R. 3712] with 19 Republican co-sponsors. Continue reading “CBDC Hearing Shows Diversity Of Opinion Among House Financial Services Democrats”

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Vice Chair Michael Barr Discusses New Novel Activities Program At Federal Reserve

Michael Barr

In a fireside chat at Day 2 of the Seventh Annual Fintech Conference at the Federal Reserve Bank of Philadelphia on Friday,  Federal Reserve Vice Chair Michael Barr participated in a fireside chat moderated by Sunayna Tuteja, the Federal Reserve System’s Chief Innovation Officer.

Before he answered questions, Barr delivered a speech entitled, “The Federal Reserve’s Role in Supporting Responsible Innovation,” (read it here) where he discussed the Fed’s ongoing exploration of Central Bank Digital Currencies (CBDCs), the launch of FedNow as well as where stablecoins or “private money,” as Barr termed it, may fit in the U.S. financial system.

He said, “I remain deeply concerned about stablecoin issuance without strong federal oversight.” Nevertheless, Barr stressed the importance of financial innovation and that it was “absolutely essential for our economy.”

Below is an edited transcript of Vice Chair Barr’s discussion with the Fed’s Sunaya Tuteja.

on payments innovation and financial inclusion

Vice Chair Michael Barr: “…The payment system is one of these aspects of finance that is so critical for people’s everyday lives. Most of us can take for granted that we can get paid, we can store money and we can pay bills in a pretty seamless way if you’re in the higher socio-economic classes of people who have access to these kinds of financial services. But if you’re a low or moderate income person payment services actually can be a real problem. It can be hard to receive your income. A lot of people still get paid by check and have to get that check cashed somewhere. A lot of low income people 5% of Americans are outside the banking system and don’t have a bank account at all. 15% of Americans according to the FDIC are underbanked that is they have a bank account but they still use expensive alternative financial services.” Continue reading “Vice Chair Michael Barr Discusses New Novel Activities Program At Federal Reserve”

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Senator Hagerty Touts Need For Crypto Clarity And Stablecoin Transparency Act

Senator Bill Hagerty

Senator Bill Hagerty (R, TN), who sits on the Senate Banking Committee, spoke to Cato Institute’s Jennifer Schulp, at Cato’s “Staying Ahead of the Curve: Crypto Regulation and Competitiveness” event in Washington, D.C. today.

View video of the event here.

Senator Hagerty addressed a number of “hot button” digital assets topics in Congress today including “choke point 2.0” (popular with the Republican caucus), Securities and Exchange Commission Chair Gary Gensler, crypto and the U.S. dollar’s co-existence, innovation and digital assets legislation momentum in Congress.

Also of note, the Senator touted his own stablecoin bill – Stablecoin Transparency Act [S.3970], which was introduced in March 2022 in the 117th Congress – saying that it’s simplicity (only 2 pages) was the way forward with digital assets legislation rather than something more all-encompassing or “fulsome” as the Senator described it.

Perhaps a re-introduction of his bill is imminent? The chances of the bill ever making it to the docket of the Senate Banking Committee controlled by the Democratic majority seems slim for now. This point was not lost on the Senator. Yet, it’s clear he wants a seat at the table of any stablecoin legislation discussion.

Also, whether Senator Hagerty intended to be directly dismissive of broader, more “fulsome” bills such as the “Lummis-Gillibrand Responsible Financial Innovation Act (RFIA)” [S.2281] in the Senate or the digital assets market structure bill in the House known as the “Financial Innovation and Technology for the 21st Century Act” [H.R. 4763] was unclear.

Nevertheless, Hagerty wants to play for singles – not home runs – when it comes to digital assets and a divided Congress.

Transcript lightly edited for clarity.

on concerns about crypto innovation moving offshore

Senator Hagerty: I certainly have the concerns because of the tremendous uncertainty that’s been created by the current administration. Basically, what you have is an environment where we cannot get the regulators to come forward with any sort of clear set of requirements. You’ve got companies that are basically being regulated in arrears, if you will. They proceed according to what they think is a legitimate business practice – [and then] the SEC, for example, deems that illegal and in retrospect. It comes back and charges [companies] for something that was never on the books as being legal or illegal. It is a terrible environment for those companies who are trying to invest and expand. It’s forcing them to look overseas to more favorable regulatory environments. That’s not where we need to be right now. Continue reading “Senator Hagerty Touts Need For Crypto Clarity And Stablecoin Transparency Act”

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House Republicans Talk Digital Assets Legislative Plan At Flyover Fintech

Flyover Fintech

Yesterday’s one-day fintech conference in Lincoln, Nebraska dubbed “Flyover Fintech” and organized by freshman Congressmen Mike Flood (R, NE) and his staff, arguably yielded as many insights as a week-long Congressional hearing.

The only thing missing was the physical presence of elected Democrats. Maybe next year?  Nevertheless, 250-strong assembled to hear, and share, the latest in digital assets efforts in DC and the U.S. as well as look to the blueprint being laid in Flood’s home state of Nebraska.

The highlight of the day came last when Rep. Flood, a capable interviewer, asked his fellow House Financial Services Committee members – Rep. French  Hill (R, AR), Chair of the Digital Assets Subcommittee, and Rep. Warren Davidson (R, OH) – to join him on stage for a 40-minute Q&A that took attendees behind-the-scenes in Congress.

After covering the impact of FTX’s implosion and the buildup to the recent markups of the stablecoin and digital assets market structure bills, the Congressmen shared their best guess on next steps…

Partial spoiler:

1) The return of Senate Agriculture to the digital assets legislative mix;

2) House member education needs to happen before any House floor vote;

3) Lummis-Gillibrand (RFIA) need a state pathway in their bill.

Noting that Rep. Hill has been on the Financial Services Committee for nine years, and Congressman Davidson, has been on the committee for six and a half years, Flood began by asking for perspective on what it took to get the stablecoin bill to last week’s markup stage.

(Transcript lightly edited for clarity.)

REP FRENCH HILL: It’s been 15 months of bipartisan work between Rep. Maxine Waters (D, CA), who was the Chair of the HFS committee in the last Congress, and Rep. Patrick McHenry (R, NC), to come up with a stablecoin bill that would fill the gap. But it goes back a lot further than that.

We’ve had efforts since Rep. Davidson came to Congress. And, Majority Whip Tom Emmer (R, MN) came to Congress in my class in 2014 to try and move this conversation forward with a Financial Technology Task Force, where we uncovered exactly what we ought to be doing and how we ought to be doing it.

But then, the pandemic got in the way – I do think we would have made more progress if we hadn’t gone through the pandemic.

Last summer, [Maxine Waters and Patrick McHenry] set a goal of trying to get a consensus stablecoin bill through as the initial gateway [product] in the digital asset space. They got very close. And we picked up with Chair McHenry’s leadership this year. We’ve gotten a bipartisan bill through the House with more changes to come. But, now we have to obviously work with the Senate. Continue reading “House Republicans Talk Digital Assets Legislative Plan At Flyover Fintech”

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Bipartisan Stablecoin Bill Update From Reps. French Hill And Jim Himes Shows Progress

Atlantic Council

In a conversation with the Atlantic Council webcast earlier today, a bipartisan update on the stablecoin bill was provided by Rep. French Hill (R, AR), Chair of House Financial Services’ (HFS) Subcommittee on Digital Assets, Financial Technology and Inclusion, and Rep. Jim Himes (D, CT), a member of the HFS Committee and also Ranking Member of the House Permanent Select Committee on Intelligence.

The discussion was led by the Atlantic Council’s Josh Lipsky and Ananya Kumar. See the interview here.

Click below (or scroll down) for several highlights from the 50-minute conversation:

The following transcript has been lightly edited for clarity.

on addressing commingling

REP. FRENCH HILL (R, AR):  “We’ve seen a lot of digital asset players that are holding themselves out as an exchange. Or, they’re creating digital assets or trying to build their digital ecosystem where they produce their own stablecoin and effectively make a market in it – where nobody knows what the value of it is, how it’s characterized, how it’s overseen.”

“And that was a big challenge in the FTX collapse. People loaned against something they didn’t even understand the value of -including a lot of sophisticated players too. So yes, it’s gonna rival the losses back in the dotcom boom when it’s all said and done. We tried to address that by defining first and foremost what is stable? How is it defined? They have to have an audit. They have monthly attestation. They have exposure of their liquidity. This is something that’s not the case in stablecoins today.” Continue reading “Bipartisan Stablecoin Bill Update From Reps. French Hill And Jim Himes Shows Progress”

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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”

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Senators Lummis and Gillibrand Announce Responsible Financial Innovation Act Re-Introduction

Responsible Financial Innovation Act of 2023

At the Milken Institute’s The Future of Digital Assets Symposium yesterday, Senator Cynthia Lummis (R, WY) and Senator Kirsten Gillibrand (D, NY) made their first appearance together in the new Congress touting the re-introduction of their digital assets regulation bill, the Responsible Financial Innovation Act (RFIA), in mid-April.

Below is an edited transcript of the interview conducted on-stage by Michael Piwowar, Executive Vice President at the Milken Institute.

On the re-introduction of the Responsible Financial Innovation Act in the 118th Congress:

SENATOR LUMMIS: We’re looking at mid-April to reintroduce the bill. And the changes that we’re making would be a slimmed down, better looking [version] adjusting some of the definitions. We’ve been working with the SEC staff to address some of their concerns that there might be some unintended consequences to some of the definitions, but we’ve been meeting with them and taking care of that.

SENATOR GILLIBRAND: We’re also trying to address some of the concerns that we heard through regulators and the industry to clarify different areas. So we’re going to have an ambition to try to build out some of the regulatory framework that we left for studies in the first version.

It might also be a more thorough bill than the first version because the first version was just an introduction of what a baseline framework could look like in the industry, and how you would assess what are digital securities, what are digital commodities, and how you would regulate stablecoins. We had a lot of studies [,too].

Now, we’re going to actually try to do a deep dive on stablecoin regulations. We’re going to refine a lot about digital securities based on conversations we had with Chairman Gensler and the SEC staff. And we’re also going to even broaden out DeFi because [with] DeFi we punted it to the regulators in our first draft. Because of the climate we’re in right now, we think it would be better for us to give our best assessment of what that regulatory framework might look like, as opposed to waiting on regulators since regulators seem to have their own unique opinions. And there doesn’t seem to be any certainty with given regulators. So we thought it’d be better to maybe do our own parameters.

And so those are some of the things we’re working on now. The bill is going to be stronger. It’s also going to address some of the things that happened with FTX. So that it’s very clear if [FTX] was registered as a US company, what it would have had to do and why consumers would not have been so harmed. Continue reading “Senators Lummis and Gillibrand Announce Responsible Financial Innovation Act Re-Introduction”

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The Arrest of FTX CEO Sam Bankman-Fried (Updated)

Sam Bankman-Fried

What we know about FTX CEO Sam Bankman-Fried’s (SBF’s) arrest last night in the Bahamas following the implosion and bankruptcy of the cryptocurrency exchange he founded…

the arrest

    • Royal Bahamas Police Force announced SBF’s arrest shortly after 6p local time yesterday for what it said were offenses against the United States and The Bahamas. Read it. SBF had just said earlier in the day that he didn’t think he would be arrested.
    • Bahamas Attorney General says that it will continue its own “regulatory and criminal investigations” into SBF while the U.S. pursues its criminal charges. The release is here.
    • The State District Attorney’s office in New York State announced Bankman-Fried’s arrest in a tweet saying that it will reveal an indictment this morning. See the charges below.
    • The Securities Exchange Commission quoted its top enforcement official, Gurbir Grewal, who congratulated law enforcement on SBF’s arrest and announced his agency’s intent to pursue “separate charges for violations of securities laws violations.” Read the tweet. See the charges below.
    • More from The NY Times, WSJ and a wild story from Bloomberg on lawyer complaints about an exchange between the Bahamian government and SBF.

Continue reading “The Arrest of FTX CEO Sam Bankman-Fried (Updated)”