Potentially Historic U.S. Stablecoin Bill Arrives; T-Shirt Requires SEC Registration

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stablecoin bill – arrival

It has arrived.  History in the making?

In anticipation of this Wednesday’s hearing in front of the Subcommittee on Digital Assets, Financial Technology, and Inclusion, the House Financial Services (HFS) Committee unveiled a discussion draft on Saturday of the new, 73-page stablecoin bill (PDF) – “To provide requirements for payment stablecoin issuers, research on a digital dollar, and for other purposes.”  This bill has been the pet project of Chair Rep. Patrick McHenry (R, NC) and Ranking Member Maxine Waters (D, CA) since last year.

The hearing will be led by Chair French Hill (R, AR) and Ranking Member Stephen Lynch (D, MA), and appears to offer the argument on why a stablecoin regulatory framework is needed in the first place.

stablecoin bill – memo and agenda

In a memorandum produced by House Financial Services for the hearing,  definitions lead: “Stablecoins are a class of digital assets designed to offer price stability by being pegged to another asset’s value. The most popular stablecoins are currently pegged to the U.S. dollar. Stablecoins, as the name implies, are intended to be less volatile than other digital assets and sufficiently stable to enable them to be used in a similar manner to currency.” See the HFS memo (PDF).

Wednesday’s agenda currently includes a state regulator among industry participants.

    • Adrienne Harris, Superintendent, New York State Department of Financial Services (NYDFS)
    • Dante Disparte, Chief Strategy Officer and Head of Global Policy, Circle
    • Austin Campbell, Adjunct Assistant Professor of Business, Columbia Business School
    • Jake Chervinsky, Chief Policy Officer, The Blockchain Association
    • “Additional Witness”

The “additional witness” would seem to ideally include a representative of U.S. Treasury (FDIC?) which has been identified by Chair McHenry in the past as a key participant in the creation of the bill.

Agenda updates, including the live stream, will be here on the HFS website.

stablecoin bill – reaction

Jeremy Allaire, CEO of USDC stablecoin issuer Circle, commented on Twitter regarding the bill, “While comprehensive, there are clearly open and challenging issues with the bill as proposed, and now is the time for our country and political leaders to really dig in and get this right. The role of the dollar in the world is at stake.”

Hilary Allen, an American University professor, who appeared at the Senate Banking “Crypto Crash” hearing in December, tweeted skeptically about the bill, “So the HFSC stablecoin bill dropped. TL;DR, it won’t fix problems with stablecoins (which aren’t used for payments anyway), but it will extend govt safety net to more firms.” Read her thread.

Indeed, plenty of questions and, hopefully, answers to come such as:

Will the bill be the history-making first-step in integration of digital assets and the U.S. Financial System?

Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg expressed interest in payment stablecoins in a speech in October. Will his division of U.S. Treasury chime in its approval or not of the bill?

To Allaire’s point, will it support Congress’ ultimate goal of maintaining the U.S. Dollar as the world’s reserve currency?

Keep an eye on the “digital dollar” discussion as it relates to central bank digital currencies (CBDCs). Republicans have largely decried any implementation of a CBDC by the United States – such as Majority Whip Rep. Tom Emmer’s (R, MN) Anti-CBDC bill introduced in February – but are generally the most outspoken advocates for digital assets in comparison to Democrats.

Beyond the U.S. House of Representatives, how will this stablecoin bill play in the Senate and its Democratic majority led by Senators such as Senate Banking Chair Sherrod Brown (D, OH), a strong critic of crypto?

Finally, what happens when it reaches the President’s desk? President Biden’s administration has appeared hawk-ish on digital assets since the implosion of FTX last November.

DeFi needs SEC registration 

Does a t-shirt with code printed on it require the owner to register the t-shirt with the Securities Exchange Commission (SEC)? That’s what Commissioner Hester Peirce (R) tweeted in regards to the Commission’s latest 3-2 partisan vote on decentralized finance (DeFi) exchanges during Friday’s open meeting of the Commission.

The Block reports the SEC wants to clarify that rules “governing trading exchanges in the U.S. also apply to decentralized finance. The procedural move isn’t a change to rules, but rather an effort to make explicit whether existing exchange rules apply to decentralized finance.”

In short, the clarification sought by the rule update is if you’re a DeFi exchange, you’ll need to register with the SEC -there is no wiggle room.

The majority (3 Democrats) feels it’s worth a look at the very least. And as a result of Friday’s actions, the comment period to Rule 3b-16 on the definition of “Exchange” will reopen for 30 days once its published in the Federal Register.

In his own statement released after the meeting, SEC Chair Gary Gensler is explicit, “Calling yourself a DeFi platform is not an excuse to defy the securities laws.” Will DeFi enforcement actions follow the inevitable approval of the rule clarification?

more tips:

Statement on Alternative Trading Systems and the Definition of an Exchange (Gary Gensler) – SEC.gov

Rendering Innovation Kaput: Statement on Amending the Definition of Exchange (Hester Peirce) – SEC.gov

See statements of Commissioners Caroline Crenshaw (D), Jaime Lizárraga (D) and Mark Uyeda (R) – SEC.gov

SEC Reopens Comment Period for Proposed Amendments to Exchange Act Rule 3b-16 and Provides Supplemental Information – SEC.gov

Fact Sheet – Reopening of the Comment Period: Proposed Amendments to Exchange Act Rule 3b-16 (PDF) – SEC.gov

backstop at the Fed

Some people want deposit protection by having their own bank account at the Federal Reserve suggested CNN’s Fareed Zakaria to U.S. Treasury Secretary Janet Yellen in an interview broadcast yesterday. Yellen responded, “We are considering, the Fed is considering and the broader government is considering whether it would be desirable to have a Central Bank Digital Currency.  That’s quite a few years off if a decision were made to go forward with it. There are important pros of which you gave one, and there are some cons with such a decision. It’s one that needs to be seriously analyzed. But, it could be something that is in America’s future.” See the video.

EU on the verge

This week is a big week for digital assets legislation in the European Union says Circle’s Director of EU Strategy & Policy, Patrick Hansen. “Both MiCA (comprehensive crypto regulation) and the TFR (crypto travel rule implementation) will be discussed on Wed afternoon & voted on Thursday,” tweeted Hansen, who links to the agenda here and re-emphasizes that this is the final formal adoption vote of the comprehensive, digital assets legislation.

For his thoughtful take on what MiCA means for crypto and the European Union, read this from last month.

more tips:

Final text for MiCA, 4/12/23 (PDF) – europa.eu

blockchain goes public

Does the Securities and Exchange Commission find everything digital assets-related toxic? SEC Chair Gary Gensler has repeatedly said digital asset entities, tokens, need to “come in and register.”

a16z-backed Chia Network will put the SEC to a test of sorts as it readies for its own initial public offering. Read the release. Chia Network positions itself as “a secure, sustainable and regulatory compliant blockchain” and CoinDesk notes its smart contract capabilities. Read that one.

Chia has a token, too.


Payments stablecoins vs trading stablecoins – JP Koning

Contradiction in the Middle – Leighton Cusack, Pool Together

still more tips

US Supreme Court Opens SEC, FTC to Broad Legal Challenges – Bloomberg

SEC Targets Bittrex, Fallen Giant of U.S. Crypto Exchanges – The Wall Street Journal

Rep. Davidson to introduce legislation to fire SEC boss Gensler for crypto overreach – CoinTelegraph

Why classic gaming names like Atari and MapleStory are still going in on the blockchain – The Verge

Tokenization of Real-World Assets a Key Driver of Digital Asset Adoption: Bank of America – CoinDesk

CFTC Commissioner Christy Goldsmith Romero Announces Yevgeny Shrago as Senior Counsel and Policy Advisor – CFTC.gov

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