Here’s today’s blockchain tipsheet… prefer it by email? Sign up here.
stablecoins – Waters urges push
Even though the House is not in Session this week, Ranking Member Rep. Maxine Waters (D, CA) of the House Financial Services Committee was talking stablecoin legislation with Yahoo Finance.
Rep. Waters: “I believe the legislation could be passed when we get back to Congress… in [the space of] a few days. We had just about solved all of our problems. The only thing that interfered I think, with this passage (late last year) was the anticipation that the House was going to change, and it was going to be in the hands of the Republicans, and they should take charge rather than those of us on the Democratic side (…). And so I think it’s ready to go and we have resolved most of our issues, and I think we can get it done.”
On a timetable – this month, end of Spring, end of 2023?
Rep. Waters: “Well, I’m not gonna give you a timetable because there’s always uncertainty in negotiations and the way that things get done in Congress. But I want to tell you that I’m focused on it, [Chair Rep. Patrick McHenry (R, NC)] is focused on it. We have a bipartisan effort that we put on it, and we’re gonna do it as quickly as we possibly can.”
Tip: This is arguably the most urgency we’ve heard publicly on stablecoin legislation from anyone in the U.S. Congress – ever.
stablecoins – full reserve, please
CEO Jeremy Allaire of Circle, issuers of stablecoin USDC, said on CNBC Squawk Box Europe: “We’ve heard very clearly from Congress, the Fed, Treasury, FSB, G20 and even SEC Chair Gensler himself that payment stablecoins that are designed as mediums of exchange and that are held to the appropriate prudential standards should absolutely be regulated as that kind of payment technology. And that’s where policymakers everywhere seem to be going. Prudential regulators supervising stablecoin issuers.” He wants full reserve stablecoins with cash held at the Fed –and the legislation that makes it law. See the interview.
Tip: Late yesterday, Circle provided an update on its blog: “…as part of our ongoing initiatives to strengthen the USDC reserve, we now hold the cash portion of the reserve at BNY Mellon, except for limited funds held at transaction banking partners in support of USDC minting and redemption. The majority of the reserve is invested in the Circle Reserve Fund, managed by BlackRock and custodied at BNYM, which is principally comprised of short dated U.S. Treasuries.”
Addressing the Independent Community Bankers of America (ICBA) in Hawaii, Federal Reserve Governor Michelle Bowman delivered a speech titled, “The Innovation Imperative: Modernizing Traditional Banking.” In spite of the title, Bowman appeared to keep up the drumbeat by the Federal Reserve warning about crypto. The ICBA with its focus on smaller, community bank members was no doubt “all ears” given the events of the past few days in the U.S. banking system.
Bowman said: “It is absolutely critical that innovation not distract banks and regulators from the traditional risks that are omnipresent in the business of banking, particularly credit, liquidity, concentration, and interest rate risk. These more traditional risks are present in all bank business models but can be especially acute for banks engaging in novel activities or exposed to new markets, including crypto-assets.” Read it.
government shutting down crypto
The Wall Street Journal Editorial Board dives into the collapse of Signature Bank and its involvement in crypto. Commenting on Signature board member and former Rep. Barney Frank’s (D, MA), author of Dodd-Frank coming out of the 2008 financial crisis, the WSJ says, “Mr. Frank once famously said he wanted to ‘roll the dice’ to ramp up lending on Fannie Mae and Freddie Mac before they failed. Signature seems to have done the same as it dove into crypto during the Federal Reserve-fueled financial mania.”
The op-ed concludes with an underlying theme about government motivation for shutting down Signature Bank: “Mr. Frank is getting a painful education in the difficulty of running a company when politicians don’t like the business you’re in.” Read more.
Meanwhile, multiple news outlets report that the New York Department of Financial Services issued another statement saying, “the decisions made over the weekend were not crypto related.” Read more on Decrypt.
- The crypto ‘contagion’ that helped bring down SVB – Politico
- U.S. Treasury Poised to Release View on How DeFi Used in Illicit Finance – CoinDesk
- Tether Becomes Unlikely Crypto Winner in Banking Crisis – The Wall Street Journal
- Opinion: The Crypto Bros Are Fast Becoming Unbankable – The Washington Post
- Binance Stops Deposits and Withdrawals for UK Customers – Gizmodo
If you would like this delivered as a newsletter, please sign up here.