blockchain tipsheet

Congressional opinions

Politico took the temperature of Members of Congress on whether or not they’re burning for digital assets legislation. In an article published yesterday, few surprises were elicited, but Rep. Bill Huizenga (R, MI) reiterated a commonly-held belief that – if not for FTX’s implosion – Democrats would be more publicly supportive of legislative efforts.

Rep. Jim Himes (D, CT), who supported the House Financial Services Committee’s stablecoin and digital asset market structure bills, is still worried about problems in the industry telling Politico: “I hear all these promises, but I say, ‘How is this going to change the neighborhood in St. Louis, or the state of Connecticut, or the United States?’ (…) To the average member, [they see] $2 trillion lost over time.” Read more.

SEC appeal denied

The Securities and Exchange Commission’s (SEC) attempt to appeal the Ripple decision has been denied. Fox Business’ Eleanor Terrett reported late yesterday, “[SEC’s motion] for leave to file an interlocutory appeal in the [Ripple] case has been DENIED… the SEC’s motion for certification of interlocutory appeal is DENIED, and the SEC’s request for a stay is DENIED as moot.” See more including the full decision here on X.

Blockworks summarizes the news saying in part, “The court did not find a ‘substantial ground for difference of opinion,’ [Judge Analisa] Torres wrote.” Read more. Continue reading “Capitol Hill Opinions Flourish On Digital Assets; SEC’s Ripple Appeal Denied”

subpoena stick

House Financial Services Chair Patrick McHenry (R, NC) made clear in a tweet on X yesterday that he’s serious about potentially issuing a subpoena to Securities Exchange Commission Chair Gary Gensler, a Democrat, if he doesn’t answer Congressional requests – primarily from Republicans. “SEC Chair [Gary Gensler] refuses to schedule a Commission vote to provide Congress with requested documents. Should Gensler continue to stonewall, Republicans will have no choice but to issue the first subpoena to the SEC from my Committee to compel their production.” See more.

McHenry first broached the subpoena at last week’s HFS SEC oversight hearing.

How serious is McHenry about using an unprecedented subpoena with an SEC Chair? Hard to say. But, the threat of a subpoena could create another lever in negotiations with Democratic leadership as Chair McHenry attempts to get key digital assets legislation (stablecoin and market structure bills) through Congress.

Senate Banking machinations

Politico reported yesterday that Senate Banking Chair Sherrod Brown (D, OH) is under pressure by Senator Elizabeth Warren (D, MA) to advance her Digital Asset Anti-Money Laundering Act (see S.2669), but he’s not convinced. Brown tells Politico, “We’re all trying to figure out what regulators can do and where the holes are that we need legislation (…) That’s the real problem. And I don’t know that Warren’s bill does that.” Read more.

Cato Institute policy analyst Nicholas Anthony commented on X about the news: “Senator Brown is right here. It was a bit bizarre when Senator Warren introduced this bill during the FTX hearing as it would do nothing to address the issues behind FTX, but it would levy a hefty blow to financial privacy for American citizens.” Read Anthony’s blog post on the Warren bill from last December on Cato’s blog. Continue reading “McHenry Threatening Subpoena For SEC Chair Gensler Again; Senator Brown Questions AML Bill”

November floor vote?

With the government shutdown drama arguably delayed until at least November 15, the House vote on the stablecoin (“Clarity for Payment Stablecoins Act of 2023“) and digital asset market structure (“Financial Innovation and Technology for the 21^st Century Act“) bills seems back on track.

Prior to Saturday, crypto bills had been thought to be getting “pushed.”

Then again, how much the shutdown has distracted pro-crypto House members and their staffs, led by House Financial Services (HFS) Chair Patrick McHenry (R, NC) and HFS Digital Assets Subcommittee Chair French Hill (R, AR), from educating their House colleagues on digital assets in advance of a vote, would appear to be another potential roadblock to House passage this year.

And then there’s that cannibis legislation in the Senate. Is that the way through the Senate as Democratic leadership (White House, Senate Banking and Chair Sherrod Brown (D, OH), HFS Ranking Member Maxine Waters (D, CA))  “horse trades” new cannibis banking law for stablecoin law? Senator Kirsten Gillibrand (D, NY) said last week she thinks something is possible.

Meanwhile, Rep. Mike Flood’s (R, NE) “Uniform Treatment of Custodial Assets Act” with its bipartisan HFS Committee support looks like a potential candidate for another markup by House Financial Services. Flood’s bill would nullify the controversial Staff Accounting Bulletin 121 (SAB 121) by the Securities and Exchange Commission (SEC) which has inhibited custody services by heavily-regulated TradFi banks. Democrats, who are frustrated with SEC overreach led by its Chair Gary Gensler, could be most easily convinced on this straightforward bill. Continue reading “November Digital Assets Floor Vote Back On?; Wholesale CBDC Possibilities”

hear ye, hear ye

Today, Securities and Exchange Commission (SEC) Chair Gary Gensler will visit House Financial Services for an “SEC Oversight” hearing beginning at 10 a.m. ET.

See the hearing page with live video

The hearing’s memorandum includes a wide range of potential topics – including digital assets. The SEC’s Staff Accounting Bulletin 121 (SAB 121) is at the top of the list. Industry policy executive Cody Carbone of Chamber of Digital Commerce shared on X: “…After meeting with Committee, expect a lot of continued questions on [crypto] with reactions of recent Court cases (Ripple, Grayscale).”

At the beginning of the Q&A during the last House SEC Oversight hearing in April, HFS Chair Patrick McHenry (R, NC) famously tried to get Gensler to say whether he thought Ether was a commodity or a security – but, to no avail. Gensler demurred.

For this hearing, Republican “push back” is expected. But, where will Democrats land? – other than the HFS Democratic leaders, that is. Ranking Member Maxine Waters (D, CA) and Rep. Stephen Lynch (D, MA) have dutifully supported the White House in past hearings and will no doubt come to Chair Gensler’s defense.

hear ye, hear ye – letter

Late yesterday afternoon, and just in time for today’s oversight hearing, a bipartisan letter from Rep. Mike Flood (R, NE) as well as fellow House Financial Services (HFS) Committee Members Rep. Wiley Nickel (D, NC), House Majority Leader Rep. Tom Emmer (R, MN), and Rep. Ritchie Torres (D,NY) arrived in Chair Gensler’s inbox. The gyst of the letter is that the Congressmen are urging the Chair to approve a spot Bitcoin Exchange Traded Product (ETP) “immediately.” See the letter.

If the spot Bitcoin ETP isn’t topic #1 today in today’s hearing, it will be topic #1A. The Congressmen have purposefully telegraphed their move to the Chair. Continue reading “House SEC Oversight Hearing Today; China Submits USPTO Application On Blockchain”

cannabis for crypto

In an interview with Fortune’s Leo Schwartz on Friday at Messari Crypto’s Mainnet event in New York City, Senator Kirsten Gillibrand (D, NY) divulges a possible way forward for digital assets legislation in the Democratic-controlled Senate and the Senate Banking Committee, specifically – a key roadblock to regulation in the United States in the minds of pro-crypto advocates.

Gillibrand sees the possibilities for some “horse trading” as Fortune’s Schwartz writes, “One possible solution would be reaching a compromise on one of the Senate Banking Committee’s priorities – cannabis banking reforms – where the House and Senate committees would take up each other’s bills. Gillibrand said that she has spoken with [Senate Banking Chair Sherrod Brown (D, OH)] about a compromise along those lines, although declined to comment on his openness to the proposal.” Read more.

Gillibrand still sees her Lummis-Gillibrand Responsible Financial Innovation Act as playing a role in Senate efforts to bring digital assets under the U.S. regulatory umbrella. Overall, the fact that the New York Senator is very public about these possible next steps for legislation is new for any sitting, Democratic U.S. Senator. And her influence shouldn’t be underestimated in that her fellow New York State Senator is the Senate Majority Leader Sen. Chuck Schumer (D, NY).

h/t @AlexanderGrieve Continue reading “Cannibis And Digital Assets Legislation May Meet In Congress; Shutdown Means Slowdown”

Sen. Gillibrand on stablecoins

On Friday, Senator Kirsten Gillibrand (D, NY) appeared at Messari Capital’s Mainnet crypto event in New York City on Friday and talked all things digital assets in a conversation with Crypto Council of Innovation’s Sheila Warren. Sen. Gillibrand was remarkably positive about legislation momentum in spite of what may look like Capitol Hill gridlock due to a divided government. Senator Gillibrand is co-sponsor of the Lummis-Gillibrand Responsible Financial Innovation Act and a member of the Senate Agriculture and Intelligence Committees.

Gilibrand cut to the chase: “…passing a stablecoin bill is the low hanging fruit and we should absolutely try to do that this Congress (by the end of ‘24). I also think that passing a market structure bill is possible this Congress and so those two pieces would be the highest priority. We’ve already done the anti-money laundering and know-your-customer and anti-terrorism financing provisions in the defense bill (see NDAA amendment). It’s there. It’s workable, it’s smart, and it can be implemented. So, I would really hope that we can create a national conversation around at least the two next pieces, because it would make a huge difference. And there’s such a willingness on behalf of the leaders. In the House and the Senate to do this. We just need to create consensus and create momentum with other members understanding what’s at stake and why it’s important.”

Suggesting that the lightweight NDAA amendment covers the AML-KYC piece for digital assets seems to challenge the scope of – and growing number of co-sponsors for – Senator Elizabeth Warren’s (D, MA) “Digital Asset Anti-Money Laundering Act.”

Nevertheless, Gillibrand didn’t hesitate on discussing what’s at stake: “If we can regulate, we can keep markets and we can keep participants. It allows our economy to grow, allows us to compete worldwide, and that’s better for New York, it’s better for America.” Continue reading “Crypto Democrats: Torres Challenges Progressives, Gillibrand Bullish On Legislation”