Financial Innovation and Technology for the 21st Century Act Introduced; FedNow Goes Live

new bill for digital assets

In a tantalizing tweet for the crypto throngs at 3:16 pm. ET on Twitter yesterday, the Republican House Agriculture Committee account said, “👀Some big #crypto news coming soon…”

[drum roll, please]

About an hour later, House Agriculture Chair GT Thompson (R, PA) delivered the news that the new market structure bill for digital assets – which include some changes from the discussion draft according to sources – has a new name, “H.R. 4763, the Financial Innovation and Technology for the 21st Century Act.” Sources also confirm it will be heading to a markup next week.

From the release: “Today, Glenn “GT” Thompson (R, PA), Chairman of the House Committee on Agriculture, and French Hill (R, AR), Chairman of the Subcommittee on Digital Assets, Financial Technology and Inclusion, and Dusty Johnson (R, SD), Chairman of the Subcommittee on Commodity Markets, Digital Assets, and Rural Development, introduced H.R. 4763, the Financial Innovation and Technology for the 21st Century Act. Additional cosponsors include Reps. Tom Emmer (R, MN) and Warren Davidson (R, OH).”

Chair Thompson is quoted in the release: “Today’s introduction of the Financial Innovation and Technology for the 21st Century Act marks a significant milestone in the House Committees on Agriculture and Financial Services efforts to establish a much-needed regulatory framework that protects consumers and investors and fosters American leadership in the digital asset space.” Read more.

Perhaps looking to gin up bipartisan support, HFS’ Rep. French Hill notes the broad involvement in the creation of the bill in the release – including the White House, “After listening to members on both sides of the aisle, the Biden Administration, and stakeholders, the House Committees on Financial Services and Agriculture are introducing landmark legislation today…”

Chair Thompson thanked his fellow Republican and House Financial Services Chair Rep. Patrick McHenry (NC) for his leadership and coordination. McHenry offered quotes of his own in the release including concerns that the U.S. was “falling behind” on digital assets as well as a jab at Securities and Exchange Commission Chair Gary Gensler and his “regulation by enforcement” approach.

today’s prediction

It would not be surprising to see HFS Chair McHenry make a similar announcement about the stablecoin bill today and publicly confirm the previously-reported July 26 markup.

With the Congress’ August recess looming (last day is July 28), there’s no time to lose for both House committee markups.

Assuming approval of the bills on the Republican majority-controlled committees, it will be on to the House floor (perhaps in September) where a broader drama may ensue across both parties: who supports what in digital assets.

stablecoins have arrived

Speaking on the House Floor, Rep. Mike Flood (R, NE), a member of the House Financial Services (HFS) Committee, referenced next week’s markup of the market structure and stablecoin bills by HFS. Flood focused on the need for the stablecoin bill and pulled no punches saying, “We are not dealing with a theoretical conversation about Stablecoins here. Stablecoins have already arrived. Whether you like them or not is irrelevant; they are here and the question of the day is how to regulate them, not whether to regulate them at all.”

“Now that we’ve covered the basic need for this legislation, let’s discuss a specific issue in the bill: how to treat state-regulated institutions that want to issue a Stablecoin…”

Read the transcript. And, see the video on YouTube.

Congressman Flood’s “Flyover Fintech” event on August 2 should be extra spicy for digital assets enthusiasts.

disappointment in DeFi bill

The new Senate DeFi bill called, “Crypto-Asset National Security Enhancement Act of 2023″ and introduced by Sen. Jack Reed (D, RI) along with co-sponsors Senators Mark Warner (D, VA), Mike Rounds (R, SD) and Mitt Romney (R, UT), continues to meet harsh feedback from the blockchain industry in D.C.

The latest criticism comes from Jerry Brito of CoinCenter who calls the new bill – which is focused on decentralized finance (DeFi) and AML/KYC requirements – “unconstitutional” in his preliminary analysis.

Brito explains, “This bill comes as a surprise as it was apparently developed without any input from stakeholders. While we appreciate the Senators’ desire to combat the abuse of crypto protocols by criminal and enemy actors, the bill unfortunately also would make the development of such protocols in the U.S. and by U.S. persons unfeasible. Worse, the bill would be unconstitutional legislation as it would clearly violate the First Amendment.” Read more on CoinCenter.

The bill, also known as S.2355, has been referred to Senate Banking. Bloomberg notes one of the bill’s onerous requirements makes venture capitalists liable if they financed a DeFi protocol or similar. Read that one.

Florida mining, please

In an op-ed in Bitcoin Magazine written by Rep. Byron Donalds (R, FL) and Perianne Boring, CEO of the Chamber Of Digital Commerce, the pair make a case for expansion of Proof-of-Work Bitcoin mining in Florida.

They write, “Florida is on the leading edge of the energy revolution. Our state’s solar industry is now in the top five in the nation, and our biomass electrical and nuclear energy industries continue to expand to meet consumer and business needs. Rather than studying the successes of Florida’s free market approach, the Biden administration, once again, is attempting to legislate through regulation and taxation…” Read more in Bitcoin Magazine.

RFIA reviewed

On their think tank’s blog, Cato Institute’s Jack Solowey and Jennifer Schulp dissect the re-introduced Responsible Financial Innovation Act (RFIA) by Senators Cynthia Lummis (R, WY) and Kirsten Gillibrand. The Cato analysts break down the bill across market structure, exchanges and stablecoins and appear optimistic about the bill’s substance.

They conclude, “Providing clarity to crypto entrepreneurs, developers, and users in the United States remains a work in progress. Even with important case law evolving in the courts, Congress ultimately must provide a stable and practical framework for U.S. crypto policy.” Read the post.

more tips:

Treasury Department Can’t Help but Recognize DeFi Is Unique – Cato Institute (April)

FedNow now

FedNow, the Federal Reserve’s real-time payment system for the U.S. banking system is now live according to a press release from the Fed yesterday. “To start, 35 early-adopting banks and credit unions, as well as the U.S. Department of the Treasury’s Bureau of the Fiscal Service, are ready with instant payments capabilities via the FedNow Service. In addition, 16 service providers are ready to support payment processing for banks and credit unions.” A wider roll out is to come. Fedwire and FedACH remain important pillars for the banking system, says the Fed. Read the release.

Earlier this month, Senate Banking Democrats touted FedNow tweeting, “Our banking system is one step closer to real-time payments, which will help consumers and small businesses send and receive money instantly and safely.”

Meanwhile, the Fed has aggressively tried to tamp down concerns on FedNow becoming a pre-cursor to a Central Bank Digital Currency (CBDC) or that it will replace cash. Read this Fed FAQ published in April.

What about stablecoins? From May, read Bitwise analyst Ryan Rasmussen’s “FedNow vs. Stablecoins: Five Reasons Why FedNow Fails To Disrupt Stablecoins.”

Ripple and the SEC

Galaxy Digital CEO Mike Novogratz joined Squawk Box hosts on CNBC yesterday and discussed the Securities and Exchange Commission (SEC), the Ripple court decision and its impact on digital assets regulation.

Referring to the Chair of the SEC, Gary Gensler, Novogratz said, “Gary has been saying, ‘come in, the rules are clear.’ The rules are absolutely not clear. The judge just basically said to the SEC, ‘you’re wrong.'” See the interview.

And, read a summary on Blockworks.

The New York Times

Inside the Private Writings of Caroline Ellison, Star Witness in the FTX Case – The New York Times

Investor Charged With Kidnapping ‘Crypto King’ – The New York Times

see more tips

Opinion: One Hot July Week Could Transform The Future Of U.S. Crypto Regulation – Forbes

North Korean hackers breached a US tech company to steal crypto – Reuters

Crypto finds its killer app: Hamster racing for degens – Blockworks