ETH ‘securities’
Prometheum rolled out its first Ether-as-a-security product on Friday according Fortune’s Leo Schwartz: “The custody launch appears to validate the position of [Securities and Exchange Commission (SEC)] Chair Gary Gensler, who has countered the broader crypto industry’s position by saying the existing regulatory regime is adequate and effective.” And yet, Gensler has never confirmed Ether is a security in the eyes of the SEC. Is this that moment? Read more.
The crypto platform was awarded a controversial special purpose broker-dealer (SPBD) license for crypto securities which purportedly adheres to SEC guidelines in May 2023.
what you should know: Big picture… this is the first of several potential salvos this week by anti-crypto advocates within Democratic leadership as they look to counter pro-crypto forces who are pushing for passage of the “Financial Technology and Innovation Act for the 21st Century” [H.R.4763] or “FIT 21” in the House this week. Ironically, the confusion created by Prometheum and its SPBD speaks to the need for a regulatory framework. FIT 21 looks to divide digital asset responsibilities between the CFTC and SEC.
Votes – FIT 21, CBDC
In preparation for House Floor votes this week, the House Rules Committee will hear about FIT 21 and Majority Whip Tom Emmer’s (R, MN) Central Bank Digital Currency (CBDC) bill known as “CBDC Anti-Surveillance State Act” [H.R.5403] at 4p.m. ET today.
There are 31 amendments listed for FIT 21 and a mere five for the CBDC bill.
Votes – SAB 121, ETH ETF
Though the exact timing hasn’t been “officially” announced for the Floor vote on FIT 21 or the CBDC bill, Digital Chamber’s Taylor Barr tweeted yesterday that tomorrow (Wednesday) at 4:30 p.m. ET, a vote on FIT 21 will take place even though the exact timing is still “fluid.”
And if the vote isn’t Wednesday, it’s Thursday.
what you should know: If the Biden Administration is going to veto the SAB 121 resolution, it will likely be in the lead up to the vote on FIT 21.
In this scenario, Dem leadership wants to “herd” House Democrats into a “no” vote and maintain an “anti-crypto” stance on digital assets and the market structure (FIT 21) bill, in particular.
Likewise, the delay of the Ether ETF applications by the SEC run by Chair Gensler, a Democrat, would hit right before the vote, too.
developing story – ETH ETF
Out of the blue late yesterday, Bloomberg analysts Eric Balchunas and James Seyffart suddenly moved their likelihood on ETH ETF approvals in the near-term from 25% to 75%. According to various sources, there was a sudden pick up in interest by the SEC yesterday in getting application changes done by financial service companies looking to apply for ETH ETF approval.
Balchunas retweeted new data from his colleague saying: “The ‘Eethness Stakes’ is pretty good. Nice look at all the entrants dealing w this fire drill. Hearing the SEC wants revised 19b-4s returned to them by 10am tmrw morning (based on a bunch of comments they just received today) for likely approval as soon as Wed.”
what you should know: This could be signal of a big change by Dem leadership. Or it’s a fake out and nothing happens? Hang on, tight! Meanwhile, last night.. the price of Ethereum token rocketed 20% on Monday night.
FIT 21 – Dems prep
HFS Ranking Member Maxine Waters (D, CA), Rep. Stephen Lynch (D, MA) and Rep. Sean Casten (D, IL) held a meeting yesterday afternoon for their caucus in preparation for the vote on the FIT 21 bill.
Politico’s Eleanor Mueller reported yesterday morning that “An invite shared by an aide warns of the bill’s ‘major consequences and spillover effects to the traditional securities market.” Read more. Dem leadership favorite professor Hilary Allen of American University and SEC advocate Lee Reiners of Duke University, who have both appeared at past HFS hearings, were among the speakers slated to speak says Politico.
In response to the news, CEO Ryan Selkis of crypto industry company Messari tweeted at the Ranking Member, “Dear [Ranking Member Waters]. Please don’t torpedo the chances of a bipartisan crypto bill at today’s member briefing. None of us liked SBF. None of us support fraud. Rejection of FIT 21 will be an attack on U.S. investors & entrepreneurs. Would favor corrupt regulators over voters.”
what you should know: Late yesterday, Mueller reported on X that although House Democratic leadership said in a note to its members that it still opposes FIT 21 , it “does not urge [Dems] to vote ‘no.’”
Is this another sign of a shift by Dem leaders along the lines of the ETH ETF approval news above? Or a dastardly head fake?
Also: Republicans will host a press briefing this afternoon on FIT 21.
FIT 21 – Tim Ryan
Former Democratic Congressman Tim Ryan (OH) makes his case to Democrats on why they should pass FIT 21 in an op-ed in Newsweek. He concludes: “Fit 21 will allow a technology potentially as transformative as AI to grow safely here in the United States. Here, in the end, is another opportunity for America to lead. I just hope my fellow Democrats are on the right side of history. President Kennedy would want it that way.” Read it.
The piece was promoted yesterday by the Republican House Financial Services X account.
Ryan is on Coinbase’s Global Advisory Council and co-Chair of the Blockchain Initiative Project.
FIT 21 – industry letter
“Dear Speaker Johnson and Minority Leader Jeffries: We, the undersigned, write today to express our support for a floor vote for H.R. 4763, the Financial Innovation and Technology for the 21st Century Act (FIT21)…” – Blockchain Association
anti-CBDC drumbeat
In advance of the House Floor vote later this week on the CBDC Anti-Surveillance State Act, the bill’s sponsor, Majority Whip Tom Emmer (R, MN), continued his familiar drumbeat on X yesterday, “The idea of a central bank digital currency is more than alarming, it is down-right un-American. This week, the [House Republicans] will uphold the American values of privacy, individual sovereignty, and free-market competitiveness by passing my CBDC Anti-Surveillance State Act.”
what you should know: The industry remains mum here on CBDCs. Stablecoin legislation is the “golden goose” for crypto participants. Additionally, there’s no reason to step further into the CBDC discussion which is decidedly partisan today.
Gruenberg on his way
With last week’s prudential regulator oversight hearings by HFS and the Senate Banking Committees in the rear-view mirror, Senate Banking Chair Sherrod Brown (D, OH) has apparently seen enough of FDIC Chair Martin Gruenberg, a Biden Administration appointee. He wants Gruenberg replaced coming out of revelations about the sexual harassment scandal at the FDIC. Brown said in part, “I’m calling on the President to immediately nominate a new Chair who can lead the FDIC at this challenging time…”
Read the statement on Senate Banking’s website.
Then, later in the day, Gruenberg said in a statement he’d step aside once a replacement was found.
more tips:
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- Sen. Elizabeth Warren‘s statement on Gruenberg stepping aside – via Punchbowl’s Brendan Pedersen on X
- HFS Chair Patrick McHenry (R, NC) on Gruenberg’s Intent to Resign: This Announcement is Too Little, Too Late – financialservices.house.gov
what you should know: During the Senate Banking hearing last week, Senator Elizabeth Warren (D, MA) had defended Gruenberg and advocated for him to stay at the agency. This could be a sign of her diminishing influence within Democratic leadership which could influence future decisions on digital assets legislation.
global regulation – Brazil
Brazil’s central bank to formulate a plan for stablecoin, crypto rules this year – Ledger Insights
event
HFS Subcommittee for Digital Assets, Financial Technology and Inclusion Chair French Hill (R, AR) and Rep. Wiley Nickel (D, NC) will join Axios for a virtual event hours before the scheduled vote on FIT 21 tomorrow. Sign up is here.
still more tips
Grayscale Announces Peter Mintzberg Appointed CEO Effective August 15, Michael Sonnenshein Departs – press release
“Today, [CEO Sheila Warren] testified at the Wyoming Select Committee on Blockchain, FinTech, & Digital Innovation Tech, highlighting the crucial role Wyoming plays in the US for digital asset regulation” – read thread from Crypto Council of Innovation on X
Bitcoin Miners Targeted by Venezuela in Latest Crypto Crackdown – Decrypt
New York AG announces $2 billion settlement with crypto lender Genesis – CNBC
Donald Trump‘s Election Odds Just Spiked To 51% According To This Crypto Prediction Market – Benzinga