SEC Oversight Hearing With Chair Gensler Today; Stabenow, Boozman Talk Crypto Legislation

SEC oversight today

Securities and Exchange Commission (SEC) Chair Gary Gensler will appear at an oversight hearing in front of the Senate Banking Committee today at 10 a.m.  Video will be here.

In preparation, cryptocurrency platform company Coinbase – which has been charged by the SEC with operating an unregistered securities exchange – published a blog post critical of the SEC and its Chair titled, “Just the facts: A regulation by enforcement only approach is hurting American leadership, jobs, and innovation.” See it.

Coinbase makes the case that jurisdictions are rapidly developing crypto regulatory frameworks around the world including the G20 (which the U.S. is a part of), UK, UAE, Japan, Brazil, Hong Kong, Australia and Canada. Read more.

Late yesterday, Chair Gensler seemingly responded to the Coinbase hearing-pre-emptive strike with his prepared testimony for today’s hearing: “As I’ve previously said, without prejudging any one token, the vast majority of crypto tokens likely meet the investment contract test,” a refrain he has, indeed, previously said, but what token isn’t, and what token is a security remains a question that he and his agency has never answered. Read the Chair’s remarks (PDF).

And, read a summary on Decrypt.

prospects: not good

At the Permissionless II conference in Austin, Texas yesterday,  House Majority Whip Rep. Tom Emmer (R, MN) joined SEC Commissioner Hester Peirce, Blockchain Association CEO Kristin Smith and former Commodity Futures Trading Commission (CFTC) Commissioner Brian Quintenz (now at venture firm a16z) for a panel discussion on digital assets policy prospects for the United States. And the prospects… look bleak.

Blockworks’ Casey Wagner reports that Rep. Emmer was unequivocal, “It’s not good…. The question is will [crypto innovation] happen here in this country, or are we going to push it out?” SEC’s Peirce chimed in, “The government develops its own interest and starts to forget that it represents the peoples’ view on things,” according to Wagner.  Read more.

Senate Ag speaks

Unchained’s Kollen Post reached out to Senate Agriculture Chairwoman Debbie Stabenow (D, MI) and Ranking Member John Boozman (R, AR) and received a couple of quick, rare thoughts on digital assets.

The two Senate Agriculture Committee leaders have been buried in the Farm Bill – and silent on crypto – ever since the implosion of FTX last November. FTX CEO Sam Bankman Fried‘s involvement in Senate Ag’s 2022 Digital Commodity Consumer Protection Act (DCCPA) made the legislation effectively ‘radioactive.’

On crypto legislation today, Sen. Stabenow tells Post “that we need new legislation on CFTC authority ‘now more than ever.'” Unfortunately for crypto proponents, Stabenow will leave the Senate at the end of the 118th Congress. Could she pop up in a second-term Biden Administration?

Meanwhile, Sen. Boozman briefly shares his thoughts on crypto with Post saying, “There’s some things that – there’s no ifs, ands or buts – they are commodities.” The Senator also said in regards to the digital assets market structure (FIT) bill being shepherded through the House by Rep. Glenn “GT” Thompson (R, PA) and Rep. Patrick McHenry (R, NC) that’s he’s “supportive of their efforts” and stopped there.

Read the article which gives a thoughtful overview of the crypto legislation state-of-play.

more tips:

Back in early August, House Financial Services (HFS) Vice Chair Rep. French Hill (R, AR) told a conference in Lincoln, Nebraska that Senate Agriculture would be an important element in the strategy for passage of any crypto legislation: “… importantly, we want to go back to John Boozman of Arkansas and Debbie Stabenow of Michigan, who is not running for re-election, and let GT Thompson, Dusty Johnson (R, SD) and our Democrat Ranking Member [Maxine Waters (D, CA)], talk about how well this worked in House Ag. And how well we believe it can work in Senate Agriculture while we look for new partners, new voices over in the non-Ag part of the Senate -in Senate Banking.” Read the event coverage.

progressives and patents

In a “Law of Code” podcast episode, DeFi Education Fund’s chief legal officer Amanda Tuminelli offers her thoughts on the two Republican house bills: Financial Innovation and Technology for the 21st Century Act & the Blockchain Regulatory Certainty Act.

She is dubious about any crypto legislation making it through the Democrat-controlled Senate. Tuminelli expressed disappointment that progressive Democrats such as Rep. Alexandra Ocasio-Cortez (D, NY) and Sen. Elizabeth Warren (D, MA) do not align with Rep. Ritchie Torres (D, NY), a crypto supporter who has made the case for crypto in the context of potentially replacing high-fee, check cashing and money transfer businesses used by his constituents.

Tuminelli also brings to light a little-discussed patent being used to sue protocols like Maker (lawsuit) and Compound (lawsuit). Her industry organization aims to undo the patent’s potential wide-ranging effects for decentralized finance. Hear the podcast.

(h/t @jchervinsky on X)

more tips:

See DeFi Education Fund’s petition to the Patent Board saying that all of the patent’s purported technology existed before the patent (PDF) –

Democrats speak – update

Next week’s Mainnet crypto conference in New York City released the timing for the conference’s agenda yesterday. Senator Kirsten Gillibrand (D, NY) will talk digital assets legislation at 1:05 p.m. on Friday, September 22 with Crypto Council of Innovation CEO Sheila Warren. Meanwhile, House Financial Services Committee member Rep. Ritchie Torres (D, NY) will speak with Union Square Ventures Partner Fred Wilson at 4:05 p.m on Friday. See the agenda.

fraud registry

In a keynote in front of the The North American Securities Administrators Association’s (NASAA) Annual Meeting in San Diego, California, Commodity Futures Trading Commission Commissioner Christy Goldsmith Romero told attendees that it was time to create a national fraud registry to protect consumers -and blockchain technology was the answer. Romero was in the U.S. Treasury in 2019 when she originally proposed a version of the idea.

She said yesterday, “Tracing funds, tracing crypto, using the blockchain, using link analysis, using social media, and data analytic tools should all be in a regulators’ tool kit.  The ability to find connections between people has gotten tremendously easier, faster, and more reliable.  This could help regulators determine connections to uncover those working in concert or for insider trading, for example.  Regulators could also consider AI or other tools to help establish beneficial ownership or other types of links.” Read the speech.

more tips:

“Modernizing Investor Protection for the Digital Age” by SEC Commissioner Mark Uyeda, his keynote at NASAA Conference –

still more tips

China wants metaverse firms with ‘global influence’ and plans for up to 5 industrial clusters by 2025 – South China Morning Post

FTX assets include $1.2 billion of Solana token, Bahamas properties – The Block

1 in 4 investment firms assign senior execs to digital assets: Report – Cointelegraph

Standard Chartered-owned crypto firm Zodia launches in Singapore – CNBC