Powell Says Stablecoins Are Money As McHenry Announces Markup For Digital Assets Legislation

Fed Chair Powell

Jerome Powell, the Republican Federal Reserve Chair appointed during the Trump administration, appeared before the House Financial Services (HFS) Committee today for his semi-annual hearing, “The Federal Reserve’s Semi-Annual Monetary Policy Report” a.k.a. the Humphrey-Hawkins report.

Although Powell’s prepared testimony was bereft of anything digital asset-related as was the Committee’s agenda for the hearing (see it), Chair Powell’s Q&A with members of Congress provided a taste of hot button digital asset issues for the Fed.

HFS Chair Rep. Patrick McHenry (R, NC) kicked things off right before Powell’s testimony saying before the full Committee that the stablecoin and market structure bills were on the HFS schedule for next month. Chair McHenry stated in the third person:

“The Chair would further announce to committee members that the Chair’s intention is that in the second week we return in July, we will have a markup, and that markup will include two important bills. One is giving digital assets a market structure and federal regulatory remit. And the second is a federal stablecoin regime. It is the intention of the Chair to have that as two pieces of committee markup in the second week when we return in July.”

More precisely, Digital Chamber’s Cody Carbone tweeted the tentative date for markup of both bills is July 19. (See: what is markup?)

After McHenry’s brief announcement, the hearing commenced.

Click below or scroll down for a selection of what Powell said about digital assets in answer to several Members of Congress during the Q&A portion of the hearing. Video is here.

(lightly edited for clarity)

Rep. Waters (D, CA): I’ve argued that we should allow states to be part of this process, but we must have a strong enforceable federal floor with the roll by the Federal Reserve to approve and provide oversight of payment stablecoins issued by non-banks in order to ensure that consumers are protected. Such a framework is similar to our dual-banking system and it would ensure that non-banks and banks are treated the same. We should also bear in mind that payments stablecoins are a new form of currency intended to allow individuals to pay for things with them. As such, do you agree that it is important for the Fed as our central bank to have a chance to approve or decline any state license non-bank entity before it starts issuing payments stablecoins nation-wide? Continue reading “Powell Says Stablecoins Are Money As McHenry Announces Markup For Digital Assets Legislation”

Secretary Yellen Discusses Digital Assets At House Financial Services Hearing

Secretary Janet Yellen

Highlights from today’s U.S. Treasury Secretary Yellen‘s appearance in front of the House Financial Services Committee for the hearing, “The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System.”

Digital assets were discussed during the Q&A with Secretary Yellen by several Members of Congress. Video is here.

Click below or scroll down for a selection of what was said:

(lightly edited for clarity)

REP. HILL (R, AR): The FSOC (The Financial Stability Oversight Council) report  recommended that Congress passed legislation to provide regulators authority over stock markets for digital assets as well as legislation we could regulators more authority to have visibility into or supervise digital asset companies. We’re working on that here in Congress. Are those recommendations from late summer’s FSOC report (see the report) still the recommendations of FSOC… still the view of FSOC? Continue reading “Secretary Yellen Discusses Digital Assets At House Financial Services Hearing”

‘Token Millennial’ Rep. Kat Cammack Explores Gaming, Government Programs And The Blockchain

Rep. Kat Cammack

As she began her 5-minute allotment of the Q&A, Rep. Kat Cammack (R, FL) let loose with a “quote of the day” as she identified herself “the token millennial” at the blockchain hearing run by House Energy and Commerce’s Subcommittee on Innovation, Data, and Commerce titled, “Building Blockchains: Exploring Web3 and Other Applications for Distributed Ledger Technologies.

Tokenized, indeed.

In spite of being the last Member to question the hearing’s witnesses, Cammack seemed to relish the chance to explore several areas in which she believed distributed ledger technology and digital assets could have compelling purposes.  See the video of Rep. Cammack’s Q&A.

(lightly edited for clarity)

REP. KAT CAMMACK: How do you envision blockchain changing the future of gaming and even going so far as, say, the metaverse?

RYAN WYATT, POLYGON LABS: I appreciate the question and am empathetic to it, especially having kids and my wife not being particularly keen with video games. But, I think one thing that a lot of folks don’t realize is the way that we think about video games – Mario, Tetris – it is evolved. They are digital worlds. People are learning. They’re interacting. They’re socializing. They’re wanting to spend their time inside of these environments, whatever it is that they’re doing, right? And there’s obviously a variety of things.

So, with this, is people want to spend money where they’re spending time – that’s a very natural behavior for anyone to do. Whether you’re a kid or an adult that are interacting in these digital worlds, that’s important. So therefore, you see a lot of digital goods being purchased inside of these games. Whether it’s a cosmetic item for you to have some representation in-game or whatever the case may be. As you pointed out, it’s generating hundreds of billions of dollars. YouTube’s one of the largest verticals in the (gaming) business. Continue reading “‘Token Millennial’ Rep. Kat Cammack Explores Gaming, Government Programs And The Blockchain”

Lawmakers Want Use Cases, Witnesses Want Regulation: Today’s House Energy and Commerce Subcommittee Hearing

Rep. Darren Soto

Today’s hearing of House Energy and Commerce’s Subcommittee on Innovation, Data, and Commerce titled, “Building Blockchains: Exploring Web3 and Other Applications for Distributed Ledger Technologies,” was a rare opportunity for lawmakers to discuss blockchain applications beyond the financial realm – and learn.

And though some Democrats appeared to read from a script written by Democratic party leadership – such as the Subcommittee Ranking Member Rep. Jan Schakowsky (D, IL) and Rep. Lori Trahan (D, MA) who seemed to try and paint blockchain technology as a threat – other Members from both sides of the aisle often asked substantive questions.

This included Rep. Darren Soto (D, FL), who took his turn during the hearing’s Q&A section with a straightforward query about blockchain use cases.

Soto is well-known on Capitol Hill for his support of the burgeoning blockchain industry with his work on several blockchain-related bills including co-sponsorship of Majority Whip Rep. Tom Emmer’s (R, MN) recent “Securities Clarity Act“. He was also a co-chair of the Congressional Blockchain Caucus in the 117th Congress.

As evidenced by the answers to Rep. Soto ‘s question, witnesses mostly wanted to talk about the need for regulation, not use cases.  (Video is here.)

(Lightly edited for clarity)

REP. DARREN SOTO: In the beginning, in my opening remarks, I talked about a lot of the areas where we were already able to pass amendments into both the National Defense Authorization Act and the Appropriations Act and get a lot of the blockchain advances under federal law. It was mentioned by our colleague, [Rep. Rick Allen (R, GA)]: the food tracing with the FDA to help with public safety; helping with encrypted communications through our military; protecting veterans records, among other areas, going forward.

So, we in Congress want to make sure we’re good partners in advancing this critical technology, whether it’s for economic reasons, security, for advancing critical resources. So, I’ll start with Mr. Wyatt, but I’m going to ask all of you the same question. Mr. Wyatt, if there could be one particular partnership the federal government could help advance in some of these areas. What do you think it should be that we should work on and why? Continue reading “Lawmakers Want Use Cases, Witnesses Want Regulation: Today’s House Energy and Commerce Subcommittee Hearing”

Come In And Register – How Does That Really Go? Robinhood Tells All At House Ag Hearing

registration

Securities Exchange and Commission (SEC) Chair Gary Gensler has often said in the media that aspiring, well-regulated crypto companies should “come in” and “register” with the SEC.

See his speech in September 2022, for example.

But, how does that really go? Rep. John Rose (R, TN) wanted to know.

During the second panel of the day for House Agriculture’s digital assets hearing, “The Future of Digital Assets: Providing Clarity for Digital Asset Spot Markets,” Rose asked Dan Gallagher, Chief Legal Compliance and Corporate Affairs Officer, of Robinhood Markets, to discuss his own company’s pro-active registration attempt with the SEC for its crypto product:

“We actually came in and we did it proactively. We weren’t being investigated by the SEC. And we did it just because he wanted folks to do it. We thought it was good for our business and our customers.  We went through a 16-month process of trying to register a special purpose broker dealer. And then we were pretty summarily told in March [of this year] that that process was over and we would not see any any fruits of that effort.”

Continue reading “Come In And Register – How Does That Really Go? Robinhood Tells All At House Ag Hearing”

CFTC’s Behnam Sees Need For Digital Assets Legislation At House Agriculture Hearing

Chair Behnam

Today’s hearing, “The Future of Digital Assets: Providing Clarity for Digital Asset Spot Markets” by the House Agriculture marks another step in the legislative process for House Republicans to create a digital asset market structure.

See the discussion draft (PDF) and the bill’s summary (PDF).

Among the witness list, the first panel included only Chair Rostin Behnam, Commodity Futures Trading Commission (CFTC).

TL;DR – Behnam is ready for this bill or something like it. Near the end of the hearing’s questioning, he suggested decades-old law is not nearly enough.

You can see prepared testimony for participants here.

Video is here.

opening

House Agriculture Committee Chair Rep. Glenn “GT” Thompson (R, PA) – after a brief opening statement – added that today’s Securities and Exchange Commission (SEC) enforcement action against Coinbase is exactly why this hearing was taking place – regulation by enforcement was not the way forward, rather legislation from Congress should be the way, he said.

Next, House Ag Ranking Member Rep. David Scott (D, SC) sounded a hopeful tone in his opening statement by saying, in so many words, to Chair Behnam that he deserves more funding. This became a popular refrain of Democrats in the hearing who may still be smarting from the debt ceiling debacle and various budget cuts.

Continue reading “CFTC’s Behnam Sees Need For Digital Assets Legislation At House Agriculture Hearing”

Partisan Questioning of SEC Chair Gensler Leads To Few Surprises In HFS Oversight Hearing

HFS and the SEC

Today’s hearing of the House Financial Services (HFS) Committee hearing on Oversight of the Securities and Exchange Commission (SEC) started before it began as the Committee’s Republicans led by Chair Patrick McHenry (R, NC) fired off a condemnation of SEC Chair Gary Gensler’s handling of digital assets in advance of the hearing’s start.

See the letter (PDF). And, see the accompanying press release.

In the letter, HFS Republicans called out Chair Gensler for misrepresenting his agency’s willingness to perform registration of digital asset companies. “You have been outspoken in your push for digital asset trading platforms to ‘come in and register’ under the national securities exchange (NSE) framework. Yet, at the same time, you have failed to provide a path that allows digital asset trading platforms to register.” With HFS Committee member Rep. Warren Davidson (R, OH) already threatening Gensler on Twitter with the loss of his job through a new, yet-unseen bill that would restructure the SEC, the stage was set for a combative meeting between HFS Republicans and Chair Gensler.

opening statements

As the hearing began, Chair McHenry called the meeting to order and began with his opening statement (read it) criticizing the SEC Chair on his digital assets “regulation by enforcement” agenda. He also noted that rule-making by the SEC had doubled under Gensler’s leadership. And he concluded with a condemnation of Gensler’s lack of response to Congressional Republicans requests of the SEC for information related to FTX and other issues. .

In her opening statement, Ranking Member Rep. Maxine Waters (D, CA) wasted no time in her opening statement (read it) in defense of Chair Gensler and called the investigations by Republicans as a “sham.” She blamed Republicans for alignment with Wall Street interests and the rejection of climate change rules for investing, hedge fund reforms and what she called deregulation. She applauded Chair Gensler for his strong enforcement of securities laws as it related to crypto.

Next up were Rep. Ann Wagner (R, MO) and Rep. Brad Sherman (D, CA) took brief turns on the far ends of criticism and compliments of Chair Gensler, respectively.

In his opening remarks, Chair Gary Gensler pivoted off a tweet he had carefully made before the hearing with the statue of lawmaker Sam Rayburn in the Rayburn House Office Building. He argued that artificial intelligence (AI) and not crypto was a more important topic as he looked ahead at his purview at the SEC, suggesting roboadvisors will be transformed to name a few of the impacts. The markets should serve investors not the other way around, he said.

See Chair Gary Gensler’s prepared testimony on the SEC website.

Q&A

HFS Chair McHenry began the question and answer of Gensler around whether Ether was a commodity or a security. Gensler never answered directly as much as Chair McHenry tried even if he did not seem very surprised.

Ranking Member Rep. Waters asked Gensler to explain to Chair McHenry how a security is defined. He indicated it’s a four-part test and provided some detail. Rep. Waters asked if Gensler had the framework he needed to bring crypto into compliance. Unsurprisingly, Gensler said he has what he needs. “I’ve never seen a field (crypto) that is so non-compliant,” said Gensler. Continue reading “Partisan Questioning of SEC Chair Gensler Leads To Few Surprises In HFS Oversight Hearing”

Digital Assets Hearing Highlights House Democratic Support for Digital Assets Legislation

Today’s inaugural hearing of the Digital Assets, Financial Technology and Inclusion Subcommittee titled, “Coincidence or Coordinated? The Administration’s Attack on the Digital Asset Ecosystem,” took place under the auspices of the House Financial Services Committee and Subcommittee Chair Rep. French Hill (R, AR).

See the 2+-hour video of the hearing.

In spite of the title and with a couple of exceptions (such as Rep. Brad Sherman (D, CA)), rather than a partisan food fight, the hearing was largely about creating a regulatory framework and what was needed.

With Republican support for digital assets legislation well-known, the hearing reaffirmed that some Democratic voices are pro-crypto, too, with members such as Wiley Nickel (D, NC), Bill Foster (D, IL) and the Subcommittee’s Ranking Member Stephen Lynch (D, MA) who each talked hopefully about the space but were eyes-wide-open about its challenges.

In his opening statement, Hill pointed out that the Subcommittee’s Ranking Member Stephen Lynch (D, MA) had partnered on a financial technology task force previously. Read his complete opening remarks.

Payment stablecoin legislation started by HFS Chair Rep. Patrick McHenry and Ranking Member Maxine Waters (D, CA) appears to be at the top of the list for regulation, Chair Hill wants to see move forward in the 118th Congress.

Ranking Member Lynch expressed optimism about the digital asset space in his opening statement, but acknowledged the challenges and irresponsible actions within the ecosystem including a lack of transparency. He wanted the “consumer’s voice” considered more in the overall digital assets discussion. Continue reading “Digital Assets Hearing Highlights House Democratic Support for Digital Assets Legislation”