House SEC Oversight Hearing Today; China Submits USPTO Application On Blockchain

hear ye, hear ye

Today, Securities and Exchange Commission (SEC) Chair Gary Gensler will visit House Financial Services for an “SEC Oversight” hearing beginning at 10 a.m. ET.

See the hearing page with live video

The hearing’s memorandum includes a wide range of potential topics – including digital assets. The SEC’s Staff Accounting Bulletin 121 (SAB 121) is at the top of the list. Industry policy executive Cody Carbone of Chamber of Digital Commerce shared on X: “…After meeting with Committee, expect a lot of continued questions on [crypto] with reactions of recent Court cases (Ripple, Grayscale).”

At the beginning of the Q&A during the last House SEC Oversight hearing in April, HFS Chair Patrick McHenry (R, NC) famously tried to get Gensler to say whether he thought Ether was a commodity or a security – but, to no avail. Gensler demurred.

For this hearing, Republican “push back” is expected. But, where will Democrats land? – other than the HFS Democratic leaders, that is. Ranking Member Maxine Waters (D, CA) and Rep. Stephen Lynch (D, MA) have dutifully supported the White House in past hearings and will no doubt come to Chair Gensler’s defense.

hear ye, hear ye – letter

Late yesterday afternoon, and just in time for today’s oversight hearing, a bipartisan letter from Rep. Mike Flood (R, NE) as well as fellow House Financial Services (HFS) Committee Members Rep. Wiley Nickel (D, NC), House Majority Leader Rep. Tom Emmer (R, MN), and Rep. Ritchie Torres (D,NY) arrived in Chair Gensler’s inbox. The gyst of the letter is that the Congressmen are urging the Chair to approve a spot Bitcoin Exchange Traded Product (ETP) “immediately.” See the letter.

If the spot Bitcoin ETP isn’t topic #1 today in today’s hearing, it will be topic #1A. The Congressmen have purposefully telegraphed their move to the Chair.

China patent in US

China-based Baidu, an internet services and technology company, filed for a patent with United States Patent and Trademark Office (USPTO) using blockchain technology as a “verification method” last Thursday.  House Energy & Commerce staffer Michael Cameron tweeted, “If the US doesn’t start taking blockchain seriously we will lose control!” See the patent.

National security, anyone?

tokenization, the killer app

The Futures Industry Association will be holding its “Expo” in Chicago next week and blockchain technology extends throughout the day-long agenda. Commodity Futures Trading Commission Chair Rostin Behnam and Commissioner Caroline Pham will appear.  In addition to Pham, representatives from JP Morgan and UBS will appear on a panel about tokenization: “Tokenization and Its Role in Accelerating Collateral Management – After many years and many attempts, distributed ledger technology has failed to deliver on its promise to transform trading and clearing. But an inflection point may be approaching. Tokenization in collateral management could be the ‘killer app’ that leads to adoption at scale. In this session, speakers will discuss the current landscape, the potential benefits and the challenges ahead.” See the agenda.

UK bank bans crypto

Cointelegraph reports that “…starting Oct. 16, customers of Chase Bank in the U.K. will no longer be able to make crypto transactions using their debit cards or through outgoing bank transfers.” With 1 million UK customers potentially affected, a bank representative tells the publication that an “increase in fraud and scams” using crypto is the reason. Read more.

cross-border stablecoins

MoneyGram, whose “bread and butter”is sending funds cross-border, announced that in Q1 2024, it will launch a non-custodial wallet which “will enable consumers to leverage stablecoin technology to seamlessly move from fiat to digital currency, to fiat again.” Read the release. The release explains further that “The MoneyGram non-custodial digital wallet – which will be offered as a zero-fee service until June 2024 – will leverage the Stellar network and MoneyGram’s fiat on and off-ramp services integrated with the Stellar network.”

MoneyGram CEO Alex Holmes tells Fortune’s Leo Schwartz about the news, “…it represents the next step in the company’s experimentation on how to leverage blockchain technology to allow users to move funds around the globe, while understanding that they still need to end up with cash—not cryptocurrencies—as an end result.” Read that one.

lab lobby

Venture investment firm Paradigm announced their new “Policy Lab” yesterday. Paradigm General Counsel Rodrigo Seira said about the new initiative on X, “Led by [Paradigm policy manager Brendan Malone] and myself, the Lab will be a gathering place for academics, policy experts, lawyers, and technologists to study how to address the biggest policy challenges in crypto.” The Block reports that the Lab named two inaugural academic fellows who will study “‘regulatory equivalence’ — a term used to describe ‘the comparability of legally-bounded and technologically-bounded systems and how the same policy outcomes can be achieved through regulation or through technological architecture.'” Read more.

It was less than a year ago that Paradigm announced its “Policy Council” which seemed more inward-focused with the council positioned to “advise Paradigm’s leadership team and help us tell the story of Web3 in Washington and around the world.”

DeFi market structure

Gabriel Shapiro, general counsel for crypto incubator Delphi Labs, expressed his concern yesterday with the Financial Innovation and Technology for the 21st Century Act [H.R. 4763] (digital asset market structure bill) by tweeting at House Majority Leader Tom Emmer (R, MN) and Coinbase. He said, “…we cannot give more power to the CFTC to continue treating DeFi as illegal or to reimpose intermedation. There must be clear legality for ALL p2p finance through decentralized autonomous smart contracts.” Read it.

still more tips

Opinion: IRS Proposed Rule on Digital Asset Broker Reporting Could Kill Crypto in America – CoinDesk

JPEX scandal erodes public trust in cryptocurrencies, sets back Hong Kong’s virtual asset hub ambitions: analysts – South China Morning Post

The World’s Biggest Crypto Firm (Binance) Is Melting Down – The Wall Street Journal

Walmart to sell Pudgy Penguins, NFT-inspired, toyline in 2,000 stores – The Block