blockchain tipsheet

SAB 121 this week

On Friday, House Majority Leader Steve Scalise (R, LA) announced his schedule for this week and the resolution rescinding the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121 “may” reappear.

The bottom of the schedule reads:

“Legislation that may be considered:
Veto message to accompany H. J. Res. 109 – Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Securities and Exchange Commission relating to ‘Staff Accounting Bulletin No. 121’. (Sponsored by Rep. Flood / Financial Services Committee)”

What is the “veto message”?

H.J.R.109 passed both House and Senate on a bipartisan basis in May only to receive the President’s veto.

Will Republican House leaders – led by House Financial Services Chair Patrick McHenry (R, NC) – try another vote that overrides the President whose Administration seems to be reeling post-debate? Giving Democrats an opportunity to distance themselves from the President makes logical sense.

Or, will Republican House leaders simply highlight for the voting public that the Democratic President is the one who rejected the resolution which had been approved on a bipartisan basis?

Chair McHenry’s office did not respond to a request for comment.

more tips:

• • Veto Override Procedure in the House and Senate – Congressional Research Service
    Continue reading “SAB 121 ‘Veto Message’ In House This Week; Digital Assets Gets Senate Ag Hearing”

hear ye, hear ye – July 9

The House Financial Services (HFS) Committee led by Chair Patrick McHenry (R, NC) will hold a hearing on Tuesday, July 9, titled “The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System. 10 a.m. start time in Rayburn. See hearing page.

what you should know: Digital assets could pop up here – in particular, stablecoins and the pending “Clarity For Payment Stablecoins Act” [H.R.4766] sponsored by Chair McHenry. Treasury Secretary Janet Yellen has expressed interest in Congress legislating on stablecoins in the past (see February hearing) while advocating for a “federal floor.” Republicans favor a dual banking approach which empowers the States. Also, connecting the discussion of the “Dollar as the World’s Reserve Currency” to stablecoins seems logical for this hearing with international implications.

Meanwhile, Chair McHenry awaits a must-pass in the current Congress intertwined with a final negotiation with Dem leadership and HFS Ranking Member Maxine Waters (D, CA) in order to get his stablecoin bill moving toward law. Continue reading “House Financial Services Hearing With Treasury On Tuesday; Biden Chief Of Staff Gets Blockchain Invite”

Coinbase serves U.S. gov’t

Coinbase may be defending itself against complaints of the Securities and Exchange Commission (SEC) and the regulator’s reluctance to offer any rules on digital assets, but that doesn’t mean other areas of the U.S. government aren’t interested in doing business with the cryptocurrency platform.

From the company blog, Coinbase said yesterday that “…After a comprehensive process, the U.S. Marshals Service (USMS), a division of the U.S. Department of Justice, selected Coinbase Prime as its partner to safeguard and trade its ‘Class 1’ (large cap) digital assets.” Read more.

more tips:

• • USMS awards Coinbase Prime a multi-million dollar contract – Blockworks

what you should know: The Marshals Service needs an exchange it can use to custody digital assets confiscated from criminals as well as turn those digital assets into U.S. dollars. If U.S. regulated “TradFi” banks were allowed to hold and trade digital assets today, they’d likely be a potential solution for USMS, too. But the SEC’s SAB 121 doesn’t allow them. So, Coinbase says, “Thank you very much.” With little competition, Coinbase likely enjoys fatter margins.

hearing next week

Politico reports that Senate Agriculture Chair Debbie Stabenow (D, MI) is moving ahead with a hearing on digital assets regulation next week – July 11 – featuring her former senior counsel, Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam.

Read more (subscription).

The last time Chair Behnam appeared in front of the Senate Agriculture Committee regarding digital assets was the December 2022 hearing looking at crypto platform FTX’s implosion as the Committee tried to resuscitate the Digital Commodities Consumer Protection Act (DCCPA) [S.4760].

This new hearing is potentially an effort by Senate Democrats to shed light on a rumored “DCCPA 2.0” and answers the bell rung by the Republican-led House Agriculture and House Financial Services Committees with their Financial Innovation and Technology for the 21st Century Act (FIT 21) [H.R.4763]. Continue reading “US Marshals Turn to Coinbase For Help; Circle Says Its Ready For New EU Stablecoin Law”

courts – SEC v. Binance

In a court case that may have far-reaching implications across Securities and Exchange Commission (SEC) complaints against Coinbase, Kraken and others, District Court Judge Amy Berman Jackson partially dismissed a complaint by the SEC which said, in part, secondary sales of Binance’s BNB stablecoin token qualify as securities under the Howey test. Read more on X.

Read: SEC v. Binance full decision, June 28, 2024 (PDF) – courtlistener.com

Willkie Farr counsel Mike Selig said on X, “Big loss for the SEC in Binance litigation. Court rejected SEC’s viral theory of securities. Sales of tokens as part of an investment contract security don’t become infected by or embody the contract’s security status. Secondary sales of tokens aren’t necessarily securities.”

Katherine Minarik, chief legal officer of Uniswap Labs (another company in the SEC’s crosshairs), commented about the decision on X:

“[Judge] Jackson expresses concern with the SEC’s approach — not giving issuers a chance to defend themselves, not identifying the full set of assets about which the SEC takes issue. No court wants a dozen cases baked into one case, esp without the right parties or all the facts. (…) This is also why the SEC’s approach to crypto is rightly called regulation by enforcement, not just enforcement. Rulemaking can be built on examples. Court judgments cannot. Judicial opinions and jury verdicts are necessarily fact-specific. It’s basic due process…” Read her tweet thread on X.

more tips:

• • U.S. Judge Lets Most of SEC Case Against Binance Proceed, Dismisses Secondary Sales Charge – CoinDesk

Continue reading “Court Rules On Crypto Token Secondary Sales; IRS Punts On DeFi And Broker Rule”

the debate

There was no crypto mention in the debate. It was just as well.

The story of the presidential debate between President Joe Biden (D) and former President Donald Trump (R) – which was visible to all – made crypto and the many serious issues raised seem insignificant. President Biden experienced difficulty articulating his opinions -particularly at the beginning of the night.

After all the prognostication and hope expressed by crypto industry and media (including this newsletter) that a question about digital assets might seep into the first presidential debate, CNN moderators chose not to raise anything tech-related.

Perhaps ABC News producers will choose differently for the currently-scheduled September 10 debates .

It’s also possible the topic could come up at a vice presidential debate if a date/time is agreed upon by the two parties. Former President Trump is expected to announce his nominee shortly and his running mate would debate current Vice President Kamala Harris.

Problem Solvers on crypto

.At a Punchbowl News event in Washington D.C. yesterday, Rep. Josh Gottheimer (D, NJ) said that post-election, digital assets legislation will be a priority for his bipartisan Problem Solvers Caucus which he co-chairs. Continue reading “Presidential Debate Skips Digital Assets Question; Problem Solvers Caucus Has Plans”

Super PACs are 33-2

CNBC follows the money of recent House and Senate elections and says that crypto Super PACs are 33-2 in primaries.

As a result, several incumbents have been steadily changing their minds – such as Sen. Jon Tester (D, MT), who had previously been anti-crypto.

According to CNBC, Tester recently told reporters that he is open to digital assets legislation bubbling in Congress saying on June 12: “It’s 21st century stuff.” In another sign of reversal, Tester voted for the resolution rescinding SAB 121, too.

Read more on CNBC. Continue reading “Crypto Super PACs Having Election Effect; Rep. Flood On Digital Assets And CODELs”

House returns to White House

The primary creator of President Biden’s 2022 Executive Order on digital assets is returning to the White House after two years in the private sector. Carole House announced on LinkedIn, “I am deeply honored, humbled, and excited to return to government appointed in the Biden Administration, where I am serving as the Special Advisor for Cybersecurity and Critical Infrastructure Policy at the White House National Security Council!” Read more.

From April 2021 to June 2022 – during the time she helped create the E.O. – she was the part of the White House’s National Security Council, where she served as Director of Cybersecurity and Secure Digital Innovation.

Not all of House’s recent private sector service in the past two years was necessarily private.

She has served on Commodity Futures Trading Commission (CFTC) Commissioner Christy Goldsmith Romero Technology Advisory Committee (TAC). In January, TAC’s Subcommittee on Digital Assets and Blockchain Technology –  House is a co-chair –  presented a thoughtful, new study on Decentralized Finance -or DeFi.

With Goldsmith Romero being recommended by the White House for the FDIC Chair currently, the re-appointment makes even more sense.

more tips:

• • Carole House appears as witness at House Financial Services (HFS) FinCEN hearing in February 2024 – blockchain tipsheet
  • “TRM Talks” podcast from January 2024 where House discussed the mechanics involved in the creation of the digital assets Executive Order issued by the White House in March 2022.  She says [at 18:11], “Not everyone was happy with the Executive Order. Some people felt it was too generous. Some, too mean. Overall, I was very pleased – the interagency was very happy with it.” Listen to it.

what you should know: Is the White House truly turning from an “anti-crypto” to a pro-crypto stance? And, does everything change post-election if President Joe Biden is re-elected? Questions remain and House will likely be tasked with growing trust of the Administration in the digital assets community. Votes are at stake. Continue reading “Carole House Returns To White House Digital Role; Trump To Appear At Bitcoin 2024”