Fed on CBDCs, stablecoins
The Fed still sees a priority with stablecoin regulation, not so much on Central Bank Digital Currencies (CBDCs) according to The Federal Reserve’s Vice Chair for Supervision Michael Barr at yesterday’s DC Fintech Week event. Paraphrasing Barr, Fortune’s Leo Schwartz tweeted on X, “…the central bank has not yet made a decision on CBDCs, but wouldn’t move forward with a retail version without authorization from Congress and the White House.” Read more on Fortune.
what you should know: The Fed has yet to publicly suggest that a CBDC is imminent. As Barr stated, Congress would need to authorize a CBDC, too.
Rep. Wiley Nickel (D, NC), a member of the House Financial Services (HFS) Committee, represented Congress at DC FinTech Week yesterday and spoke across a range of digital asset topics. On the stablecoin bill, he remains optimistic with only one issue remaining between the opposing sides, i.e. “state right-ers and having a strong federal floor” for stablecoins. Nickel said that the views were not very far apart and all that remained was the “sausage making process” for the bill to eventually become law.
Thread: “Take a look at some of the amendments to the FSGG approps bill for [crypto]” – Digital Chamber’s Cody Carbone on X
OCC loves tokenization
Appearing at DC Fintech Week, Acting Comptroller of the Currency, Michael Hsu, brought his unwaveringly skeptical view on crypto, but saw opportunity with tokenization.
Hsu explained, “Tokenization – what is tokenization about? Tokenization is focused on solving an actual problem. And that problem is settlement. This is boring back office stuff, but it’s super important. Every time you buy a security, every time you transfer money, there’s a bunch of actions that happen in the background with regards to settling that transaction. And it seems invisible, but to those in the know, it involves a bunch of different players with a bunch of different handoffs, there’s risks, there’s frictions, there’s fees. Tokenization holds the promise to collapse that and to simplify it if it’s done right.
“So when I talk to folks, there’s increasing interest in tokenization because it solves a problem and less and less interest on crypto. And crypto is just – there’s so many problems with it. It’s hard to comply with BSA and other laws. Whereas tokenization, if done right, that holds a lot of promise.”
Hsu also announced that the Office of the Comptroller of the Currency (OCC) will be hosting a conference in February on tokenization.
what you should know: Hsu said at last year’s DC FinTech Week a month prior to FTX’s implosion: “One of the largest centralized crypto exchanges in the U.S., submitted a presentation to the Financial Stability Oversight Council (FSOC) in response to outreach on the digital assets Executive Order. The arguments in the presentation caught my attention because they presumed that integrating crypto and TradFi would enhance finance stability. I could not disagree more.” The damage FTX wrought in D.C. is vast.
.“… We live in a fully digital electronic age, not just in trading. We already, by the way, have digital money. It’s called bank deposits.” SEC Chair Gary Gensler (in person) at SIFMA’s Annual Meeting
Keep Your Coins
The Chamber of Digital Commerce’s Taylor Barr announced on X yesterday that Senator Ted Budd (R, NC) has introduced in the Senate the “Keep Your Coins” Act [H.R. 4841] previously introduced in the House by Rep. Warren Davidson (R, OH). The bill passed out of a HFS Committees markup along party lines in late July.
Barr described the bill’s aim: “Specifically, it prohibits Federal agencies from restricting the use of convertible virtual currency by a person to purchase goods or services for the person’s own use.”(Senator Budd’s X account re-tweeted the announcement.) The two Congressmen were on the HFS Committee before Budd joined the Senate this year.
what you should know: So far, Democrats have not voiced support for the bill in the House with Rep. Sean Casten (D, IL) calling the bill “a real problem” at an HFS illicit financing hearing two weeks ago.
Coinbase has added for well-known names to its Coinbase Global Advisory Council: former U.S. Defense Secretary Mark Esper, former Rep. Stephanie Murphy (D, FL), former Bush Administration counterterrorism advisor Frances Townsend, and consultant David Urban, who was the former Chief of Staff to Sen. Arlen Specter (R, PA). In addition to Coinbase’s own battle with the Securities Exchange Commission (SEC), with the recent discussions in DC around crypto’s involvement in illicit financing and the terrorist attacks in Israel, the move likely looks to address the increased pressure on the Company – and the blockchain industry – regarding perceived threats from virtual currency to the U.S. and its global interests. Read Coinbase blog post.
what you should know: Regarding the announcement, Coinbase CEO Brian Armstrong added on X, “Crypto has an important role to play in national security.”
CFPB wallet crackdown
The Consumer Financial Protection Board run by Director Rohit Chopra proposed new guidelines for “big tech” as well as digital wallets and payment apps yesterday as the Biden Administration and Democratic leadership continues to attempt to rein in technology. Generally speaking, non-bank companies will need to comply to the level of bank compliance regarding payments. Comments are due January 8, 2024. Read the press release.
Read the proposal: “Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications” – consumerfinance.gov
House Financial Services Committee Chair Patrick McHenry (R, NC) spoke strongly against the action saying in a release, “The action announced by Director Chopra today is a step in the wrong direction. Consistent with the Bureau’s track record, this proposed rule will only entrench the status quo by impeding the adoption and development of innovative products and services.” Read more.
what you should know: Blockchain payments solutions such as crypto wallets are not mentioned by name but would appear to get bucketed into the broad application of the rule.
still more tips
a16z writes first check out of UK to crypto startup Pimlico – Techcrunch
NY Top Financial Regulator on Banking System, AI (Video) – Bloomberg
Custodia Bank launches Bitcoin custody platform – Cointelegraph