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Two differing themes emerged from lawmakers at yesterday’s House Financial Services (HFS) Digital Assets Subcommittee stablecoin hearing at the Rayburn House Office Building. On the Republican side, states rights were a legislative focus whereas Democrats see the need for the involvement of the Federal Reserve. From a tone point-of-view, the Republicans led by Subcommittee Chair Rep. French Hill (R, AR) continue to position with an air of bipartisanship (read his opening remarks) while Democrats led by HFS Ranking Member Rep. Maxine Waters (D, CA) are generally more combative and remain dissatisfied with the majority’s views.
Digital Assets Subcommittee Ranking Member Steven Lynch put it bluntly saying state regulation for stablecoins feeds into crypto companies propensity for seeking out the least restrictive jurisdictions – “a race to the bottom,” he said. Read more in The Block.
CoinDesk’s Jesse Hamilton notes the bright side in all this: “…this and other committees are showing that the stablecoin topic – and crypto more broadly – is important enough to have already warranted several congressional hearings in recent weeks. Most members in both the House and Senate seem to be advocating action, and if they can agree on a stablecoin compromise, it would be a major first step toward U.S. oversight of the industry.” Read more on CoinDesk.
Fox Business Eleanor Terrett commented on Twitter about her view of the hearing, “Seemed to be an overwhelming consensus that stablecoins are not securities and should not be regulated by the SEC, but possibly regulated at the state level.”
Bipartisanship may have gained new life with the introduction of a bill by Chair Hill and Rep. Jake Auchincloss (D, MA) on Wednesday. “The Power of the Mint Act” is intended to stop the Federal Reserve from issuing a digital dollar a.k.a. Central Bank Digital Currency (CBDC). See the press release.
Auchincloss’ co-sponsorship mildly challenges Democratic leaders who included a provision of allowing “research” of a CBDC in the Dem version of the new stablecoin bill. Auchincloss has expressed support for digital assets legislation in the past and his public support on this bill adds him to the list of Democrats who could support digital assets legislation in the 118th Congress.
Read: A stablecoin blindspot? – Politico
clarity for crypto
House Majority Whip Rep. Tom Emmer (R, MN) announced the introduction of the Securities Clarity Act in a tweet yesterday. Rep. Darren Soto (D, FL) has come aboard as a sponsor of the bill.
Emmer explains further in his tweet thread, “The Securities Clarity Act inserts a key term, the ‘investment contract asset,’ into existing securities law to enable crypto projects to reach their full potential in a compliant way, allowing the United States to compete globally in this next iteration of the internet.” See the bill (PDF).
Behnam on digital assets
Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam talks onstage to Bloomberg’s Odd Lots podcast about cryptocurrency regulation at the recent International Swaps and Derivatives Association (ISDA) Annual General Meeting event. There was no direct talk about the Digital Commodity Consumer Protection Act (DCCPA) which was scuttled in late 2022 after a brush with FTX and Sam Bankman-Fried.
But, Chair Behnam addressed a variety of topics including DeFi and best practices for staying in the good graces of the CFTC with a decentralized finance product : “I think it’s easy to suggest, ‘Oh, …there’s no institution, there’s no individual -it’s just code. You can’t regulate that -it’s sort of self-effectuating”… but that’s really the wrong set of questions. It’s really about what are US customers being offered and exposed to and who is the individual or the group of individuals who set up that entity – that code – to offer those products.” Behnam talks Chair Gensler, prediction markets and more.
Hear the podcast (50 minutes).
The state of Texas remains an active jurisdiction for digital assets and Bitcoin, in particular. The Texas Blockchain Council announced in a release the passage of a bill in the state legislature which will require “many digital asset service providers operating in Texas to segregate and separately account for customer funds. It also requires the filing of reports, a component of which is auditor-attested ‘proof-of-reserves’. ” The final step is the getting Governor Greg Abbott’s (R) signature. See the press release.
Decrypt explains that the law “enacts regulations and duties stating that companies cannot maintain customer funds in such a manner that cannot be ‘fully withdrawn’ by users, nor can these be used for any other purposes than a customer transaction.” The customer can’t get “rugged,” in other words. Read more.
Coinbase is expanding outside of the United States, again. The company announced the official launch of Coinbase One in the US, UK, Ireland and Germany today. And in the coming months, the company will roll it out to 31 European countries in “the coming months.” Coinbase’s Phil McDonnell tells TechCrunch that the subscription service product had been in beta since 2021 and “offers a host of features, including no trading charges, higher staking rewards, 24/7 customer support, and pre-filed tax return documents.” It’s another way for the company to diversify and grow revenue with current trading fees heavily diminished by crypto winter. Read more.
The announcement builds on Coinbase’s recent global expansion news this month including the company’s international derivatives exchange in Bermuda and interest expressed by Coinbase CEO Brian Armstrong last week in creating an “international hub” in the United Arab Emirates.
how to blow a whistle
Poppy Alexander, a lawyer at Constantine Cannon’s whistleblower practice in San Francisco, offers a how-to on how to become a whistleblower in digital assets. She suggests a three-step process: 1) Figure out what’s going on; 2) Tell the right people; and 3) Wait. Yes, wait. She explains: “Government moves slowly, and that goes doubly so for government investigations. It will take time for authorities to even decide if they want to act on the information you bring, let alone take that action.” Read more in The Information.
still more tips
Westpac places immediate ban on payments to Binance crypto exchange – Australian Financial Review
Blockchain Advocacy Group Calls on Congress to Get it Together – Blockworks
Crypto: New. Fraud: Old. – Vox
Pepe, a Frog-Based Memecoin, Is the New Crypto Craze. Move Over, Dogecoin. – Barron’s
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