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privacy without anonymity?
Speaking at a London financial services conference, Commissioner Christy Goldsmith Romero of the Commodity Futures Trading Commission (CFTC) advocated for improved identification capabilities in crypto to overcome illicit finance risks reports CoinTelegraph. But, she still sees privacy in the crypto equation and told the audience, “It is possible for all crypto companies to distance themselves from mixers and anonymity-enhanced technology, while still appropriately providing financial privacy for customers.”
How does that work?
Commissioner Goldsmith Romero stated “there is a distinction between financial privacy and anonymity. Traditional finance (TradFi) ensures financial privacy by verifying the customer’s identity through Know Your Customer (KYC), Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) measures, without relying on anonymity-enhancing technology,” according to CoinTelegraph.
This is the nexus of all crypto battles – AML/KYC and integration of traditional finance systems into decentralized systems that do not make the privacy distinction Romero is making. But, privacy is privacy and/or anonymity in a decentralized world enabled by cryptography. Read more.
Will there be compromise? Inevitably if regulated access to the U.S. financial system for digital assets is to be achieved. Today, Congress is mired in politics and the fight for the White House. Crypto or digital assets policy will most likely not progress until a case is made in the interest of national security – which is inherently bipartisan.
Speech: Illicit Finance and Other Key Risks of Digital Assets: Keynote at City Week 2023 – CFTC Commissioner Christy Goldsmith Romero in London – CFTC.gov
Consensus: Lummis, McHenry, Harris
In his “State of Crypto” newsletter, CoinDesk managing editor Nikhilesh De announced the addition of Senator Cynthia Lummis (R, WY) and House Financial Services Chair Rep. Patrick McHenry (R, NC) to Friday’s Consensus 2023 “Policy Summit” agenda in Austin, Texas.
No Congressional Democrats are scheduled to appear. In 2022, appearances included Senator Kirsten Gillibrand (NY), a Democrat.
But, on Thursday in Austin, New York Department of Financial Services Superintendent Adrienne Harris, a Democrat who was part of last week’s HFS Digital Assets Subcommittee stablecoin hearing, will participate in a fireside chat with CoinDesk’s De. The dichotomy of state versus federal oversight of the digital assets industry continues to heat up led by Harris’ office and its NY Bit License. Read more from “State of Crypto“.
lobbying for Bitcoin
Former Representatives Tim Ryan (D, OH) and David McIntosh (R, IN) are joining forces on a new lobbying effort – called BPI Action – supporting Bitcoin as part of the Bitcoin Policy Institute. The Block’s Stephanie Murray reports, “Ryan, the group’s chair, gave up his House seat when he ran unsuccessfully for Senate in the 2022 election cycle. McIntosh is the president of the conservative Club for Growth, which deployed a pair of crypto-focused super PACs during the last election.” Read more.
Last month, McIntosh’s conservative Club for Growth questioned Senator Roger Marshall (R, KS) on why he was partnering with crypto critic Senator Elizabeth Warren (D, MA).
“Since December, I have voiced concerns about Binance’s ties to China & the CCP. Today’s report on their workforce in Shanghai raises yet another red flag about their operations both here in America & globally—and the influence of the CCP in crypto markets.” – Senator Bill Hagerty (R, TN)
“In my estimation, the reason so many young Americans are into #Bitcoin is because it is #soundmoney. The federal govt’s blank check spending habit, coupled with the complete erosion of the gold standard and the development of the internet, led us here. Inevitable.” – Senator Cynthia Lummis (R, WY)
digital assets vice chair
House Financial Services Ranking Member Rep. Maxine Waters (D, CA) announced Vice Chair appointments across her Democratic subcommittees and made Rep. Josh Gottheimer (D, NJ) Vice Chair of the Digital Assets, Financial Technology and Inclusion Subcommittee. Read the release. Gottheimer was one of the few Democratic members of House Financial Services that expressed positive interest in digital assets last week amidst Democrats’ spiking of the stablecoin bill and defense of SEC Chair Gary Gensler.
Are Democrats keeping a “toe” in the digital assets water?
In February 2022, Gottheimer introduced a discussion draft of his own Stablecoin Innovation and Protection Act. Perhaps, he’ll help spearhead stablecoin bill efforts on the Democratic side in the current Congress?
Or, is Gottheimer’s appointment merely for show by Democratic leadership which does not intend to pass any legislation yet still needs to exhibit some level of engagement?
“dead in America”
On the most recent All-In Podcast, investor and gadfly Chamath Palyapthiya says, “The United States authorities have firmly pointed their guns at crypto” and its effectively “dead in America.” Hear more on Apple Podcasts.
CNBC’s MacKenzie Sigalos covers the news and notes Palyapthiya’s confidence two years ago that Bitcoin would rise to $200,000 in five to 10 years. Read more.
crypto media resignation
Crypto media has increasingly focused on the policy discussion as crypto winter naturally prods its community to consider how things can be improved while “number goes down.”
In media publication Blockworks’ daily newsletter on Monday, editor Byron Gilliam shared resignation about the United States’ slow moving regulatory pace. Sure, there’s disappointment with SEC Chair Gary Gensler and his regulation by enforcement, “But it should be noted that Gensler, crypto’s bête noire, has been SEC chair for only two of those seven years and things likely wouldn’t be so different without him.”
In decentralized finance (DeFi) media company Bankless’ daily newsletter, editor Jack Inabinet griped, “Despite clear opportunities, solidifying dollar dominance and broadening access to stable financial instruments seems to be longer-term thinking than stateside regulators are broadly ready for, but let’s hope for some more comprehensive progress soon.”
Fed on stablecoins
Nick Timiraos, a Wall Street Journal reporter that the U.S. Federal Reserve seems to use for signaling interest rate changes to the general public, notes in a tweet that a new policy by the Fed may affect stablecoins. He tweeted yesterday, “The Fed updated the eligibility rules for the ONRRP (Overnight Reverse Repo Facility) facility in ways that could deny access to stablecoins.” Read more.
Timiraos observes that USDC issuer Circle has said it will use Blackrock for its reserves.
Statement Regarding the Policy on Counterparties for Market Operations and Reverse Repurchase Counterparties, April 25 – newyorkfed.org
new, state chartered bank option
Executives from the recently closed Signature Bank’s cryptocurrency unit have joined Fortress, a state chartered bank in Nevada. Joseph Seibert, former head of Signature’s digital assets team, is now managing director of the Fortress digital assets business, and “working with part of the Signature Bank risk and compliance team and crypto payments specialists, to help exchanges, over-the-counter (OTC) desks and others in the industry solve their post-Signature/Silvergate fiat settlement at Fortress,” reports CoinDesk. Read more.
- “The Future of Digital Assets: Identifying the Regulatory Gaps in Spot Market Regulation,” 2 pm – House Agriculture Subcommittee on Commodity Markets, Digital Assets, and Rural Development
- “The Future of Digital Assets: Identifying the Regulatory Gaps in Digital Asset Market Structure,” 2 pm – House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion
- “Oversight of the Financial Crimes Enforcement Network (FinCEN) and the Office of Terrorism and Financial Intelligence (TFI),” 2 pm – House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions
still more tips
CFTC Commissioner Caroline Pham will participate in a keynote fireside chat at California Digital Assets Week on May 3 – DAweek.com
Coinbase trading volumes fall as regulatory uncertainty weighs – Financial Times
Binance US Ends $1 Billion Deal to Buy Bankrupt Crypto Firm Voyager – Bloomberg
NFL crypto disaster was ‘hundreds of millions of dollars’ off target as NFT market collapsed – The Block
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