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Chair French Hill’s (R, AR) Subcommittee on Digital Assets, Financial Technology and Inclusion reconvenes on Thursday with a hearing titled, “Putting the ‘Stable’ in ‘Stablecoins:’ How Legislation Will Help Stablecoins Achieve Their Promise.” See the hearing page – it’s a 9 a.m. start. Bring your coffee and pastry with you!
This Thursday’s gathering will be a follow-up to last month’s hearing and judging from the hearing’s title, it would seem Chair Hill is focusing on making a clear case for stablecoin legislation with Democrats and whomever else will listen.
stablecoin hearing – Democrats
Putting Democrats in a position of “Why wouldn’t you?” could be difficult, though, considering the Dems nearly united unwillingness at the April hearing to consider a bill they had nearly blessed in the last Congress – let alone House Financial Services (HFS) Ranking Member Rep. Maxine Waters (D, CA) had expressed support of the bill in March.
What will be interesting to watch are the few Democrats who have publicly expressed interest in digital assets such as Rep. Josh Gottheimer (D, NJ), who was curiously chosen by Ranking Member Waters to Vice Ranking Member of the HFS digital assets subcommittee. Is Waters keeping the Democrats’ “toe” in the pro-crypto camp if shifting political sands should change?
(As the general election approaches in November 2024, Dems may move toward the political center in order to capture votes for President Biden especially if he’s in a tight race. Is it center enough to open the digital assets legislation window? Doubtful. )
Gottheimer has been outspoken about his dissatisfaction with Securities and Exchange Commission (SEC) Chair Gary Gensler, including at the HFS SEC Oversight hearing in April, and he released a discussion draft of a stablecoin bill of his own last year.
Another Democratic Member to watch is Rep. Ritchie Torres (D, NY). His support for digital assets is well-known and includes:
- Co-sponsorship of HFS Chair Rep. Patrick McHenry’s (R, NC) Keep Innovation in America Act in March;
- Signing the “Blockchain 8” letter in March of 2022 which was critical of the Securities and Exchange Commission (SEC);
- Membership in the now dormant Congressional Blockchain Caucus in the 117th Congress
- And then last week, he came out in support of the New York Department of Financial Services (NYDFS) and Superintendent Adrienne Harris in light of the New York Attorney General Letitia James’s attempt to arguably usurp some of NYDFS’s authority with new legislation. NYDFS is a key state regulator which maintains the NY BitLicense crypto framework.
Rep. Wiley Nickel (D, NC), Rep. Jonathan Jackson (D, IL), Rep. Darren Soto (D, FL) and (maybe even) Rep. Bill Foster (D, IL) seem to be on the fence regarding support for passing digital assets legislation.
Rep. Torres thinks the divide in digital assets policy in D.C. is generational not partisan. Listen to “Are Democrats Against Crypto? Rep. Ritchie Torres (D, NY) Answers” – Bankless Podcast
stablecoin hearing – Congress whispers
Punchbowl News’ Brendan Pedersen reports that there’s little interest in the stablecoin bill from HFS Democratic leaders including Digital Assets Subcommittee Ranking Member Rep. Steven Lynch (D, MA) who says unequivocally of the stablecoin bill, “That bill is going to go nowhere in the Senate. (…) The president is not going to sign that bill.”
On the other side of the aisle – on House Agriculture’s version of the Digital Assets Subcommittee – Subcommittee Chair Rep. Dusty Johnson (R, SD) remains steadfast that something meaningful can be passed. He tells Pedersen, “I think one of the most toxic ideas in this town is that you can just sort of wait around for two or three terms to find the right solution. The environment has to be appropriate for action, but we know the environment is appropriate for action. We know this issue is ripe.” Read more.
Imagine four to six years (2 to 3 Congressional terms) more of intransigence? It appears likely.
Sen. Toomey and Rep. Maloney
You knew he’d be back in the crypto mix at some point.
Former Sen. Patrick Toomey (R, PA) will join the defense for Coinbase in its fight against the SEC as the cryptocurrency platform company announced a new “Global Advisory Council.” And, that’s not all. Coinbase appears to be trying to flip the partisan script against today’s anti-crypto stance embraced by Democratic party leaders. Former Rep. Tim Ryan (D, OH) and former Rep. Patrick Maloney (D, NY.), as well as former Democratic strategist Chris Lehane and Democratic pollster John Anzalone have joined the team. Read more on Coinbase’s blog. SEC Chair Jay Clayton (R), who ran the agency under the Trump administration, is coming aboard, too. More in Politico.
Maloney’s inclusion may be the most surprising in that President Joe Biden is said to be planning to nominate the former House Democratic campaign chief for representative of the United States to the Organization for Economic Cooperation and Development (OECD). Read more on The Hill.
Rep. Sherman’s Bitcoin beef
Late Thursday, Rep. Brad Sherman (D, CA) sent a letter to the SEC for what the Congressmen sees as inadequate investor protections relating to Grayscale and Digital Currency Group saying that nearly 850,000 investors may have their investments “trapped” in Graysacle’s Bitcoin Trust (GBTC). In addressing his letter to SEC Chair Gary Gensler, Rep. Sherman says in part, “I am writing today to raise some regulatory issues with respect to GBTC as well as get clear guidance from the Commission related to this matter.” Read more.
Meanwhile, Grayscale is trying to transform GBTC into an Exchange-Traded Fund (ETF) and stuck in a legal battle currently in the courts.
Could Sherman’s letter be helpful to Grayscale and DCG who seek relief from an SEC unwilling to approve the ETF? Doubtful. There may be a plan in motion and this letter lights the wick. Maybe it eventually disrupts the Grayscale-SEC trial?
bite at a time
Rep. Bryan Steil (R, WI) spoke to Capitol Account about a range of subjects including his background, the SEC and prospects for digital assets legislation. Steil sits on HFS’ Subcommitee for Digital Assets, Financial Technology and Inclusion. He said, “It’s a bite at a time, right? I don’t know that we will have massive, comprehensive, holistic legislation that will come out and get across the line. But I do think there’s areas of broad agreement, and often in a nonpartisan way – particularly as we look at stablecoins, as we look at registration of some of these players. We have an ability to provide that regulatory certainty. And I think at the end it will show that we can protect investors and consumers, but we can also spur development and innovation here in the United States rather than abroad.” Read more.
SEC on crypto accounting rules
Last Friday, SEC Commissioner Mark Uyeda (R) spoke at a UK event for the The Institute of Chartered Accountants in England and Wales (ICAEW) titled, “World-Class Regulation: Building Trust and Transparency in International Markets.”
Commissioner Uyeda spoke at length about updating the Financial Accounting Standards Board (“FASB”) crypto assets accounting standards saying about the ongoing rulemaking, “This process highlights the time, resources, and attention required to maintain high-quality accounting standards, and is a good example of an effective approach to crypto regulation.” Read (a lot) more.
El Salvador’s Bitcoin
The Accountability for Cryptocurrency in El Salvador (ACES) Act appears to have been re-introduced last week by members of the Senate Foreign Relations Committee beginning with Senator James Risch (R, ID) and co-sponsor Senator Robert Menendez (D, NJ). The text or the exact name of the bill isn’t available yet on Congress.gov, but this bill caused some consternation in El Salvador in 2022 as the Central American country’s decision to make Bitcoin legal tender came under closer scrutiny by the United States due to “potential risk to the U.S. financial system.”
See: S.1578 – A bill to require reports on the adoption of cryptocurrency as legal tender in El Salvador. – congress.gov
no more APE coin
Perhaps looking to stave off any chance of an enforcement action by the SEC, digital assets platform Bakkt delisted 25 of the 36 tokens on its newly-acquired Apex Crypto platform. The Information published a statement from Bakkt saying on the delisting, “Our clients’ and their consumers’ best interests are our core commitment, and our review process ensures those interests are best served when we contemplate the most up-to-date regulatory guidance and the latest industry developments.” Read more.
Binance leaves Canada
In a communication from the company’s Twitter account, cryptocurrency platform Binance announced its departure from the Canadian market due to regulatory concerns: “We had high hopes for the rest of the Canadian blockchain industry. Unfortunately, new guidance related to stablecoins and investor limits provided to crypto exchanges makes the Canada market no longer tenable for Binance at this time. We put off this decision as long as we could to explore other reasonable avenues to protect our Canadian users, but it has become apparent that there are none.” Read more.
still more tips
5 questions for the Digital Dollar Project’s Jennifer Lassiter – Politico
US Chamber of Commerce Slams SEC, Backs Coinbase in Legal Fight – Decrypt
CFTC Commissioner Summer K. Mersinger will participate in a 25-minute fireside chat on May 18 called, “Regulation through Enforcement: Impact of Funds and Allocators at the BattleFin Discovery Day New York Digital Assets” – battlefin.com
Binance’s US business looks to cut founder Zhao Changpeng’s majority stake amid regulatory pressure – Reuters
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