The Fed Master Accounts Swirl; Senators Lummis And Hagerty On ETFs and Crypto

Fed master accounts

The push-pull continues between states rights versus federal in the approval of master accounts at the Federal Reserve.  Wyoming is once again in the middle of it with its crypto-friendly state regulation.

On Tuesday, The Wall Street Journal highlighted the Fed’s rejection of master account applications for 4 Wyoming-charter SPDIs (special-purpose depository institutions, i.e. a crypto bank) . Very simply, the master account gives a bank – or an SPDI in this case – access to Federal Reserve payment services. CEO Caitlin Long of Wyoming-based SPDI Custodia Bank, has been a well-known critic of the Fed as her bank attempts to get its master account.

Chris Rothfuss, a Wyoming Democratic state senator and sponsor of the SPDI legislation tells the WSJ, “The idea that a state needs to be held back because we were being innovative in a way that nationally chartered banks or the federal government had not caught up with is really a slap in the face of state rights.Read more.

more tips:

Master Accounts and the Payment System (December 2022) – Congressional Research Service

Senator speaks – on ETF

Advocating for her “Lummis-Gillibrand Responsible Financial Innovation Act” [S.2281] and a Congressional crypto regulatory framework, Senator Cynthia Lummis (R, WY) tweeted her support yesterday for the last week’s court ruling in favor of Grayscale and its crypto Exchange-Traded Fund (ETF) efforts.

Grayscale is attempting to convert its Bitcoin Trust into a Bitcoin spot market ETF in spite of the Securities and Exchange Commission’s refusal to approve. Sen. Lummis said, “The D.C. Circuit Court of Appeals ruling sends a message loud and clear that the SEC cannot continue legislating by enforcement. A bitcoin spot ETF would be a step in the right direction for the crypto industry.” Read a bit more.

Senator speaks – event

Today, Cato Institute is producing “Staying Ahead of the Curve: Crypto Regulation and Competitiveness” beginning at 9:30 a.m. ET in Washington, D.C.

Sign up is here and includes a virtual option. Agenda is here.

Among the highlights of today’s event is a fireside chat with Senator Bill Hagerty (R, TN) who has familiarity with crypto beginning with his own stablecoin bill in the 117th Congress – Stablecoin Transparency Act – which was also sponsored in the House by Rep. Trey Hollingsworth (R, IN).

Hagerty has also expressed concerns about  a “choke point” strategy within the Federal Government meant to slow progress for crypto. And in April, he co-wrote a missive with Rep. French Hill (R, AR) to Securities and Exchange Commission (SEC) Chair Gary Gensler about the veracity and independence of an SEC Investor Advisory Committee letter which closely aligned with the Chair’s position on crypto.

The event’s day-long programming also includes a panel discussion titled “Crypto Regulatory Uncertainty and U.S. Competitiveness” with panelist which include dYdX Trading’s Head of Policy Rashan Colbert, who was a staffer for Senator Cory Booker (D, NJ), and Ji Kim, who was General Counsel for Gemini.  The discussion will be moderated by George Leonardo of Cap Hill Crypto.

crypto wealth migration

According to a new report from “investment migration consultancy” Henley & Partners, there are a measly six Bitcoin billionaires in the world today.  The report titled, “The Crypto Wealth Report” (see the stats) says just over 88,000 people worldwide own a million dollars or more of Bitcoin out of the 425 million people who use crypto of any kind.

Dr. Juerg Steffen, CEO of Henley & Partners, says in a press release that promotes his company’s services:  “We have seen a significant spike in enquiries from crypto millionaires over the past six months, who are all looking to build a viable ‘Plan B’ to protect themselves against any potential future bans on the trading or use of cryptocurrencies in their countries, and to allay the risks of aggressive fiscal policies that tax digital assets at source.” Regulation, or lack thereof, drives migration.  Read the release.

And, read a summary from CNBC.

privacy pools

What if you could enjoy privacy with your crypto transactions…

-AND disassociate yourself from the bad guys?

-AND thereby satisfy the “raison d’être” of the traditional financial system’s AML-KYC requirements?

-AND make Senator Elizabeth Warren (D,  MA) happy? (The Senator is the author of “[S.2669] Digital Asset Money Laundering Act.”.)

A new research paper co-authored by Vitalik Buterin, co-founder of Ethereum, and Jacob Ilum of Chainalysis among others attempts to solve for crypto privacy across the various constituents and offers a provocative title, too: “Blockchain Privacy and Regulatory Compliance: Towards a Practical Equilibrium.” Read it here.

Co-author Ameen Soleimani announced on X the gyst of the paper: “We explored new compliance opportunities made possible by privacy pools where users can provably dissociate from illicit funds.”

broker definition

The new U.S. Treasury proposal last week on what defines a “broker” in digital assets is creating fodder for crypto tax experts.

Shehan Chandrasekera, Head of Tax Strategy at, breaks down the new proposal on Forbes and notes its effects,  “Implementing information gathering and tax calculation tools will be an extremely time-consuming and expensive process for all brokers. The increased cost of compliance could stifle some innovation in the US…” Read his explainer.

Circle is a tech company

Fortune’s Leo Schwartz takes a look at the stablecoin market and the battle Circle has been fighting especially since March when the company’s USDC stablecoin briefly lost its peg against the dollar a several banking institutions melted down in the United States.

Schwartz talks to Circle CEO Jeremy Allaire and his strategy for diversifying revenue -which includes the recent introduction of new tools such as a programmable wallet. Schwartz writes, “Rather than leaning into banking services like lending, Allaire still views Circle as a tech company, leading him to stick with his longtime conception of USDC as a platform.” Read more.

securities discussion

The North American Securities Administrators Association takes a look at the digital assets landscape at its Fall annual meeting in San Diego next week.

On Day 2 of the conference, Commodity Futures Trading Commission (CFTC) Commissioner Christy Goldsmith Romero will lead off with a keynote which is followed by a panel discussion titled, “Current Era in Securities Regulation: Crypto, Digital Assets, and Bank Failure.” Members of the CFTC, California Department of Financial Protection and Innovation, New York Investor Protection Bureau and the SEC (David Hirsch, Chief, Crypto Asset and Cyber Unit in the Division of Enforcement) will participate.

The discussion’s “Overview” reads: “Is all the conversation around crypto and digital assets making your head spin? And what do bank failures have to do with securities regulation? In this session, we will discuss how the securities regulatory framework deals with crypto, and how capital markets have been impacted by the growth of digital assets.” See the agenda.

product developments

MetaMask adds ‘cash out’ function allowing users to sell crypto for fiat – The Block

Coinbase Creates New Crypto Lending Service Geared Toward Large Investors – CoinDesk

still more tips

Opinion: The US can’t kill crypto: Real regulations are coming – TechCrunch

Andreessen Horowitz invests in startup that uses blockchain tech to address problems heightened by AI – Decrypt

Cuy Sheffield, Head of Crypto, explains Visa’s POV on blockchain networks and why financial institutions should take note (video) – @VISAnews on X

San Francisco Lost Its Chance to Be Blockchain Capital, Ripple’s Larsen Says – Bloomberg