DeFi Is Among Next Legislative Targets For EU; Hagerty and Hill Voice SEC Suspicions

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European DeFi

A new 77-page report from the European Systemic Risk Board (ESRB) offers up views and suggestions on decentralized finance (DeFi) and cryptocurrency policy. The ESRB explains it’s still early: “The following analysis of the current state of the crypto-asset world underscores findings by international standard-setters that currently the crypto-asset sector is too small and insufficiently integrated with the traditional financial system to pose any systemic risks.” Download it (PDF). Lots of helpful definitions beginning on page 66.

Ledger Insights notes in relation to the report: “With the EU’s MiCA legislation for crypto-assets now approved and about to come into force, the question has turned to the next iteration, which will likely cover DeFi, although it’s a few years off.” Read more.

more tips:

What is DeFi? – Coinbase

letter: IAC independence

Senator Bill Hagerty (R, TN) and Rep. French Hill (R, AR) sent a missive (see it) on Wednesday to Securities and Exchange Commission (SEC) Chair Gary Gensler and expressed deep skepticism about the veracity of an April 6 letter advising on crypto  (see coverage) from the SEC’s Investor Advisory Committee (IAC) to Chair Gensler.

See the April 6 letter on the SEC’s website….  it sounded very simillar to crypto views expressed by the Chair.

The two Members of Congress clearly do not believe that IAC wrote the letter and said in a press release yesterday, “We have serious questions regarding the process (or potential lack thereof) used by the IAC to draft and approve the Crypto Letter, including whether a committee vote was held and whether any dissenting views were registered.” Read the release.

Of all the letters sent by Congress to the SEC and its Chair, it will be interesting to see what happens with this particular initiative. The members of the IAC are independent and do not work for the Commission. Could they be easily subpoenaed, for example?

Hagerty and Hill requested the following information from the SEC By June 7:

    • “All minutes and notes of the IAC or any member thereof addressing cryptocurrencies or the Crypto Letter.”
    • “Documentation of any vote taken to draft and/or issue the Crypto Letter including, but not limited to, a full list of all IAC members who voted in favor of the decision to draft and/or issue the Crypto Letter and all IAC members who voted against the decision to draft and/or issue the Crypto Letter. If no such votes were held, provide a detailed description explaining why.”
    • “A description of the rationale of each IAC member’s decision or vote to approve or disapprove of the views expressed in the Crypto Letter.”
    • “A description of any interactions between or among IAC members and third parties relating to the Crypto Letter, and copies of all communications with third parties.”
    • “All communications (including off-platform communications) between any member of the IAC and the Chairman or the Chairman’s office staff related to cryptocurrency including, but not limited to, the Crypto Letter.”

Stay tuned.

letter: custody rule

Released yesterday to the media, a copy of a May 18 bipartisan letter was sent from Rep. Mike Flood (R, NE) and Rep. Ritchie Torres (D, NY) which “strongly urges” the Securities and Exchange Commission (SEC) Chair Gary Gensler to hold off on a change in the “custody” rule-making first proposed back in February. The Congressmen ask that Gensler not further limit the pool of “eligible qualified custodians in the final rule” for fear of disrupting the current dual-banking system between state and national banks. Read the letter (PDF).

The Congressmen close emphatically, “We strongly urge you to continue to allow for state-chartered banks and state regulated trust companies to operate as qualified custodians.”

use case – UBI

Tools for Humanity announced it has raised a $115 million Series C round of funding for its WorldCoin project – a business which starts with creating a unique digital identity through the scanning of your eye’s iris. The company’s World app aspires to be the seeds of a new financial infrastructure – and yes, there is a coin, Worldcoin.

“Over time, [the app] will evolve into a toolkit to empower individuals in the Age of AI, enabling the usage of proof of personhood, the equitable global distribution of digital currencies and ultimately a path to AI-funded UBI (Universal Basic Income),” says the company on its website.

The startup is co-founded by OpenAI Chief Executive Officer Sam Altman. Read more from Cointelegraph.

more tips:

OpenAI – TechTarget

NY AG Legislation

Lawyers from Wilmer Hale takes apart New York State Attorney General Letitita James’ new CRPTO legislation line by line in a post on its website titled, “NY AG’s Digital Asset Proposal Shouldn’t Be Taken Lightly.”

“It would add a new layer of regulation on top of the existing regulatory framework for digital assets in the state, i.e., the BitLicense regime, and could challenge the business models of many digital asset companies that currently operate from or within New York state,” write three members of the firm.

Download the article (PDF).

more tips:

New York Department of Financial Services (NYDFS): Statement of Superintendent Harris Before the Standing Committee on Banks, NY State Assembly (PDF) – (Yesterday)

Norwegian crypto regulation

The Norge Bank, Norway’s central bank, said yesterday it was time for the country to create its own cryptocurrency regulation even though the EU is already underway with MiCA. “The Norwegian authorities should assess whether to proceed more quickly rather than wait for international regulatory solutions. Norges Bank can contribute to such assessments and to regulation that promotes responsible innovation,” said Deputy Governor Pål Longva in a press release. Read it.

DeFi’s lack of regulation seems to be at the core of the bank’s initiative according to CoinDesk reports.

Celsius resurrection

Failed, centralized cryptocurrency exchange, Celsius, announced the winner of the auction for what remains – quite a lot, actually. “Fahrenheit—a group consisting of US Bitcoin Corp., Arrington Capital, Proof Group, Steven Kokinos and Ravi Kaza—will provide the capital, management team, and technology required to successfully establish and operate the new company (‘NewCo’) contemplated in the bid, which will be implemented pursuant to a chapter 11 plan (the ‘Plan’),” said Celsius in a press release.

Blockworks breaks down the regulatory filing and says, “Fahrenheit will take control of $450 million to $500 million worth of liquid crypto as a result of the deal.” Read more. And, read the regulatory filing from the U.S. Bankruptcy Southern District of New York Court.

still more tips

Paradigm broadening crypto-only focus to areas including AI – The Block

Digital Asset Business Act update (Bermuda legislation) – JD Supra CEO says US default would hit crypto initially – Reuters

2023 New Value Report: Top 5 Crypto Trends in Business and Beyond – Ripple (May 23)

Stablecoin hearing: USDF deposit token consortium calls for a level playing field for banks – Ledger Insights (May 19)

Crypto Use Cases: 12 Real-World Stories of How Millions of People Are Using Crypto Services Today (PDF) – Bitwise

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