warning crypto lawyers
At a continuing legal education event run by the American Bar Association last Thursday, Securities Exchange Commission (SEC) Chair Gary Gensler participated in an interview where he offered his view on lawyers involved with crypto clients.
Fintech policy publication Capitol Account, which covered the event, reported that a show of hands revealed roughly 40% of the audience’s lawyers were working in crypto. Gensler responded, “That’s your field, if those are your clients…without pre-judging any one of them. And the public if they lose trust in this little area (crypto), this little corner of the market, and you as gatekeepers facilitate that? That hurts the rest of the market, too.” Read more in Capitol Account.
Crypto publication CoinDesk named Chair Gensler to its 2023 Most Influential list last week. In appreciation, the Chair responded on X on Friday, “Thank you @CoinDesk, I guess?”
what you should know: The message coming from Democratic leadership – including Chair Gensler – to industry remains, “If you touch crypto, stop touching.” Its message to voters is “We are going to stop crypto in the U.S.” The big question: will voters care enough to make it a needle-mover in the 2024 general election one way or the other?
SEC sanction update
“The [Securities and Exchange Commission] wants more time to respond to a judge’s accusation that it made ‘materially false and misleading representations’ in a lawsuit against the crypto company DEBT Box.” Fortune reporter Leo Schwartz on X
2024 – agenda
Even though House Financial Services (HFS) Committee Chair Patrick McHenry (R, NC) has announced his retirement after this Congress, he told Politico’s Zach Warmbrodt on Friday that he’s not slowing down on a 2024 agenda which will include digital assets as a top priority. McHenry believes “his biggest challenge on the crypto bills is ‘politics.’ He said Senate Banking Chair Sherrod Brown (D, OH) and Sen. Elizabeth Warren (D, MA), who have pushed back on his proposals, are leaving consumers worse off,” writes Warmbrodt. But, McHenry takes a glass-full approach to Treasury’s recent request for more anti-money laundering (AML) powers by offering an opportunity for Congressional action. Read more.
what you should know: If digital assets law is going to happen, it would seem an amendment to a “must-pass” bill of the 118th Congress will continue to be the most likely option. Chair McHenry will be working on his legacy, too, so perhaps 2024 will include more digital assets legislation than originally thought.
2024 – government funding
On Tony Edward’s Thinking Crypto podcast, Blockchain Association government relations executive Ron Hammond talked about the timing possibilities of digital assets legislation in 2024 and he was far from sanguine due to the government funding debacle. Speaking to the pro-crypto throngs, Hammond said, “I just want to warn folks -[HFS Chair Patrick] McHenry has been saying, ‘Q1 2024,’ but it’s gonna get really divisive, really soon. And we could be having a shutdown pretty soon if Republicans and Democrats don’t find a way to work together. And that could delay any crypto legislation for quite some time.” Hear more.
HFS Chair process
With the conclusion of Chair Patrick McHenry’s (R, NC) leadership on the House Financial Services Committee a little more than a year away, George Leonardo of Cap Hill Crypto points to a helpful Congressional Research Service report and discusses the Congressional process ahead.
“Members seeking a chairmanship are interviewed and selected by a ‘Steering Committee’ (composed of party leadership and conference reps from various regions and levels of seniority) at the start of each new Congress, and must be confirmed by the full House,” explains Leonardo. He continues, “Factors considered by the Steering Committee include seniority, fundraising ability, geographical distribution, policy priorities, and more.” Read Cap Hill Crypto.
what you should know: Whether Ranking Member Maxine Waters (D, CA) continues to lead the Democratic caucus on House Financial Services in the next Congress has not been double-confirmed yet. One would assume, but…
Tether embraces OFAC
Tether, which issues the largest US Dollar-backed stablecoin, said in an announcement over the weekend that it was now coordinating with the U.S. government: “On December 1, 2023, the company made the decision to initiate a new voluntary wallet-freezing policy designed to combat activity connected with Sanctioned persons on the Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) List.” Read the release.
The Block reports that “the move appears to be one of the first significant moves made by CEO Paolo Ardoino, the company’s former CTO who took the helm this month.” Read that one.
what you should know: The pressure continues to build on the crypto industry to regulate and monitor itself as the U.S. government and Congress, with its various Anti-Money Laundering / Countering the Financing of Terrorism bills and amendments, threatens it with stricter and more draconian steps.
At Least They Asked This Time: Treasury Department’s Crypto AML Power Wish List Is a Non‐starter – Cato Institute
Treasury’s Letter; HFSC Hearing on Financial Innovation and Regulation – DeFi Education Fund
use case – bill of lading
With nearly all bills of lading used in transport of cargo still paper-based, blockchain-based technoogy is being introduced through a new system tied to the Swift payment network. Ledger Insights explains that Swift “completed a second Proof of Concept (PoC) to enable interoperability between siloed electronic bill of lading (eBL) solutions. BNY Mellon and Deutsche Bank participated in the trials that involved four blockchain-based eBL platforms.” Read more. And, read Swift’s press release here.
market risk meeting
On Friday, Commissioner Kristin Johnson of the Commodity Futures Trading Commission (CFTC) announced the agenda for today’s Market Risk Advisory Committee (MRAC) meeting. The half-day meeting will conclude with a 20-minute session dedicated to the “Future of Finance” with participation by Jai Massari of Lightspark, which builds payments infrastructure using the Bitcoin Lightning Network.
On Friday, House Financial Services (HFS) Digital Assets, Financial Technology and Inclusion Chair French Hill (R, AR) drew several of his colleagues to a “field hearing” in Little Rock, Arkansas. In an opening statement, Chair Hill said, “As fintech continues to expand and develop, we’ve reached a critical inflection point where it is embedded in communities across the United States, including right here in Little Rock.” Read his statement.
Members who joined included Rep. Wylie Nickel (D, NC) and Rep. Mike Flood (R, NE). The Subcommittee’s Ranking Member Stephen Lynch (D, MA) was scheduled to join but was hosting a Cabinet member in Boston.
what you should know: Back in August, Hill joined Rep. Warren Davidson (R, OH) and attended an unofficial HFS Committee hearing called Flyover Fintech hosted by Rep. Flood. No matter the party in charge, support for innovation and entrepreneurship remain a hallmark of House Financial Services.
still more tips
“The eccentric pro-tech movement known as ‘Effective Accelerationism’ wants to unshackle powerful A.I., and party along the way.”- The New York Times
The Other Party is hoping to bring blockchain-powered democracy to the UK – The Block
El Salvador Could Rake In $1B Bitcoin Investment per Year With New ‘Freedom VISA’ – CoinDesk
Circle and Nubank Partner to Increase Digital Dollar Access in Brazil (Dec. 5) – Circle
Crypto media site Decrypt merges with decentralized media firm Rug Radio – Axios