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choke point drumbeat
Perhaps building on the theme of a Nic Carter tweet on Monday that suggested a “Choke Point” type of operation “targeting the crypto space in the US”, Senator Bill Hagerty (R, TN) offered up his own tweet yesterday saying, “Regulators singling out business activities should alarm all Americans. It doesn’t matter if it’s crypto assets, firearms, or any other lawful business, using banking regulators to advance political agendas should not be tolerated.” Is he talking about a new Choke Point for crypto? Hagerty then linked to an early January Blockworks article about U.S. banks dabbling in crypto under the watchful gaze of U.S. government regulators.
Last year, Hagerty, who is considered to be pro-crypto, introduced one of many stablecoin bills in Congress along with Rep. Trey Hollingsworth (R, IN) called the “Stablecoin Transparency Act‘ -an attempt to provide clarity on how the US Dollar stablecoins can be created, used and managed. Any clear regulation saying how cryptocurrency, even stablecoins, can be used in connection to the U.S. dollar would be significant.
Alexander Grieve of D.C. government relations Tiger Hill firm tweeted, “Operation Chokepoint (using bank policy to deny banking services to sectors for political reasons) has been an issue in the past. Recent bank regulatory statements and actions seem to confirm it’s happening again – this time with crypto.”
This is a developing story.
Coinbase CEO Brian Armstrong tweeted last night, “We’re hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers. I hope that’s not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen.” He then links out to a Paradigm document on why Ethereum staking does not make ETH a security – see it here.
In the final tweet on his thread, Armstrong makes a plea, “Hopefully we can work together to publish clear rules for the industry, and come up with sensible solutions that protect consumers while preserving innovation and national security interests in the U.S.”
The crypto industry in the United States seems increasingly on edge. Is some big announcement coming?
Ranking Member Rep. Brad Sherman (D, CA) in his opening statement (see the video) for Capital Markets Subcommittee hearing yesterday discussed how he believes the “accredited investor definition unfairly limits investment access for the non-wealthy and the need for reform.” Sherman’s statement wasn’t related directly to crypto investing (he’s well-known for his crypto skepticism), but it does illustrate one of the conundrums for Democrats and part of its base. Namely, how to support underserved communities who say they want access to digital asset investing even though many Democrats – such as Senators Elizabeth Warren (D, CA) and Sherrod Brown (OH) – want to rein in crypto altogether.
Even in the CFTC, there may be opposing views brewing between its members such as Commissioners Kristin Johnson ( see her CFTC webinar from August) and Christy Goldsmith Romero who has publicly suggested more restrictive accredited investor rules may be necessary – which could limited who can invest and how much.
In a November 2022 speech in which laid out her proposals, Goldsmith Romero said, “My concern is that if regulation fails to keep pace with technology, it’s going to be those most vulnerable who are going to be hurt.” Read her speech.
“How do you regulate something that doesn’t actually exist?” asks, rhetorically, a Politico article yesterday on how the European Union is moving on “metaverse” regulation. A bunch of new commissions among other initiatives show that the EU is serious. “Our ability to shape the metaverse will depend on our ability to master and develop cutting-edge technologies in Europe and build a sustainable ecosystem,” reads a detailed LinkedIn post by European commissioner Thierry Breton from last September.
UK crypto entrepreneurs leaving
The United Kingdom’s Financial Conduct Authority (FCA) has largely inhibited the growth of crypto startups and forced them to leave the country in some cases according to an article by Coindesk’s Camomile Shumba. MP Lisa Cameron, chair of the UK Parliament’s equivalent to the Congressional Blockchain Caucus tells Shumba, “Some companies have actually very sadly told me that they’ve sort of given up in the process and gone elsewhere. (…) Those companies are large companies who want to do the right thing and want to engage in a very constructive way.” Read the well-researched article.
You want more
- Crypto Regulatory Affairs: Australia Releases Token Mapping Framework, Places Focus on Consumer Protection – Elliptic
- Crypto Miners Vote With Their Feet – Cato Institute
- Indian firms advance CBDC for consumers – American Banker
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