digital assets taxonomy
Yesterday’s meeting of the Commodity Futures Trading Commission’s (CFTC) Global Markets Advisory Committee (GMAC) led by Commissioner Caroline Pham revealed the current work of its new Digital Assets Market Subcommittee (DAMS).
Caroline Butler, who is the CEO of Digital Assets at BNY Mellon and heads up the subcommittee with Franklin Templeton SVP Sandy Kaul, explained at the meeting about five (5) work streams currently in motion among the 36 subcommittee members who represent traditional finance and digital asset companies. The works streams include: nomenclature and creating a taxonomy; pre-trade and post-trade requirements across digital assets; governance and risk control frameworks; NFTs and utility tokens; and, digital asset infrastructure. See a slide breaking it all down (JPEG).
what you should know: Considering its ambitious goals, DAMS’ work would appear to be a resource that Congress, CFTC and industry will covet. Meeting video is here.
With the stablecoin and digital asset market structure bills still waiting to reach the House Floor, Blockchain Association’s policy executive Ron Hammond provided his point-of-view on Congress and digital assets legislation momentum yesterday. Hammond said, “At this stage for any of the bills to move forward this Congress, there is a strong push for inclusion of [Anti-Money Laundering (AML)] provisions. It was something that came up multiple times when [House Financial Services (HFS) Committee] voted on the stablecoins and market structure but the Hamas narrative has escalated this.” Read the whole thread.
what you should know: The AML legislative smorgasbord includes the Digital Asset AML Act from Senator Elizabeth Warren (D, MA) and Senator Roger Marshall (R, KS), Senator Jack Reed’s (D, RI) CANSEE Act and the National Defense Authorization Act (NDAA) amendment from Warren, Marshall, Senator Cynthia Lummis (R, WY) and Senator Kirsten Gillibrand (D, NY).
quick tip: A FinTech conference at Georgetown next week includes CFTC’s Rostin Behnam, Christy Goldsmith Romero and Summer Mersinger; Reps. Steven Lynch (D, MA), French Hill (R, AR) and Bryan Steil (R, WI); and SEC Commissioner Hester Peirce. See agenda.
With crypto asset regulation approved as of last week – now to the rollout – and with the rollout comes more discovery of the exact regulations. The Financial Conduct Authority’s (FCA) new discussion paper for stablecoin issuers was published yesterday as the UK government takes a phased approach to its crypto-asset strategy beginning with fiat-backed
stablecoins. See the proposed stablecoin approach (PDF). The discussion period ends February 24, 2024.
This wasn’t the only guidance in the UK as the Bank of England also supplied its guidelines with a focus on the central banks and insuring stability with the same deadline as the FCA’s effort. See it.
Ledger Insights breaks down the difference between the two releases and comments that the Bank of England “doesn’t want banks to get involved in stablecoins or e-money using their primary banking brand. The only way in which banks should use DLT [distributed ledger technology] for money is for tokenized deposits. Like the United States, the banking regulator also wants to be kept informed about planned digital money innovations.” Read more.
What is the difference between DLT and DeFi? – Investopedia
use case – entertainment
An opinion piece in the Los Angeles Business Journal, entertainment industry participants make their case for how blockchain can “save” entertainment. In addition to the incremental revenue opportunity represented by NFTs or digital collectibles, “curbing piracy, addressing fraud, creating new funding methods, tracking royalties and securing an equitable and sustainable future” are all mentioned. The centerpiece of the article is the Decentralized Pictures Foundation co-owned by Frances Ford Coppola’s son, Roman. Read more.
Today’s House Financial Services Subcommittee on Financial Institutions and Monetary Policy hearing titled, “The Tangled Web of Global Governance: How the Biden Administration is Ceding Authority Over American Financial Regulation” will begin at 10:00 a.m. ET. Live video and hearing info here.
- Thomas Hoenig, Distinguished Senior Fellow, Mercatus Center, George Mason University
- Christina Parajon Skinner, Assistant Professor of Legal Studies & Business Ethics, Wharton School, University of Pennsylvania
- Bryan Bashur, Director of Financial Policy, Americans for Tax Reform
- Renita Marcellin, Advocacy and Legislative Director, Americans for Financial Reform
what you should know: Digital assets might pop-up in this hearing. George Mason’s Hoenig wrote an op-ed in American Banker in 2021 which read in part, “Cryptocurrencies are faith-based – they have no intrinsic value. There is no sovereign authority backing them. They are the ‘pet rock’ of currency, worth only what someone can get you to believe they are worth.”
Financial ratings agency Moody’s put an electric shock – or two – into the hearts of stablecoin users with a self-published article yesterday titled, “Large fiat-backed stablecoins depegged 600+ times in 2023”. Simultaneously, the company launched a “new digital asset monitor to track risk.” How conveeeenient.
what you should know: Zero Knowledge Consulting’s Austin Campbell tweeted on X, “Moody’s out with some spectacular disinformation on stablecoins by apparently including tiny exchanges and venues with zero liquidity in their definition of de-peg.”
SEC crypto recruiting
The Office of Inspector General at the Securities and Exchange Commission (SEC) reported last week said that there is significant difficulty hiring for the Commission due to the crypto asset rules. From page 16: “Officials also reported that many qualified candidates hold crypto assets, which the Office of the Ethics Counsel has determined would prohibit them from working on particular matters affecting or involving crypto assets. This prohibition, according to SEC officials, has been detrimental to recruiting, as candidates are often unwilling to divest their crypto assets to work for the SEC.” Read the report (PDF).
what you should know: Imagine if job candidates weren’t allowed to hold U.S. dollars? Read Fortune, too.
still more tips
Largest investor inflows into crypto products since 2021 bull market high – Blockworks
Opinion: Sizing the Massive Spot Bitcoin ETF Opportunity – GSR’s Brian Rudick and Matt Kunke on CoinDesk
Hong Kong Mulls Allowing Spot Crypto ETFs in Pursuit of Asia Hub – Bloomberg