New Democrats On House Agriculture; Kraken May Signal End Of Bipartisanship

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agriculture committee democrats

Ranking Member David Scott (D, GA) announced the 23 new Democratic House Agriculture Committee members yesterday. The list included 10 holdovers from the previous Committee when Dems were in the majority. It’s hard to predict how the committee’s new faces will divide and conquer when it comes to digital assets. But, given the Biden Administration’s actions lately and yesterday’s Kraken news (below), digital asset interest may be difficult to pursue -especially for junior Democrats. In general, bipartisan Congressional power has lurched both pro- and anti-crypto in the past year.

On the House Ag Committee in the 118th Congress, and among the higher profile Democratic names in digital asset legislation, Rep. Darren Soto (FL) joins and Rep. Ro Khanna (CA) is no longer assigned. See the complete list. Democratic subcommittee assignments – especially on the newly re-named “Subcommittee on Commodity Markets, Digital Assets, and Rural Development” – could be illuminating on Democratic direction on digital asset legislation when announced. To date, only the Ranking Member, Rep. Yadira Caraveo (CO) has been revealed. Her position on digital assets is unknown.

Notably, Rep. Andrea Salinas (OR) joins the committee after beating a May ’22 primary challenger backed by Sam Bankman-Fried. And, committee newcomer Rep. Jill Tokuda (HI) beat a Republican in the General Election who was supported by Web3 Forward -a PAC associated with FTX executives and investors.

Rep. Jasmine Crockett (TX) and Jonathan Jackson (IL) join the Committee and were both supported by Web3 Forward.

In the last Congress, this House committee was responsible for the [H.R. 7614] Digital Commodity Exchange Act (DCEA) introduced by Chair Glenn “GT” Thompson with bipartisan co-sponsorship. The Committee also oversees the Commodity Futures Trading Commission.

Kraken down

Stressing the importance of investor protections, The Securities and Exchange Commission (SEC) announced a settlement with crypto exchange Kraken and its entities on Thursday which included a fine of $30 million and agreeing to shutdown its “staking-as-a-service program.” Read the SEC release.

Proper disclosures associated with the offering and the fact it was not registered as a security is cited. For example, on needed disclosures according to the SEC release: “When investors provide tokens to staking-as-a-service providers, they lose control of those tokens and take on risks associated with those platforms, with very little protection.” 

SEC Chair Gary Gensler said in a tweet (with a video): “Whether it’s through staking-as-a-service, lending, or other means, crypto intermediaries must provide the proper disclosures & safeguards required by our laws.”

The conundrum for exchanges like Coinbase in the United States is that even if they try to register their staking-as-a-service product with the SEC as a security, will the SEC even allow it? Nevertheless, Coinbase CEO Brian Armstrong vowed to keep on fighting last night.

And, in a strongly-worded dissenting opinion titled “Kraken Down” and issued late yesterday, SEC Commissioner Hester Peirce said, “A paternalistic and lazy regulator settles on a solution like the one in this settlement: do not initiate a public process to develop a workable registration process that provides valuable information to investors, just shut it down.” Read more.

Finally, with strong negative reactions on Twitter to the enforcement action from Rep. Tom Emmer (R, MN) and Rep. Warren Davidson (R, OH) and no reaction thus far from Democrats in Congress, one has to wonder if  bipartisanship is on the brink of collapse as it relates to blockchain legislation progress.

international digital assets

In a podcast from the Institute for International Finance, digital asset regulation is explored with John Ho, Global Head of Legal Financial Markets at Singapore’s Standard Chartered Bank. It’s a good overview of what’s happening globally around standardization of crypto regulation.

The conversation begins with discussion of “Prudential treatment of cryptoasset exposures (PDF)” which had been produced last year by Basel Committee on Banking Supervision – a part of BIS. “Do we believe every single regulator (will) adopt the same standards?” says Ho. He expresses a shared concern across his international partners that coordination on digital asset regulation remains key. Hear the podcast.

FTX’s final hours

The Financial Times’ Joshua Oliver provides as much detail as anyone has ever seen about the human side of FTX and its founder/CEO Sam Bankman-Fried as the inevitable bankruptcy approached: “Nobody had gone through a disaster before, so people were breaking psychologically. (…) It was never more apparent to me how young all of them were than in the 72-hour period before bankruptcy.” Read it (no paywall – for now).

IP and crypto lawyers

Fortune’s Jeff John Roberts opines on the increase of Intellectual Property (IP) cases associated with NFTs (non-fungible tokens) now pulsing in the U.S. court system. Hermès just successfully sued an NFT artist over trademark infringement this week.

Roberts comments, “it was not long ago I could count the number of crypto attorneys on one hand, but now there are hundreds—and at this rate, it won’t be long until lawyers start building their practice around crypto IP. Already, there is no shortage of work.” Read it.

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