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state regulators – Torres
On Friday, Rep. Ritchie Torres (D, NY) reiterated his support of the digital assets regulatory regime in his state and its regulator the New York Department of Financial Services (NYDFS).
Torres tweeted Friday, “The evidence is crystal clear — state regulators like @NYDFS have been far more effective at regulating cryptocurrencies than federal regulators. Watch my questioning during yesterday’s @FSCDems hearing aimed at developing a framework for stablecoin regulation and legislation.” See his Q&A (video) at last week’s stablecoin hearing.
Torres isn’t necessarily aligned with his Democratic caucus, which appears to prefer some form of Federal oversight when it comes to digital assets and stablecoins. Republicans, on the other hand, have embraced the “states rights” view.
state regulators – event
Meanwhile, the battle between NY Attorney General Letitia James’ office, which recently introduced its “CRPTO” legislation, and NYDFS and Superintendent Adrienne Harris who are caretaker’s of the New York BitLicense, may be heating up.
Harris and NY Assistant AG Kenneth Polite could shed more light on the battle, or lack thereof, this Wednesday at the “White Collar Crime Institute” event by the New York City Bar. Commodity Futures Trading Commission (CFTC) Commissioner Christy Goldsmith Romero will appear on Tuesday night.
Debt ceiling negotiations between the President Joseph Biden and House Republicans could lead to changes in the tax treatment of crypto if the President has his way.
On Sunday, President Biden once again called out crypto saying, “I’m not going to agree to a deal that protects wealthy tax cheats and crypto traders while putting food assistance at risk for nearly 1 million Americans.” Read more in Politico.
The President appears to be referencing the wash sale rule and the current tax treatment for much of crypto. He painted with a similar broad brush on May 9 where anyone buying or selling crypto is seen in alignment with “MAGA Republicans,” according to the President. This continues his administration’s vilification of digital assets which seemed to begin in earnest after the implosion of cryptocurrency exchange FTX last November.
Bitcoin payments expand
Bitcoin payments infrastructure provider Strike said that its Strike payments app is now available in at least 65 countries with more on the way. U.S. (other than New York), Argentina, and El Salvador have been the original jurisdictions for the app. Read the release. Strike CEO Jack Mallers tells Fortune he’s moving his company’s headquarters to El Salvador given the anti-crypto stance by regulators in the U.S. Read that one.
Ripple says its offering a platform which will allow governments to issue a Central Bank Digital Currency (CBDC). CoinDesk reports, “The platform is an enhanced version of Ripple’s Private Ledger, which was started in 2021 for issuing CBDCs. The platform is powered by the XRP Ledger, but was built on a new private ledger.” Read about it.
The Stablecoins of Gibraltar
The crypto regulatory regime in tiny Gibraltar is creating new opportunities in digital assets amidst the “crypto winter.” American Banker finds Xapo Bank, run by Seamus Rocca, is expanding its crypto payment options with Tether. Settlement and international payments is the use case here.
American Banker reports Xapo “is regulated by the Gibraltar Financial Services Commission. That regulator supervises both traditional currency and crypto activities. Gibraltar has moved faster than most jurisdictions to regulate cryptocurrency, with standards that require firms to mitigate market manipulation, liquidity risks and other behavior that threatens market integrity.” Xapo’s Rocca believes this gives his company “regulatory coverage.” Read more.
Is Gibraltar another Bahamas regime, which led to FTX, or is it an example of crypto’s global growth where successful digital assets frameworks are standardized over time.
papers – DeFi France
Circle announced its company’s response (see the blog post) to The ACPR, the French Prudential Supervision and Resolution Authority, and its recent discussion paper on decentralized finance (DeFi).
On Twitter, Circle’s EU policy director Patrick Hansen summarized his company’s response: “…. we highlight 1) the benefits of DeFi for cheaper, faster and programmable financial services 2) the difference between ‘DeFi protocols’ and ‘DeFi applications’ 3) the benefits and importance of public, permissionless blockchains 4) the need for new and pragmatic regulatory approaches towards DeFi (instead of copy/paste solutions) 5) the benefits and drawbacks of specific regulatory concepts…”
“Discussion papers publication ‘Decentralised’ or ‘disintermediated’ finance: what regulatory response?” – Banque de France (in English)
Read law firm Clifford Chance’s views on the discussion paper published in April. Download here (PDF).
papers – BIS
Bank of International Settlements (BIS) published a new paper last week titled, “Crypto, tokens and DeFi: navigating the regulatory landscape.”The BIS describes the paper as “an overview of policy measures taken in 19 jurisdictions to address the risks associated” with crypto. Read more.
And, get the paper (PDF).
The DeFi Education Fund offers its take saying, “The paper serves as a high-level overview of a variety of policy measures to address the presumed risks of crypto assets. However, DeFi’s risks cannot be appropriately addressed with jurisdictions’ current approaches (…) Read more.
Marketplace: NFTs down
Digital assets platform company Galaxy released its latest NFT (non-fungible token) marketplace report last Thursday. “NFT trading volume is down significantly but may be bottoming out. It’s clear that Blur is dominating on volumes, but OpenSea continues to dominate on users. Ultimately, OpenSea’s user base is more organic and perhaps durable in the long term, while Blur’s is almost exclusively high time preference whales. See the pretty graphs.
still more tips
A husband hid $500,000 in bitcoin during a divorce — and got busted by a crypto hunter – CNBC
Inside the Bitcoin 2023 conference in Miami, attended by 12K+ people, down from 25K+ in 2022, which had a subdued but positive mood, and no talk of moonshots – Bloomberg
Tax Experts Share Best Practices While We Wait for IRS Guidance – Blockworks
The promise of crypto has not lived up to its initial excitement – The Economist
How to Upgrade House Stablecoin Bill 2.0 to Version 2.1 – Cato Institute (May 17)
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