state of stablecoins
At yesterday’s State of Crypto event produced by CoinDesk in Washington, D.C., an appearance by Senators Cynthia Lummis (R, WY) and Kirsten Gillibrand (D, NY) provided optimism on digital assets legislation. Rather than identifying their own “Responsible Financial Innovation Act” [S.2281] as the low-hanging fruit, they said stablecoin law might be possible very soon. Sen. Gillibrand said, “I think there’s a huge potential for a bipartisan stablecoin bill in both the House and Senate. (…) This is a measurable, doable goal for both chambers to have.” Read more.
more tips:
Opinion: The U.S. Risks Its Position as a Stablecoin Leader – Jason Somensatto, Chainalysis, on CoinDesk
what you should know: Perhaps, a stablecoin bill gets added to a must-pass? This seems like the only hope with the expected stasis of 2024 legislative action caused by the 2024 general election.
Emmer
After the House Republican conference voted privately to nominate Majority Whip Tom Emmer (R, MN) to the Speaker role yesterday, crypto advocates rallied given Emmer’s strong support for digital assets and his desire to keep innovation, its companies and its jobs in the United States.
But a nomination is one thing. A successful election in a House with a slim and rancorous Republican majority is another as witnessed by the previous House Speaker, Rep. Kevin McCarthy (R, CA). Then, in yesterday afternoon, former Republican President Donald Trump’s comments added more controversy.
And just like that, Emmer was out as Speaker. So much for the pledge.
more tips:
Tom Emmer drops out of the Speaker’s race – The Hill
what you should know: For Republicans to sacrifice one of the party’s leaders, again, speaks to what appears to be the inevitable success Democrats will have in the 2024 general election. Blockchain industry execs will be praying Emmer doesn’t quit.
Tax rule deadline
The deadline for comment on the U.S. Treasury and the Internal Revenue Service’s (IRS) broker rule has been extended two weeks to November 13. BUT, the public hearings on the rule are still happening on November 7 and 8. See more in the notice in the Federal Register (PDF).
When the latest proposed rules were published in late August, the blockchain industry was largely aghast at some of their draconian details which had been held over from a problematic section introduced by Congress in the Jobs Act of 2021.
Blockchain Association CEO Kristin Smith explained on X, “For instance, the proposal includes software developers who might have worked on a front-end interface to a DeFi protocol, and bc they did so, the IRS may consider them ‘in a position to know’ about future activity on that protocol…These developers would then have to furnish 1099s and abide by other reporting requirements. This is untenable + would force those persons to stop work or move to more welcoming jurisdictions. As it stands, if this updated definition is adopted by the IRS, it would result in a decimation of the digital assets industry in the U.S.” Read the thread.
what you should know: The decentralized finance battle continues as a centralized government senses a loss of control -a threat. Who didn’t expect this to happen? And it will continue as the United States led by Congress figures out how to embrace decentralization while maintaining the supremacy of the U.S. and the Dollar in the global economy. Perhaps, the bipartisan “Keep Innovation In America Act” [H.R. 1414] introduced in March with 14 co-sponsors including HFS Chair Patrick McHenry (R, NC) and Majority Whip Rep. Tom Emmer, which address a reporting fix with the IRS, could be in play soon.
Rep. Horsford on regulation
Rep. Steven Horsford (D, NV) appeared at a Punchbowl News event in Washington D.C. yesterday and spoke on a range of business topics including regulation – though not specifically digital assets. Horsford, who is a member of the House Financial Services (HFS) Committte, was among six Democrats that voted “for” the digital assets market structure which passed out of Committee in late July.
According to Punchbowl on X, Horsford shared his opinion on Securities and Exchange Commission (SEC) Chair Gary Gensler, also a Democrat, saying, “…he has a lot of respect for the former MIT professor, but: ‘I think it’s important that in this moment that we’re in, we’re not adopting regulations based on what was happening 10-20 years ago.'” This echoes a theme from fellow HFS Committee member Ritchie Torres (D, NY) who believes there is a generational divide in the Democratic Party when it comes to regulation such as digital assets.
what you should know: How the Democratic digital assets regulation generation breaks out…. Horsford is 50, Torres is 35. And the other four Democrats who voted “for” H.R. 4763 in July were: Rep. Wiley Nickel (D, NC), who is 47; Rep. Josh Gottheimer (D, NJ) is 48; Rep. Brittany Pettersen (D, CO) is 41, and Rep. Jim Himes, (D, CT) is 57.
So, if you’re 58 or older and a Democrat… well, you know.
White House crypto policy
Politico confirmed that Senator Elizabeth Warren’s (D, MA) Chief of Staff Jon Donenberg is moving to the White House and its National Economic Council next month: “He’s expected to take over the portfolio of departing Warren alum Bharat Ramamurti, including competition, junk fees, financial regulations, tech policy and student debt relief.” Also, read coverage in The Hill.
It was just last week that Mainnet CEO Ryan Selkis had shared on X a rumor about Donenberg’s new role. Selkis believed it will continue the White House’s hawkish view on crypto policy. Others believed it could signal a softening.
what you should know: Senator Warren maintains her sphere of influence in the White House by letting her trusted Chief of Staff leave. Executive branch digital assets policy will remain circumspect of anything digital assets-related unless there is a new administration.
about the Web3 voter
Coinbase continues advocacy marketing campaigns across the Web that details for Congress and anyone else who will listen, how many U.S. citizens really do love their crypto. See AmericaLovesCrypto.org.
A data point from a Morning Consult survey targeting the thoughts of voters during the November 2022 elections in New Hampshire, Nevada, Ohio, and Pennsylvania reveals: “55% of voters are less likely to vote for candidates who oppose policies that enable web3 (defined as a decentralized, open internet where people have more control over their data).”
what you should know: The survey was taken in September of last year. Where voters stand today could be an issue given FTX’s implosion in November and the rippling side effects at the time such as Gemini Earn, which is now caught up in the New York AG’s fraud lawsuit. On the other hand, arguably, “number go up” solves everything.
innovation safe harbor
Today’s House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion provided a complete agenda for the meeting prior to today’s 10 a.m. start time. The House Speaker drama will hopefully not get in the way.
Memo is here. See the live (and recorded) video is here.
This hearing appears to be mostly about financial technology rather than digital assets, in particular.
Legislation
Witnesses
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- Jodie Kelley, CEO, Electronic Transactions Association
- Ram Palaniappan, CEO, EarnIn
- Jimmie Lenz, Director, Advanced Research & Financial Services, Duke University
- Parris Sanz, Head of Policy and Government Relations, WebBank
- Mitria Spotser, Director of Federal Policy, Center for Responsible Lending
what you should know: The “Financial Services Innovation Act of 2023” which is appended to the meeting could help digital asset companies looking for an exempt “safe harbor” with regulators as the Committee’s memo explains, “The bill allows persons intending to offer a financial innovation to petition specified financial regulatory agencies regarding existing areas of regulation. A petitioner may request a modification or waiver of an agency regulation. The bill sets forth requirements regarding the petition process, a safe harbor for petitioners from enforcement, and enforceable compliance agreements. The bill also establishes Financial Services Innovation Offices at these agencies to assist petitioners.” SEC Commissioner Peirce long-ago recommended a sandbox for digital assets including her 2021 “Token Safe Harbor Proposal 2.0.”
HFS postponement
A Housing and Insurance Subcommittee hearing was cancelled by the House Financial Services (HFS) Committee yesterday afternoon leaving three of the original six hearings for the week including one for tomorrow’s Digital Assets Subcommittee.
what you should know: In spite of HFS Republicans best efforts to carry on as usual, reality appears to have set in as House Speaker business needed to be prioritized. Will voters notice?
still more tips
Grayscale Investments Unveils Grayscale Crypto Sectors and Launches New Partnership with FTSE Russell to Introduce Crypto Sector Index Series – press release
McHenry, Huizenga, Luetkemeyer Demand Treasury Produce Records on Status of Sanctions Against Iran – House.gov
FTC Commissioner Alvaro Bedoya, a digital privacy expert, on plan to hire child psychologists to help regulate social media firms – The Record
Fred Ehrsam At Crypto Venture Firm Paradigm Stepping Down as Managing Partner – The Information