Senate Banking’s Crypto Hearing Today; Stablecoin Stopped

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stablecoin stopped #1

Paxos, a cryptocurrency and stablecoin infrastructure platform, announced it will “end its relationship with Binance for the branded stablecoin BUSD” and thereby stop offering BUSD.  See yesterday’s Paxos statement.

stablecoin stopped #2

Effectively, BUSD is getting shut down at the request of state regulator New York Department of Financial Services (NYDFS) – see the NYDFS statement. A spokesperson for NYDFS told Reuters, “Paxos ‘violated its obligation to conduct tailored, periodic risk assessments and due diligence refreshes of Binance and Paxos-issued BUSD customers to prevent bad actors from using the platform.'” More on CoinDesk.

stablecoin stopped #3

The Securities and Exchange Commission will reportedly sue Paxos shortly, the first “enforcement action against a major stablecoin issuer,” according to The Wall Street Journal. And, more crackdowns are expected says The WSJ in a follow-up last night.

SEC’s Gensler on stablecoins

Last September, SEC Chair Gensler said stablecoins may need to be registered as securities: “Stablecoins have features similar to, and potentially competing with, money market funds, other securities, and bank deposits, and raise important policy issues.” See that speech.

today’s event – crypto crash

Beginning at 10:30 a.m. this morning, The Senate Banking Committee led by Chair and Senator Sherrod Brown (D, OH) and Ranking Member Senator Tim Scott (R, SC) will hold a hearing titled, “Crypto Crash: Why Financial System Safeguards are Needed for Digital Assets.” Live video will be available here.

today’s event – the witnesses

Scheduled to appear at today’s Senate Banking hearing will be three witnesses with academic backgrounds including Lee Reiners from Duke University (see prepared testimony), Yesha Yadav from Vanderbilt Law (testimony) and Linda Jeng from Georgetown Law (testimony), who is also the Chief Regulatory Officer & General Counsel at industry trade org Crypto Council.

GMAC meeting – see slides

“What are digital assets?” At yesterday’s Global Markets Advisory Committee (GMAC) meeting held by CFTC Commissioner Caroline Pham, Michael Demissie of traditional finance firm, BNY Mellon, took a crack at a definition. See the slides. Meeting video is here.

GMAC meeting – new subcommittee

Continuing a recent trend of digital asset subcommittees on Capitol Hill (currently one is under House Ag and the other under House Financial Services) a new “Digital Asset Markets Subcommittee” was established at the CFTC’s GMAC meeting – Commissioner Pham said that “soon” there will be a request for nominations.

GMAC meeting – international regulation momentum

Echoing Commissioner Pham, Commissioner Kristin Johnson submitted a prepared opening statement that emphasized the need to keep tabs on international digital asset regulation. (see the statement)

crackdown stops consumer biz?

The Block says that cryptocurrency platform Bakkt will exit its consumer  business amidst the recent regulatory crackdown. CEO Gavin Michael says, “The discontinuation of the (consumer) app ensures we are supporting the relationship our partners and clients have with their customers. We are focusing our investment on our core solutions that have product-market fit and are positioned to scale quickly.” Read more.

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