Digital Market Structure And Stablecoin Hearing Tomorrow, RFIA Returns This Month

tomorrow’s hearings

With the United States digital assets ecosystem in the dumps following the Securities Exchange Commission’s (SEC) lawsuits against Coinbase and Binance, tomorrow’s House Financial Services hearings could offer some uplifting highlights.

Morning – At the 10 a.m. hearing, what’s Treasury Secretary Janet Yellen thinking about digital assets legislation? She told CNBC last Thursday she wants to see legislation. To which some Members may ask at tomorrow’s hearing,  “What exactly are you looking for, Madame Secretary?” See the hearing page. The Committee Memorandum notes that particular focus will be on the International Monetary Fund (IMF).

Afternoon – Beginning at 2 p.m., the stablecoin (PDF) and market structure (PDF) bills being pushed forward by Republicans will be the subject of the afternoon hearing.  See the hearing page.

tomorrow’s hearings – Dems

The big question is where House Democrats will land on these bills.

Will House Democrats try to shape these bills so that Senate Democrats can pursue passage in the upper chamber? Or will they make a token effort (rim shot) on the bills and allow the House Republican majority to do whatever it wants knowing the Democratic majority in the Senate – led by Senate Banking Committee Chair Sherrod Brown (D, OH) and committee member Senator Elizabeth Warren (D, MA) – will scuttle any meaningful Republican-led crypto legislation?

Also tomorrow…  Will the SEC deliver another lawsuit tomorrow in an effort to drown out House Republicans?

new crypto banks

In spite of the collapse of fiat/crypto rails providers Silvergate Capital and Signature Bank, Bloomberg reports that both domestic and international entities are stepping in: “Customers Bancorp Inc., a Pennsylvania lender, has become a popular destination. Swiss and Asian banks are also playing a bigger role, though they still remain selective about their crypto clients. In the UK, where access to banking has also worsened, companies are instead turning to payment-service providers to bridge the gap.” Read more

Toomey lives

Commenting on the battle between Custodia Bank and the Federal Reserve, former Senator Patrick Toomey (R, PA) tweeted on Friday, “Fortunately, U.S. District Court of Wyoming Judge Skavdahl agreed with me and saw through the Fed’s specious argument. The result: Custodia Bank will get its day in court.” Read more context on the case in CoinDesk.

RFIA – imminent

Yahoo Finance says the Senators Cynthia Lummis (R, WY) and Kirsten Gillibrand (D, NY) are set to release a new version of their Responsible Financial Innovation Act (more on RFIA from the 117th Congress here) this month which include changes to the bill effected by the implosion of FTX.

House Financial Services Committee member Rep. Ritchie Torres (D, NY) tells Yahoo Finance, “There is some semblance of a bipartisan consensus in favor of regulating crypto, and most people feel the collapse of FTX was a wake up call about the urgent need to regulate a status quo that is dangerously deregulated.”

Read more.

RFIA – Gillibrand

What could also be impactful this week is Gillibrand, a Democrat, renewing her public stand against the SEC run by Democratic Chair Gary Gensler amidst the agency’s enforcement actions. She did it in February saying to Punchbowl News, “I have many concerns about Chairman Gensler and his approach to this space. There are many, many companies that have asked to be regulated and who have been ignored for years. (…) We have to actually write rules of the road for this industry, or consumers will remain unprotected, or the entire industry will go abroad. Neither of those outcomes is positive for the U.S. economy or U.S. consumers.”

Parliament debates crypto

The All-Party Parliament Group (APPG) focused on Crypto and Digital Assets announced that the regulation of cryptocurrency will be debated this Tuesday in the United Kingdom’s Parliament. Video will be here.

Trade organization Crypto UK tweeted, “The debate will be led @DrLisaCameronMP, Chair of the Crypto and Digital Assets APPG, where the findings of her report to Parliament will be shared and a Government Minister will be in attendance.”

moving out

Crypto advocate Will Clemente of Reflextivity Research said yesterday that his data shows recent enforcement action news – which he calls “Operation Chokepoint 2.0” – is starting to be felt. He tweeted, “[Decentralized Exchange] volumes relative to [Centralized Exchanges] are at an all-time high; Tether at ATH & USDC down 50%; and, Offshore volumes near ATH at 86%.” Read more on his Twitter timeline.

He concludes, “In the end, capital & activity will just move off-shore & on-chain; ultimately giving the US govt less oversight.”

hackers – part I

The Wall Street Journal chronicles North Korean hacking that has netted $3 billion according to Chainalysis. Furthermore, the hacking is getting more audacious that ever before with North Koreans applying for Western jobs: “To get hired by crypto companies, [North Koreans] will hire Western ‘front people’ – essentially actors who sit through job interviews to obscure the fact that North Koreans are the ones actually being hired. Once hired, they will sometimes make small changes to products that allow them to be hacked, former victims and investigators say.” Read more.

In April and May, Chainalysis offered more detail on several North Korean citizens who were sanctioned by the U.S. Treasury’s Office of Foreign Assets Control (OFAC). Read this and this. The examples speak to the core of Chainalysis product offering: find the bad guys via the blockchain.

hackers – part II

The U.S. Department of Justice announced charges against two Russian hackers who had been a part of the Mt. Gox hack in 2011 as well as a “illicit” crypto exchange they had created.

From the release: “This announcement marks an important milestone in two major cryptocurrency investigations. As alleged in the indictments, starting in 2011, [Alexey] Bilyuchenko and [Aleksandr] Verner stole a massive amount of cryptocurrency from Mt. Gox, contributing to the exchange’s ultimate insolvency. Armed with the ill-gotten gains from Mt. Gox, Bilyuchenko allegedly went on to help set up the notorious BTC-e virtual currency exchange, which laundered funds for cyber criminals worldwide,’ said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. ‘These indictments highlight the department’s unwavering commitment to bring to justice bad actors in the cryptocurrency ecosystem and prevent the abuse of the financial system.'” Read more. And, read a bit in the Hill, too.

Congress watching

Writer Felix Salmon is unequivocal in an op-ed in Axios about the meaning of the latest enforcement actions by the Securities and Exchange Commission: “The U.S. government seems to have decided to kill the crypto ecosystem. (…) For over a decade, crypto was allowed to be given the benefit of the doubt. But those days are over.”

On the bottom line to all this, if you needed one, Salmon writes, “The crypto industry is burning down, and the SEC is pouring gasoline on the fire. Congress seems to be perfectly happy to stand alongside crypto skeptics and watch the fire burn.Read it.

still more tips

How Are Stablecoins Faring? These Charts Will Tell You – The Wall Street Journal

“The implosion of Three Arrows Capital, a cryptocurrency hedge fund, devastated the industry. Its two founders spent the next year surfing, meditating and traveling the world” – The New York Times

Binance’s Nigeria Unit Ordered to Halt ‘Illegal’ Operations by Securities Watchdog – CoinDesk

Real-world asset protocols outperform DeFi blue chips due to tokenization wave – Cointelegraph

Turkish Investors Looking for Haven Turn to Stablecoin Tether – Bloomberg

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