Democratic Leadership Asks Treasury And SEC For Comment On Crypto Legislation

letters – market structure

In two new Congressional letters, House Financial Services Committee (HFS) Committee Ranking Member Rep. Maxine Waters (D, CA) requested last Friday that U.S. Treasury and the Securities and Exchange Commission (SEC) provide comments on the new digital assets market structure bill being driven by HFS Committee Republicans.

Ranking Members Waters would not be sending the letters if they weren’t welcome. Democratic leadership is making a strategic play here.

In her letter to U.S. Treasury and Secretary Janet Yellen, she echoes previous HFS Democratic positioning (like this) -on whether the legislation was even necessary: “Finally, please advise whether this draft legislation or its specific provisions are needed, and, whether there are alterations to existing law outside the bill’s scope that would promote financial stability or strengthen oversight and investor and consumer protection in the digital assets ecosystem.”

See the press release from HFS Ranking Member Waters.

Read the letter to Treasury Secretary Janet Yellen.

And, read the letter SEC Chair Gary Gensler.

letters – Yellen and Gensler

There could be something interesting here – a difference in opinion between Yellen and Gensler?

For example, Secretary Yellen said in her testimony before HFS on June 13 that regulation was needed and specifically said to Rep. Josh Gottheimer (D, NJ) during the hearing’s Q&A, “One hole pertains to the supervision of spot markets where digital assets are not regarded as securities. There needs to be regulatory authority there. And then I would say that stablecoins is a type of digital asset that really requires a full-blown federal regulatory framework. I think this is an area where congressional legislation is appropriate to create an appropriate prudential framework.” It’s difficult to imagine Chair Gensler ever saying anything like that. What’s in place today (Howey, etc) is plenty for wrangling cryptocurrency and digital assets, according to the Chair for the past year or so.

Democratic leadership will provide a well-orchestrated, unified message by Yellen and Gensler in answer to Waters’ queries. Could it leave any wiggle room in case Dem leadership wants to flip to pro-digital assets legislation in service to Democratic interests in the upcoming general election? Certainly, it’s hard to imagine. But, perhaps, the heady days just after President Biden first issued his Executive Order on digital assets in March 2022 can return due to shifting political winds.

Answers are due Friday.

about those bills

Blockchain Association’s Ron Hammond broke down the state of play for the stablecoin and market structure bills in a thread on Twitter yesterday.

The July 19 House Financial Services (HFS) Markup approaches – as announced by HFS Chair Rep. Patrick McHenry (R, NC) before Fed Chair Jay Powell’s testimony last week – and Hammond sees the stablecoin bill with momentum where remaining differences may only include how federal and state regulators enter the mix.

Hammond explains, “One interesting dynamic has been New York. The NYDFS has a robust stablecoin regulatory regime and advocated for the R position of more state involvement. Their arguments seem to be working as all 3 NY [Democrats] expressed support for a state regime in the last crypto hearing.”

Meanwhile in Politico, HFS Committee member Rep. Jim Himes (D, CT) tells Politico “that the committee is ‘very close’ to agreement on a stablecoin bill. ‘We’re down to the sort of fiddly issues.'” Digital Assets Subcommittee Chair Rep. French Hill (R, AR) remains hopeful, too. Read that one.

Blockchain Association’s Hammond is less optimistic about the market structure bill’s chances in the current Congress. Read the thread.

legislative tracker

There’s nothing like a well-maintained, topic-specific, legislative tracker to keep ahead of the blizzard of bills in Congress.

Digital Chamber of Commerce announced yesterday its version of digital assets legislative tracker. 16 bills are featured with the latest addition the “SEC Stabilization Act” from Majority Whip Rep. Tom Emmer (R, MN) and Rep. Warren Davidson (R, OH). You can see Digital Chamber’s legislative tracker here.

George Leonardo of Cap Hill Crypto offers a nice tracker, too, which includes all the digital assets bills plus the “kitchen sink.” Leonardo says origins for his current tracker begin with creating “a one-stop-shop for seeing which Members cared about which issues.” He adds, “I based the format/content off of information we’d include in letters to constituents when I was a Legislative Correspondent.” See it here.

flight to crypto safety

With the apparent revolt of Wagner Group in Russia over the weekend, Russians were trading their rubles for digital U.S. dollars. According to the Wall Street Journal, “People often buy cryptocurrency when their countries face greater political or economic instability. Bitcoin traded at a premium against the Ukrainian hryvnia on a number of exchanges after Russia’s invasion of the country last year. Turks have ditched the lira for crypto due to unorthodox economic policies and high inflation.” Read the details.

Crypto experienced a surge in prices during the U.S. banking crisis when the “price of Bitcoin surged 40% since the fall of Silicon Valley Bank in early March.” Read more in the The New York Times (March 31).

China and innovation

Known as “Summer Davos” in previous years, World Economic Forum (WEF) has brought its global events brand to China again this week.  Its “Annual Meeting of the New Champions” takes place in Tianjin, China, and features a keynote with Li Qiang, the Premier of the People’s Republic of China, who will deliver the opening address.

The message here: China is embracing innovation.

WEF describes its New Champions community as “forward-looking companies that are championing new business models, emerging technologies and sustainable growth strategies in the Fourth Industrial Revolution.” See agenda which includes topics such as “The Future of Money.”

And, see the conference’s “Top 10 Emerging Technologies for 2023” report (PDF) – blockchain is part of the mix.

The Top 10:

1. Flexible batteries
2. Generative artificial intelligence
3. Sustainable aviation fuel
4. Designer phages
5. Metaverse for mental health
6. Wearable plant sensors
7. Spatial omics
8. Flexible neural electronics
9. Sustainable computing
10. AI-facilitated healthcare

still more tips

China’s move to control the blockchain – Politico

Digital diplomacy: Council sets out priority actions for stronger EU action in global digital affairs – Council of the European Union

Commissioner Pham Announces CFTC Global Markets Advisory Committee Meeting on July 17 – CFTC.gov

Not just an experiment’: Swiss central bank to carry out CBDC pilot – The Block

U.S. Judge Rejects Binance.US Complaint Over SEC Press Release – CoinDesk

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