New Stablecoin Bill Attracts Criticism; Fed Releases CBDC Research -With A Footnote

stablecoin bill – criticism

Former House Financial Services (HFS) and Senate Banking Committee witnesses – with both pro- and anti-crypto POVs – issued sharp criticism of the “Lummis-Gillibrand Payment Stablecoins Act” introduced yesterday by Senators Cynthia Lummis (R, WY) and Kirsten Gillibrand (D, NY).

Columbia University professor and Zero Knowledge Consulting founder Austin Campbell, who appeared as an industry witness at the April 2023 HFS Digital Assets Subcommittee hearing “Understanding Stablecoins’ Role in Payments and the Need for Legislation”, sees problems with the Lummis-Gillibrand stablecoin bill.

On X, Campbell begins with the “nerdy” issue of the bill’s stablecoin reserve requirements which including physical cash, bank deposits, “90 day or less T-Bills, and repurchase agreements of up to 7 days,” according to Campbell.

He then breaks out at least four areas of concern beginning with: “First, we have a serious technical problem, which is applying the limitation to specific T-bills instead of the portfolio: always do the portfolio people! You don’t want someone going all the way out to 90 days with everything. 60 day or less weighted average maturity for the entire portfolio, please.”

Read Campbell’s tweet thread.

Jake Chervinsky, chief legal officer of Variant Fund, who appeared at the same April 2023 hearing as Campbell while a policy executive for Blockchain Association, said on X about the new stablecoin legislation, “…the bill published today is deeply flawed: it appears to ban nearly everything except a narrow band of centralized, custodial stablecoins. This would be far worse than status quo.” He points to themes of his prepared Congressional testimony from last year as a solution.  Read more.

stablecoin bill – anti

Finally, American University Professor Hilary Allen shared her negative view of the new stablecoin bill in a lengthy tweet thread yesterday.

A consistent critic of the digital assets industry, Professor Allen is a favorite witness of Senate Banking Chair Sherrod Brown (D, OH) and appeared at Chair Brown’s December 2022 “Crypto Crash” hearing post-FTX implosion.

In yesterday’s thread, Allen says the Lummis-Gillibrand bill is “epically bad” and “… everybody but Circle and Coinbase – their USDC stablecoin will be the primary beneficiary of proposed stablecoin legislation. Although, there are a few parts of this particular hasty mishmash that might give even Circle/Coinbase pause.” Read Allen’s tweet thread from yesterday.

Allen’s tone for the new stablecoin bill echoes her tweet thread of April 2023 when the HFS “Clarity for Payment Stablecoins” [H.R.4766] bill first dropped.

The somewhat duplicative tweet thread makes sense in that Sens. Lummis and Gillibrand have said that they used as a “starting point” the HFS stablecoin bill negotiated between Dems and Republicans before it was scuttled by the White House at the July 2023 HFS markup. Read more in Politico on Wednesday.

Better Markets CEO Dennis Kelleher, who was a key member of President Biden’s 2020 transition team, hopped right on Professor Allen’s bus on X yesterday and quoted her latest tweet thread saying in part, “….she’s talking about what we call unstablecoins, which [crypto] industry allies are dangerously pushing”. Read more.

stablecoin bill – 2 questions

1…. What is the difference between Lummis-Gillibrand’s stablecoin bill and the current iteration of the HFS “Clarity For Payment Stablecoins Act”?

2…. And regarding the HFS bill which is in the hands of HFS Chair Patrick McHenry (R, NC) and Ranking Member Maxine Waters (D, CA) as they negotiate (according to Punchbowl) with Senator Chuck Schumer (D, NY) about potentially riding the FAA Reauthoriztion, what does the most current version look like?

The HFS “Clarity For Payment Stablecoins Act” seems to be in the poll position of becoming stablecoin law given its history and trajectory.

stablecoins and HFS Democrats

The stablecoin legislation state-of-play was examined by Politico’s Morning Money yesterday given the renewed momentum with both the House and Senate stablecoin bills. The message from Democratic members of House Financial Services, such as crypto gadfly Rep. Brad Sherman (D, IL), is that no one trusts anything crypto-related. But, Rep. Sean Casten (D, IL) tells the publication that during earlier phases of stablecoin bill negotiations there was a way forward and “there was a lot of involvement from Dems on committee with Maxine and her staff around what we would need to see to get to ‘yes.'” Read more from Politico.

more tips:


Cryptocurrency Exchange Kraken Acquires TradeStation Crypto – CoinDesk

new CBDC research

In a new Federal Reserve publication unveiled yesterday and titled, “Financial Stability Implications of CBDC, Fed writers “examine the financial stability risks and benefits of issuing a CBDC under different design options” according to the abstract.

Read the 48-page research report.

In the report’s introduction,  a footnote may be seeking to calm Congressional Republican nerves: “The Federal Reserve has made no decisions on whether to issue a central bank digital currency and does not intend to proceed with issuance of a CBDC without clear support from the executive branch and from Congress, in the form of a specific authorizing law…”

House Majority Whip Tom Emmer’s (R, MN) CBDC Anti-Surveillance State Act  [H.R.5403] has 146 Republican co-sponsors as of yesterday with 10 more Senate co-sponsors, including lead sponsor Sen. Ted Cruz (R, TX), in the Senate [S.3801].

crypto regulation op-ed

a16z crypto investor and author Chris Dixon drops an opinion piece yesterday in the Financial Times titled, “Crypto regulation must not prioritise memes over matter.”

See the op-ed now.

Introducing the piece on X, Dixon writes, “My goal isn’t to defend or to diminish memecoins. It’s to point out the backward incentives of a regulatory regime in the US that lets only memecoins thrive – while companies and tokens with more productive uses face hurdles.”

what you should know: Dixon just met with a group of Senators on Capitol Hill last week as part of a meeting of the Senate Financial Innovation Caucus. The topic of discussion included the importance of digital assets to the U.S., according to Senator Lummis’ office.

Bitcoin ETF effects

Grayscale’s Once-Mighty Fund Is Bleeding Bitcoin – The Wall Street Journal

crypto mixer litigation

On the Law of Code podcast, the legal case of Roman Sterlingov is reviewed in depth with his lawyers, Tor Ekeland and Michael Hassard, and George Mason University professor J.W. Verret. Sterlingov was accused by the IRS and Department of Justice of operating a bitcoin mixer known as “Bitcoin Fog” and money laundering violations. He was convicted in March.

In addition to a review of the case, it’s a fascinating discussion of how Department of Justice, the IRS and other areas of government view crypto as well as the role blockchain analytics firm Chainalysis plays.

Hear it on Apple Podcasts.

still more tips

Arkansas House adopts crypto mining resolutions – KASU

Opinion: Comparing Apples to MNGOs: Government Actions Against Avi Eisenberg Show How Poorly Digital Assets Are Classified in US – Unchained

‘Big Four’ accounting firm EY to use Polygon PoS for business contracts – Blockworks

Tether Advances Beyond Stablecoins, Introduces New Framework Embracing Core Divisions to Foster Resilient, Future-Ready Financial Systems – Tether