rescinding SAB 121 – review
A new filing for the Congressional record by House Financial Services (HFS) Chair Patrick McHenry (R, NC) provides a complete history on H.J.109, the resolution intended to rescind the Securities and Exchange Commission’s infamous Staff Accounting Bulletin 121 (SAB 121).
The resolution was introduced by Rep. Mike Flood (R, NE) and co-sponsored by Reps. Wiley Nickel (D, NC), French Hill (R, AR), Darren Soto (D, FL) and Majority Whip Tom Emmer (R, MN).
So far, HFS approved the resolution out of Committee in a February markup and awaits a House Floor vote.
In the Senate, Senator Cynthia Lummis (R, WY) has been unable to breakthrough with the Senate version due to the Democratic-controlled Congress and key committee Democrats such as Senate Banking Chair Sherrod Brown (D, OH), who has been largely anti-crypto.
The HFS report includes both sides of the SAB 121 argument which, at its core, prevents the custody of crypto by the regulated, U.S. financial system.
Of interest to SAB 121 aficionados may be the listing of organizations who opposed the resolution…. the banking sector was not among them: “Americans for Financial Reform (AFR); Better Markets; Public Citizen; Consumer Federation of America (CFA), United States Public Interest Research Group (US PIRG); NJ Citizen Action; Demand Progress; Institute for Agriculture and Trade Policy; Texas Appleseed; 20/20 Vision; Hilary J. Allen, Professor of Law at American University; Lee Reiners, Lecturing Fellow at Duke University.”
electing crypto
Why the presidency isn’t the most important election for crypto in 2024 – The Street
London’s ‘Joe Rogan’ and crypto advocate Brian Rose makes bid for mayor –Cointelegraph
Warren letters – this week
With her third Congressional letter in a week which focuses on digital assets and illicit finance, Senator Elizabeth Warren (D, MA) informed the White House, the Secretary of Defense and Treasury Secretary Janet Yellen yesterday that Iran may be profiting from Bitcoin mining. In short, she argues again that her Digital Asset Anti-Money Laundering Act (DAAMLA) [S.2669] co-sponsored by Sen. Roger Marshall (R, KS) is needed.
Her assertions in the Wednesday letter co-signed by Senator Angus King (I, ME) drew on 2021 analysis from blockchain analytics firm Elliptic titled, “How Iran Uses Bitcoin Mining to Evade Sanctions and ‘Export’ Millions of Barrels of Oil.” Read more from Elliptic.
The Senator’s release from yesterday states, “Bitcoin mining could have produced as much as $1 billion in revenue for Iran in 2021 alone.”
Earlier in the week, Sen. Warren sent a Congressional letter to Jen Easterly,
a cybersecurity director at the Department of Homeland Security, to warn of the existential threat of ransomeware attacks in the U.S. healthcare system and crypto’s involvement as well as promote DAAMLA. The letter included bipartisan co-signers Sen. Bill Cassidy (R, LA) and Sen. Richard Blumenthal (D, CT). See that release.
And last Sunday, according to the Wall Street Journal, Sen. Warren sent a letter to the White House, Defense and Treasury about the stablecoin Tether and concerns about “how countries including Russia, Iran and North Korea were relying on crypto to evade sanctions.”
Warren letters – the fusillade
It’s hard to keep up with number of Congressional letters sent by Sen. Warren in support of DAAMLA lately. But, the media (including blockchain tipsheet) keeps covering it, which at first glance may be a key performance indicator of success.
Clearly, there is a focus by the Senator on making a case for a “widespread problem” with crypto and money laundering. But, at what point is there a dulling effect and the message is lost -even among her Democratic colleagues.
Perhaps it’s telling that during the most recent negotiations over attaching the “Clarity for Payment Stablecoins Act” [H.R.4766] to the FAA Reauthorization, Democratic Majority Leader Senator Chuck Schumer, a New Yorker, appeared to ignore Sen. Warren’s recent calls to stop stablecoin law (see this April 17 letter from Senator Warren).
Instead, Schumer took his cue from New York Department of Financial Services Superintendent Adrienne Harris, also a Democrat, who gave the go ahead with adding the bill – which now likely includes some form of dual banking (shared oversight of issuance of stablecoins between the Federal Reserve and the States) – to the FAA Reauthorization.
Warren letters – ripple dissolve
You will recall that one year ago, in May 2023, New York State Attorney General Letitia James (D) appeared to try and undermine the authority of Superintendent Harris (and New York Governor Kathy Hochul, a Dem) with her Crypto Regulation, Protection, Transparency, and Oversight (CRPTO) Act.
Yes, a state AG can intro legislation in New York State.
The CRPTO bill’s rollout with myriad quotes from local, progressive organizations looked just like a Warren campaign might. There was no public involvement ascribed to the Senator or the Biden Administration, though.
To date, the bill has been unsuccessful in the New York State legislature, but Hochul/Harris versus Warren/James remains in play.
what you should know: So, are Democratic colleagues starting to glaze over about Sen. Warren’s anti-crypto stance and tactics? -even the U.S. Treasury with is Biden Administration appointees admits digital assets pales in comparison to challenges in TradFi when it comes to illicit finance.
Or, is there a “tidal wave” yet to come – led by the Senator – if Democrats take the White House and Congress in November?
Finally, would Senators Schumer and Kirsten Gillibrand (D, NY), representatives of the financial capital of the World, let a Warren “tidal wave” happen?
Finally finally, if Letitia James replaces Schumer someday, that could tip the scales in Warren’s favor.
WEF-speak
Cryptocurrency regulations are changing across the globe. Here’s what you need to know – World Economic Forum
new FIT 21 co-sponsor
The digital asset market structure bill – formally known as “Financial Innovation and Technology for the 21st Century Act” [H.R.4763] or FIT 21 – has gained a new co-sponsor: Rep. Ritchie Torres (D, NY).
The Congressman joins Democratic Reps. Henry Cuellar (TX) and Wiley Nickel (NC) and 8 Republicans in addition to the bill’s sponsor, House Agriculture Chair Glenn “GT” Thompson (R, PA).
Rep. Torres supported FIT 21 at last July’s House Financial Services Committee markup.
opinions
I’ve moved onchain – Fred Wilson, AVC
Fintech has hit a wall. Blockchain will break through it – Blockworks
CFTC
U.S. Financial Markets Regulator Names First Chief Artificial Intelligence Officer – The Wall Street Journal
House Financial Services Ranking Member Maxine Waters (D, CA) Letter To President Biden Urging Him To Nominate CFTC Commissioner Kristin Johnson As The Assistant Secretary for Financial Institutions at the U.S. Treasury – house.gov
Opening Statement of Commissioner Caroline Pham before the Technology Advisory Committee’s AI Day – CFTC.gov
still more tips
SEC’s Gensler pressed to approve options on spot bitcoin ETFs (Wednesday) – Axios
Tether Enters Transaction Surveillance Partnership with Chainalysis as Regulatory Pressure Mounts – CoinDesk
Terraform Labs’ lawyers push back against SEC, argue token sales were mostly outside US – The Block