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the stablecoin syllabus
Request: Amidst the anti-digital assets missives emanating from the White House in late January (such as The Administration’s Roadmap to Mitigate Cryptocurrencies’ Risks), The White House Office of Science and Technology Policy (WHOSTP) put out a request for help with a “National Digital Assets R&D Agenda.”
Response: And, despite the WHOSTP glass-half-empty tweet announcing the initiative (digital assets are risky, but a CBDC sounds cool), Circle, who issues and maintains the USDC stablecoin, took the glass-half-full approach with its response.
Snippet: “Faster, Cheaper Payments with Programmable Money: Current financial architectures rely on often slow and expensive platforms — that necessitate the involvement of multiple intermediaries, parallel messaging through systems like SWIFT…” If you’re teaching a course in private stablecoins, this could be your syllabus – it integrates information from across the globe beginning with U.S. Treasury’s “The Future of Money and Payments” a key governmental response to President Biden’s Executive Order a year ago.
what’s the Chair really like?
Capitol Account talks to former Republican Commodity Futures Trading Commission (CFTC) commissioner Jill Sommers. She provides her opinion on what it was like working with former CFTC Chair and current SEC Chair Gary Gensler, a Democrat: “If you talk to anybody who’s a career employee at the SEC, they’ve probably never in their career seen anyone like him. It’s our understanding that a lot of the proposals [Gensler is putting out] are not even run through the staff and the divisions that typically would be writing those proposals. It’s all out of his office. That is not surprising.” Read more from Capitol Account.
events this week – the calendar
Busy week in DC. Congress is in session, too.
- March 6- 7 – Institute of International Bankers Washington Conference – IIB (appearing FDIC Gruenberg, SEC Uyeda, Peirce, CFTC Behnam, Goldsmith Romero, OCC Hsu, + Digital Assets panel, NYDFS Harris, Rep. Andy Barr (R, KY))
- March 6-8 – Council of Institutional Investors Spring Conference 2023 – CII (SEC Gensler)
- March 7, 2:30 p.m. – Air, Climate, and Environmental Impacts of Crypto-Asset Mining: Legislative Hearing on S_, The Crypto-Asset Environmental Transparency Act of 2023 – Senate Committee on Environment and Public Works
- March 8, 9:30 am – Market Risk Advisory Committee (MRAC) – CFTC (Digital assets panel +more)
- March 8, 10 am – Hearing: Oversight of the Commodity Futures Trading Commission – Senate Agriculture Committee (CFTC Chair Behnam)
- March 9, 10 am – Fed Vice Chair Michael S. Barr on cryptocurrencies – Peterson Institute for International Economics
- March 9, 10 am – Hearing: Rising Risks: Managing Volatility in Global Commodity Derivatives Markets – House Committee on Agriculture
- March 9, 2 pm – Hearing: Coincidence or Coordinated? The Administration’s Attack on the Digital Asset Ecosystem – House Financial Services, Subcommittee on Digital Assets, Financial Technology and Inclusion
- March 9, 1 pm – Exploring the Risks of Central Bank Digital Currencies – Cato (Majority Whip, Rep. Tom Emmer (R, MN))
- Congressional Calendar 2023 – Roll Call
events this week – senate agriculture
Arguably, the most interesting hearing this week will be Wednesday’s Senate Agriculture hearing with CFTC Chair Rostin Behnam. Two questions for the Senate Ag hearing:
- Is there any life left in the Digital Commodity Consumer Protection Act (DCCPA)? Senator Kirsten Gillibrand (D, NY), an Ag committee member, generously said DCCPA “fell on its weight” at the Milken Institute conference last week.
- Is digital assets-related legislation possible out of Senate Agriculture in the wake of the wreckage left by Sam Bankman Fried and a Democratic caucus that has swung decidedly anti-digital assets?
events – MRAC
On Friday, CFTC Commissioner Kristin Johnson released a packed agenda for the next meeting of the Market Risk Advisory Committee (MRAC) on Wednesday. A digital assets panel includes appearances by employees of the SEC, Justice and the Fed:
Panel One: “Developing a Regulatory Framework for Digital Assets (20 minutes)”
- Tim Massad, Research Fellow Harvard Kennedy School, Harvard University
- Val Szczepanik, Director, Strategic Hub for Innovation and Financial Technology, SEC
- Eun Young Choi, Director of National Cryptocurrency Enforcement Team, Department of Justice
- Mark Hays, Senior Policy Analyst, Americans for Financial Reform/Demand Progress
- Alessandro Cocco, Vice President and Head of Financial Markets Group, Federal Reserve Bank of Chicago
Only 20 minutes?!
Tether, one of the most widely used stablecoins in cryptocurrency, struggled early on to remain connected to the world’s banking system and its fiat on/off ramps. In fact, according to The Wall Street Journal, the stablecoin’s owners are alleged to have hid their identity “behind other businesses or individuals. Using third parties occasionally caused problems, including hundreds of millions of dollars of seized assets and connections to a designated terrorist organization.” Read more.
The company is believed to already be under investigation by the U.S. Justice Department.
Tip: Just a month ago, Ifinex which owns Tether and crypto exchange Bitfinex, reported that the Tether stablecoin was profitable in calendar Q4 2022.
no silver lining
U.S. bank holding company Silvergate announced on its home page late Friday that “Effective immediately Silvergate Bank has made a risk-based decision to discontinue the Silvergate Exchange Network (SEN). All other deposit-related services remain operational.” This follows the company’s ability to remain a “going concern” announcement which may be a prelude to insolvency.
The Verge’s Elizabeth Lopatto ruminates on Silvergate’s demise saying, “I don’t know whether Silvergate is going to come through this. But I strongly suspect it has just gotten a lot harder to exchange dollars and crypto..” Read it.
Tip: The SEN is used by crypto companies to send U.S. dollars back and forth which can help facilitate the purchase of cryptocurrency.
Brazil in crypto
Coinbase Chief Policy Officer Faryar Shirzad tweets about a just-completed business trip to Brazil saying things look bright for crypto in the world’s 6th largest country by population. Shirzad says, “Brazil is a big economy and an important country, so their focus on diversification and innovation in their financial system is a particularly notable example for the world, especially as they prepare to lead the G20 next year.” Read the thread.,
Tip: If the United States doesn’t work out (yes, a big “if” but possible), Coinbase is pushing ahead elsewhere.
- Texts From Crypto Giant Binance Reveal Plan to Elude U.S. Authorities – The Wall Street Journal
- Coinbase’s One River Acquisition Marks First in a Year – Blockworks
- SEC staff believe Binance.US is operating an unregistered securities exchange – The Block
- A Class-action Lawsuit Against Maker Dismissed By A Federal Judge – DeFi Education Fund
- GBTC Oral Arguments Preview with Don Verrilli – Grayscale
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