military letter #2
Blockchain Association’s ex-military members have sent a new letter to Congress regarding the illicit finance and crypto debate currently swirling. Yesterday’s communication doubles the signatories of the previous BA letter back in November and clearly states their opposition to legislation being floated in Congress as well as related national security concerns.
The letter states in bolded text:
“The Digital Asset Anti-Money Laundering Act (DAAMLA) risks our nation’s strategic advantage, threatens tens of thousands of U.S. jobs, and bears little effect on the illicit actors it targets.”
Back in December, Senator Elizabeth Warren (D, MA), who is the author of DAAMLA, sent a letter in response to Blockchain Association which accused the organization of, essentially, revolving door politics and undermining “bipartisan efforts in Congress and the Biden Administration to address the role of cryptocurrency in financing Hamas and other terrorist organizations”
California Senate race
The Senate race in California will feel the effects of the “pro crypto” Fairshake PAC as The New York Times reports that the organization has begun buying TV and digital advertising in the Golden State. The race takes place in three weeks and the PAC is apparently challenging the campaign of U.S. Senate hopeful Rep. Katie Porter (D, CA).
The NYT asserts, “It is not exactly clear what about Ms. Porter has drawn the crypto industry’s ire other than her record as a progressive who favored regulating the industry to better favor consumers and made the grilling of a financial chief executive a viral moment a few years ago.” Read more.
The PAC’s ad accuses her of complicity with the interests of the banking lobby among others.
In mid-October of last year – along with 100 other Democrats – Rep. Porter signed Senator Elizabeth Warren’s letter to the White House and U.S. Treasury in regards to concerns about illicit finance’s connections to crypto coming out of the October 7 terrorist attacks in Israel. Read that one.
White House list
On Monday, the White House Office of Science and Technology Policy released its “Updated Critical and Emerging Technologies List.” In the press release, OSTP Deputy Director for National Security Stephen Welby explains, “This list supports our ongoing efforts to grow and strengthen U.S. technological leadership.”
And on the list under “Data Privacy, Data Security, and Cybersecurity Technologies” is digital assets.
See the 2024 list update (PDF).
The press release adds: “This 2024 update outlines technologies that could chart new pathways in American innovation and strengthen the nation’s security.” Laser eyes to that!
(h/t @matthew_pines)
crypto acquisition
Crypto payments company Ripple announced yesterday that it intends to acquire Standard Custody & Trust, a holder of a New York Limited Purpose Trust Charter – one of just nine New York-state licensed crypto trust charters which includes Coinbase, Fidelity Digital Assets and Paxos. Deal terms were not made public.
Ledger Insights writes, “Standard Custody is no stranger to Ripple. The architects of Standard Custody’s technology are Arthur Britto and David Schwartz, who both co-created the XRP Ledger.” Read more.
Just last July, Ripple was freed from a cumbersome lawsuit when it won its case against the Securities and Exchange Commission (SEC). The news inspired pro-crypto lawmakers such as House Financial Services Chair Patrick McHenry (R, NC) and House Agriculture Chair Glenn “GT” Thompson (R, PA) to say in a statement that the decision underscored “the need for Congress to provide clear rules of the road for the digital asset ecosystem—it’s misguided to think otherwise.”
Yesterday, CoinDesk’s Jesse Hamilton took a closer look at Ripple’s strategy saying, “The company is trying to push beyond the payments network it’s known for and into other financial products in which their institutional customers can benefit from blockchain technology.” Read that one.
Next step is for the state’s financial regulator – the New York Department of Financial Services (NYDFS) – to put its stamp of approval on the acquisition.
today’s hearing
A full committee hearing for House Financial Services is on tap today titled, “Oversight of the Financial Crimes Enforcement Network (FinCEN) and the Office of Terrorism and Financial Intelligence (TFI).”
The hearing begins at 10 a.m. in Rayburn. Livestream here.
Though the Committee’s hearing memorandum makes no explicit mention of digital assets, U.S. Treasury Undersecretary Brian Nelson comes to the defense of his department’s approach to digital assets in his prepared testimony:
“While we continue to assess that terrorists’ use of digital assets remains a small fraction of more established mechanisms to move money, we recognize that terrorist groups have and may continue to turn to digital assets to raise, transfer, and store their illicit proceeds.”
No doubt Nelson is anticipating “pro-crypto” Member criticism. At the same time, crypto advocates will be clear that illicit finance is unacceptable through digital assets or any form of money.
more bills on Thursday
Tomorrow’s HFS Subcommittee on Digital Assets, Financial Technology and Inclusion hearing, “Crypto Crime in Context Part II: Examining Approaches to Combat Illicit Activity” will include a slew of new bills.
Also, five industry witnesses will appear including Carole House who was largely responsible for guiding creation of President Joe Biden’s Executive Order on Digital Assets in early 2022.
Among the “legislative proposals,” a new study is requested of the combined forces of Treasury, the CFTC and the SEC on decentralized finance (DeFi).
In another bill, a study of privacy preserving capabilities of digital assets is requested of Treasury:
“This discussion draft would require the Secretary of Treasury to submit a report, within one year, that examines the use of privacy-preserving technologies for digital assets. The report would also provide an overview of how other jurisdictions are mitigating illicit finance related to privacypreserving technologies.”
Read the Committee’s hearing memo for a quick summary on each.
podcast: know your SEC
On Jacob Robinson’s “Law of Code” podcast, Cravath, Swaine & Moore counsel and partner Jeffrey Dinwoodie breaks down recent digital asset events and provides an inside look at the SEC where he once served in a senior role under former Chair Jay Clayton (R).
For example, Dinwoodie suggests listeners think of the SEC in three different ways: the Commission; the 5 Commissioners led by the Chair; and then, the SEC staff. On getting interpretations of Commission rules from the Staff, Dinwoodie advises, “It’s important to realize what the Staff does and doesn’t have the authority to do. Generally speaking, it’s difficult for the Staff to make that determination because it’s really a call for the Commission to make.” Hear it.
what you should know: Cravath is the same firm which helped create the DeFi Education Fund amicus brief lauded by Judge Katherine Failla in the Coinbase Motion-To-Dismiss hearing. Also, Mr. Dinwoodie appeared at a House Financial Services (HFS) Subcommittee on Digital Assets, Financial Technology and Inclusion hearing on FSOC in January.
more tips:
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- Ripple Announces Acquisition of Standard Custody & Trust Company, Expands Its Portfolio of Regulatory Licenses – Ripple blog
still more tips
As spot bitcoin ETF volumes continue to rise, Bitwise Asset Management predicts a high ceiling for growth – TechCrunch
Bullish paid close to $75 million to acquire CoinDesk. Here’s what we know about the company and its plans for crypto media – Fortune on Yahoo
Franklin Templeton Latest to File With SEC for Spot Ethereum ETF – Unchained
Are You Ready For Crypto Tax Season? – The Defiant
Fordefi Secures $10M and Launches Wallet-as-a-Service – press release