Senate Banking
Posted on by John Ebbert

Scott Announces Digital Assets Framework for Banking; Durbin Inveighs On Crypto

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Scott on digital assets framework

New Senate Banking Ranking Member, Tim Scott (R, SC), announced that the Committee will be developing a framework for digital assets. From the press release: “The Committee will work to facilitate a bipartisan regulatory framework that accounts for both the rapid growth in the use of cryptocurrencies and the concerns raised by high-profile failures.” Read all of Scott’s priorities. However, this will be no easy task for Senator Scott as he bumps up against the agenda of Banking Chair Sherrod Brown (D, OH), who has expressed deep skepticism about cryptocurrencies – including at the December Senate Banking hearing on FTX where the Chair raised the issue of whether “regulatory clarity” was even needed.

Durbin inveighs against crypto

From the Congressional Record on Wednesday comes an entry (see it) from Sen. Dick Durbin (D, IL) who wanted to talk crypto on the Senate floor. Back in December, Durbin was critical of digital assets in the December Senate Agriculture hearing on FTX with CFTC Chair Rostin Behnam.

He did not hold back this time either with an 1,800+ word speech: “Let me tell you about crypto’s terrible, horrible, no-good, very bad year–2022. Let’s start with the most popular cryptocurrency, Bitcoin. In 2022, the currency cratered, losing more than 60 percent of its value in 1 year. To put it in perspective, if you bought one Bitcoin at the start of 2022 and held on to it today, you would be down $25,000. Think of all the Americans who could have held on to that cash for family needs or to cover a downpayment on their first home. Their money is gone…” Matt Damon, Larry David, and LeBron James are implicated as well by the Senator. Read the full speech.

Not shying away from the fact that – like many in Congress – his own campaign war chest was “dusted” by crypto campaign donations, he said, “I think that we have got to be thoughtful and mindful as politicians that this industry has a lot of money riding on this bet, and we have got to be careful that we don’t become so beholden to them that we lose our clear-eyed look at an entity that has hurt so many people already and is likely to do more in the future.”

House Ag adds digital assets

It’s not quite the standalone subcommittee of House Financial Services, but “Digital Assets” moved to headline billing on House Agriculture’s “Subcommittee on Commodity Markets, Digital Assets and Rural Development.” House Ag Chair Rep. Glenn “GT” Thompson made the announcement and the subcommittee formerly known as “Commodity Exchanges, Energy, and Credit” appears to have been where changes were made.

The subcommittee’s Chair will be Rep. Dusty Johnson (R, SD) who was the original co-sponsor of the Digital Commodity Exchange Act (DCEA) in 2020. Chair Thompson introduced a new version of the DCEA last year along with co-sponsors Rep. Ro Khanna (D, CA), Rep. Darren Soto (D, FL) and Rep. Tom Emmer (R, MN). Republicans are making a concerted effort to make digital asset regulation a key policy goal now that they have the Majority in the House.

states legislating crypto

A new bill putting restrictions on the sale of digital assets is bubbling in New Jersey and has blockchain industry advocates on edge. Bill 1756, “Digital Asset and Blockchain Technology Act,” would not allow digital asset “business activity” without a license from the state. Read more from local news site TapInto.

Blockchain Association has formally outlined its opposition saying in part, “The bill would effectively outlaw all of the crypto businesses that are currently thriving in the Garden State unless they are able to navigate an onerous, uncertain, and likely expensive licensing regime. We strongly urge you to reconsider this bill.” Read the letter. Chamber of Digital Commerce’s Cody Carbone tweeted, “States are increasing their rule makings, enforcement actions, and overall activity as it relates to #crypto in the absence of federal action.”

non-fungible trademarks

A case in New York State courts is pitting a non-fungible token (NFT) creator against luxury brand Hermès for infringement. It’s the right to sell an artistic work versus trademark infringement. But as Axios’ Crystal Kim reports there may be a hitch: “Hermès International filed an NFT trademark application in August 2022, describing virtual retail store services featuring virtual goods.” Tha Metaverse plans could inhibit Hermes’ ability to litigate. Read more.

committtee potpourri

banning crypto

Berkshire Hathaway Vice Chairman Charlie Munger has never been a fan of crypto. And in a new op-ed in the Wall Street Journal, the billionaire does not equivocate in asking for a complete ban: “A cryptocurrency is not a currency, not a commodity, and not a security. Instead, it’s a gambling contract with a nearly 100% edge for the house, entered into in a country where gambling contracts are traditionally regulated only by states that compete in laxity.” Read it.

the Tether stablecoin

Also in the Wall Street Journal, a new article takes a look at the “unusual crew,” and financial inner-workings of, the Tether stablecoin which is currently valued at around $68 billion. A former child actor, a plastic surgeon turned electronics importer and a newer partner who has political ambitions in British politics are all members of the ownership group. The article explains about the coin: “Tether’s assets slightly exceed the value of tethers circulating, so it has only a thin cushion against losses, according to the company’s most recent disclosures.” Read more. Meanwhile, a new lobbying disclosure filing says Tether is active in DC. See it.

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