NDAA and Senate Banking
The bipartisan National Defense Authorization Act (NDAA) amendment [S.712] brokered between Senators Kirsten Gillibrand (D, NY) and Cynthia Lummis and Senators Elizabeth Warren (D, MA) and Roger Marshall (R, KS) re-appeared yesterday in a press release from team Lummis-Gillibrand. The two “urge” for the inclusion of the Senate-passed amendment in the annual defense budget bill “following reports that Hamas has used unregulated crypto asset exchanges to fund their war in Israel and to pass comprehensive legislation to create a well-regulated and safe crypto asset market in the United States.”
Also yesterday, a spokesperson for Senator Lummis clarified about the process for the current amendment saying, “The Senate and House will have a conference committee where the Senate and House versions are considered for the final bill, so Sens. Lummis and Gillibrand are working to ensure this provision is included in the final version.”
what you should know: The announcement may be an attempt to try and head off the momentum that the drastically more restrictive “Digital Asset Money Laundering Act” [S.2669] introduced by Sens. Warren and Marshall has in light of recent news media reports linking crypto to terrorist funding. We’ll likely hear more on both legislative efforts when Warren and Lummis have their 5-minutes to question witnesses at Senate Banking’s “Combating the Networks of Illicit Finance and Terrorism” hearing on Thursday.
postponed hearing – Bitcoin ETF
The hearing that almost was. Former head of investment management for the Securities and Exchange Commission (SEC), Dalia Blass, was scheduled to join four others as witnesses for today’s House Financial Services Capital Markets Subcommittee hearing titled, “Examining the SEC’s Agenda: Unintended Consequences for U.S. Capital Markets and Investors.” Rep. Ann Wagner (R, MO) is Chair.
Mid-afternoon yesterday, the House Financial Services (HFS) GOP account on X announced the hearing was “postponed until further notice.” Read the official announcement. No doubt the hearing was a victim of the House Speaker drama with the House Republican conference scheduled to privately meet about a new candidate today. (The Financial Institutions and Monetary Subcommittee Hearing also was postponed. Four HFS hearings remain this week.)
Blass’s presence along with Securities Industry and Financial Markets Association (SIFMA) CEO Ken Bentsen would have been notable – hopefully this hearing returns. Blass collided with SIFMA when she was at the SEC when the idea of a Bitcoin ETF was starting to take shape in the industry. The SEC wanted the industry to slow down. See Blass’s letter to SIFMA in 2018.
The Committee memo (see it – including witnesses) for today’s postponed hearing teed up Republican concerns, “This hearing will delve into Chair Gensler’s approach to rulemaking, which has sparked significant concerns.” Digital assets would likely have been among the topics for discussion.
what you should know: The Bitcoin ETF process has experienced friction with the SEC during both Republican and Democratic presidential administrations. Blass’s insights on the role that the Chair plays in decision making across the Commission could be revealing.
BItcon ETF – SEC’s Peirce
In an interview on CNBC’s Squawk Box, Republican SEC Commissioner Hester Peirce waded into the “Will the SEC approve a Bitcoin ETF” discussion. As usual, Peirce wouldn’t prognosticate, but she did share her own opinion: “I can’t say whether or not the Commission is ready to approve a Bitcoin Exchange-Traded Product. I’ve been thinking we should approve one for the last five years. So, the logic for why we haven’t has always mystified me. The court case (i.e. Grayscale), obviously, is an important factor in the landscape. But, I can’t guess my colleagues approach to this topic.” See the interview.
what you should know: What if Peirce were in charge of the SEC in a Commission with a Republican majority? A Republican president could provide the answer.
House Majority Whip Tom Emmer (R, MN) is pulling out all the stops in an effort to secure the House Speaker role (private Republican conference election today, hopefully). Politico reported that the Whip had “a Trump problem.” Read it. Meanwhile, Emmer was fighting back against the characterization.
what you should know: Having Emmer as the House Speaker is a future that the blockchain industry would relish given his advocacy to date. Nevertheless, having the Whip stay in his current role isn’t bad either. Maybe it’s better? The Speaker role in the Republican caucus looks like a no-win situation.
Coinbase v. SEC today
CoinDesk’s Jesse Hamilton provides an overview on the current state of court proceedings between the SEC and cryptocurrency platform Coinbase. According to Hamilton, the SEC has a deadline of today for rebutting Coinbase’s request to have its enforcement action dismissed. Crypto lawyer Jason Gottlieb says about the case, “This is an extremely important case for, not just the cryptocurrency industry, but for the future of digital assets in America.” Read it.
what you should know: Coinbase suddenly getting its cased dismissed by the court would be a stunning win for the company, an equally stunning loss for the SEC and a catalyst for the industry bigger than any Bitcoin spot market ETF approval by the agency.
State of Crypto
UK emissions inspection
With the launch of aggressive new rules restricting the marketing for crypto companies, a “cottage” industry has emerged which facilitates compliance with the new regulations. The Financial Times says that only three companies “are able to sign off the marketing materials of potentially hundreds of crypto groups, from social media posts to business websites. (…) London-based Archax, one of the three permitted to perform sign-offs, has OKX and Coinbase, two of the world’s biggest crypto exchanges, as customers.” Read more.
what you should know: This is the digital assets’ version of an emissions inspection. Could the States or Federal Government see a new revenue stream?
still more tips
Letter to the Editor: Blockchain Helps the Good Guys Track the Bad Guys, WSJ
Digital Yuan Used for First Time to Settle International Crude Oil Transaction: Report – Unchained
Amicus brief in case relating to IRS John Doe summons on exchanges – Coin Center
Worldcoin to pay orb operators in WLD rather than USDC – The Block
Hong Kong updates crypto rules for retail investors blocking foreign spot ETFs – Ledger Insights