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House Democrats Unify Against Current House Stablecoin Bill

Stablecoin Hearing

Stablecoins finally had their hearing as the House Financial Services (HFS) new Subcommittee on Digital Assets, Financial Technology and Inclusion gathered at the Rayburn House office building for “Understanding Stablecoins’ Role in Payments and the Need for Legislation.”

The hearing proved that, for the most part, bipartisanship on Capitol Hill has rapidly dissolved on digital assets legislation. Furthermore, it appears Democrats have unified around an anti-crypto positioning. Rep. Ritchie Torres (D, NY) and Rep. Wiley Nickel (D, NC) may be the only exceptions among those who spoke during the Subcommittee’s hearing.

The prospects for new United States digital assets regulation – other than enforcement of current securities and commodities laws – could be closed for this Congress.

the hearing

The HFS memorandum for the hearing set the stage with a definition of stablecoins: “Stablecoins are a class of digital assets designed to offer price stability by being pegged to another asset’s value.” And, a witness list of mostly pro-crypto, industry representatives provided the input on not only the stablecoin and digital asset industry, but on the new stablecoin bill (PDF) first revealed over the weekend.

witnesses:

    • Adrienne Harris, Superintendent, New York State Department of Financial Services (prepared testimony – PDF)
    • Dante Disparte, Chief Strategy Officer and Head of Global Policy, Circle (PDF)
    • Austin Campbell, Adjunct Assistant Professor of Business, Columbia Business School (PDF)
    • Jake Chervinsky, Chief Policy Officer, The Blockchain Association (PDF)
    • Delicia Reynolds Hand, Director, Financial Fairness, Consumer Reports (PDF)

opening statements

Subcommittee Chair Rep. French Hill (R, AR) started the hearing off with his own opening comment reaffirming the interest of the HFS Committee to introduce a stablecoin bill emanating from the last Congress “when the clock ran out.” Hill named the bill “Maxine McHenry” after the Ranking Member Rep. Maxine Waters (D, CA) and Chair Rep. Patrick McHenry (R, NC).

As Hill reviewed the bill, he said that it would inhibit any possibility of a “run” and urged Members to move quickly thereby encouraging innovation, protecting consumers and move toward bringing clarity for digital assets beginning with stablecoins.

Subcommitee Ranking Member Rep. Stephen Lynch (D, MA) reviewed the need for stablecoins in his opening statement and then dropped a bomb. He suggested it’s worth reviewing whether stablecoins are even needed in wake of FedNow and a Central Bank Digital Currency. And then he revealed his disapproval of the bill given it was made pre-FTX implosion and listed his significant reservations. This was surprising – this bill had been driven by Ranking Member Waters, in part.

After a brief statement by Chair McHenry, Ranking Member Waters then spoke and clarified the Democratic position saying that the bill posted was no longer relevant given events at the end of last year (FTX), needed to be renegotiated and expressed disappointment in the way the bill has been pushed by Republicans. Continue reading “House Democrats Unify Against Current House Stablecoin Bill”

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Wholesale CBDC Opportunity Says Fed Governor Bowman; Stablecoin Hearing Today

Stablecoins

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CBDC – The Fed

Yesterday, Federal Reserve Governor Michelle Bowman commented “on the evolution of the money and payments landscape” including central bank digital currencies (CBDCs) at Georgetown University in Washington, DC.

She shared specific questions on what Congress should be asking and concluded: “From my perspective, there could be some promise for wholesale CBDCs in the future for settlement of certain financial market transactions and processing international payments.” But the “direct access,” consumer-level digital dollar (CBDC) with its privacy risks among concerns seemed “difficult to imagine,” she said. Read her speech. Bowman is a Republican.

CBDC – Israel

The Bank of Israel outlined on Monday potential scenarios for a CBDC of its own and known as “a digital shekel.” In a statement, the Bank explained, “A decision to issue a CBDC by the US or the European Union, or by a significant number of other developed economies, would be an important factor to the issuance decision in Israel. The probability of such a development in the next few years is significant.” Read the statement.

more tips:

Potential Scenarios for Deciding to Issue a Digital Shekel (PDF) – Bank of Israel

Future payment methods > Digital Shekel (CBDC) – Bank of Israel Continue reading “Wholesale CBDC Opportunity Says Fed Governor Bowman; Stablecoin Hearing Today”

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Partisan Questioning of SEC Chair Gensler Leads To Few Surprises In HFS Oversight Hearing

HFS and the SEC

Today’s hearing of the House Financial Services (HFS) Committee hearing on Oversight of the Securities and Exchange Commission (SEC) started before it began as the Committee’s Republicans led by Chair Patrick McHenry (R, NC) fired off a condemnation of SEC Chair Gary Gensler’s handling of digital assets in advance of the hearing’s start.

See the letter (PDF). And, see the accompanying press release.

In the letter, HFS Republicans called out Chair Gensler for misrepresenting his agency’s willingness to perform registration of digital asset companies. “You have been outspoken in your push for digital asset trading platforms to ‘come in and register’ under the national securities exchange (NSE) framework. Yet, at the same time, you have failed to provide a path that allows digital asset trading platforms to register.” With HFS Committee member Rep. Warren Davidson (R, OH) already threatening Gensler on Twitter with the loss of his job through a new, yet-unseen bill that would restructure the SEC, the stage was set for a combative meeting between HFS Republicans and Chair Gensler.

opening statements

As the hearing began, Chair McHenry called the meeting to order and began with his opening statement (read it) criticizing the SEC Chair on his digital assets “regulation by enforcement” agenda. He also noted that rule-making by the SEC had doubled under Gensler’s leadership. And he concluded with a condemnation of Gensler’s lack of response to Congressional Republicans requests of the SEC for information related to FTX and other issues. .

In her opening statement, Ranking Member Rep. Maxine Waters (D, CA) wasted no time in her opening statement (read it) in defense of Chair Gensler and called the investigations by Republicans as a “sham.” She blamed Republicans for alignment with Wall Street interests and the rejection of climate change rules for investing, hedge fund reforms and what she called deregulation. She applauded Chair Gensler for his strong enforcement of securities laws as it related to crypto.

Next up were Rep. Ann Wagner (R, MO) and Rep. Brad Sherman (D, CA) took brief turns on the far ends of criticism and compliments of Chair Gensler, respectively.

In his opening remarks, Chair Gary Gensler pivoted off a tweet he had carefully made before the hearing with the statue of lawmaker Sam Rayburn in the Rayburn House Office Building. He argued that artificial intelligence (AI) and not crypto was a more important topic as he looked ahead at his purview at the SEC, suggesting roboadvisors will be transformed to name a few of the impacts. The markets should serve investors not the other way around, he said.

See Chair Gary Gensler’s prepared testimony on the SEC website.

Q&A

HFS Chair McHenry began the question and answer of Gensler around whether Ether was a commodity or a security. Gensler never answered directly as much as Chair McHenry tried even if he did not seem very surprised.

Ranking Member Rep. Waters asked Gensler to explain to Chair McHenry how a security is defined. He indicated it’s a four-part test and provided some detail. Rep. Waters asked if Gensler had the framework he needed to bring crypto into compliance. Unsurprisingly, Gensler said he has what he needs. “I’ve never seen a field (crypto) that is so non-compliant,” said Gensler. Continue reading “Partisan Questioning of SEC Chair Gensler Leads To Few Surprises In HFS Oversight Hearing”

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House Financial Services Oversight Hearing On SEC Today; UK And Digital Assets

Financial Services SEC Oversight Hearing

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today’s HFS showdown

Today is the day for the long-awaited Securities and Exchange Commission (SEC) oversight hearing  by House Financial Services Committee led by its Republican majority. SEC Chair Gary Gensler will undoubtedly be grilled by the Republican side about digital assets and climate initiatives the SEC has undertaken recently as well as a general lack of responsiveness according to Republican members. See last week’s letter (PDF) from HFS Chair Patrick McHenry (R, NC) and Oversight Subcommittee Chair Bill Huizenga (R, MI).

The hearing will begin at 10 a.m. ET today at the Rayburn House Office Building and the agenda as well as live webcast can be found here.

How Democrats act or react during the hearing may be of more interest.  Will it be a full-blown defense of Chair Gensler and therefore the Biden Administration? HFS Ranking Member Maxine Waters (D, CA) will likely be leading the defense. Or will they join the Republican critique in any way?

stablecoin hearing – another witness

Another witness has been added to tomorrow’s HFS Subcommittee on Digital Assets, Financial Technology and Inclusion hearing “Understanding Stablecoins’ Role in Payments and the Need for Legislation.” Delicia Reynolds Hand, Director, Financial Fairness, Consumer Reports will join four industry members. Agenda here.

According to a 2022 press release announcing her new role at Consumer Reports, Ms. Reynolds experience includes 10 years at the Consumer Financial Protection Bureau. And prior to that time, she served as Senior Counsel to Rep. John Sabanes (D, MD). Read the release.

more tips:

The addition of Reynolds, another Democrat, to the witness list (NYDFS’ Adrienne Harris is a Dem) emphasizes the importance of cultivating bipartisanship support for the new stablecoin bill (PDF) by HFS Chair McHenry in partnership with Ranking Member Waters. A divided Congress demands cooperation across the aisle for successful passage of any legislation. Continue reading “House Financial Services Oversight Hearing On SEC Today; UK And Digital Assets”

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Potentially Historic U.S. Stablecoin Bill Arrives; T-Shirt Requires SEC Registration

Stablecoin bill

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stablecoin bill – arrival

It has arrived.  History in the making?

In anticipation of this Wednesday’s hearing in front of the Subcommittee on Digital Assets, Financial Technology, and Inclusion, the House Financial Services (HFS) Committee unveiled a discussion draft on Saturday of the new, 73-page stablecoin bill (PDF) – “To provide requirements for payment stablecoin issuers, research on a digital dollar, and for other purposes.”  This bill has been the pet project of Chair Rep. Patrick McHenry (R, NC) and Ranking Member Maxine Waters (D, CA) since last year.

The hearing will be led by Chair French Hill (R, AR) and Ranking Member Stephen Lynch (D, MA), and appears to offer the argument on why a stablecoin regulatory framework is needed in the first place.

stablecoin bill – memo and agenda

In a memorandum produced by House Financial Services for the hearing,  definitions lead: “Stablecoins are a class of digital assets designed to offer price stability by being pegged to another asset’s value. The most popular stablecoins are currently pegged to the U.S. dollar. Stablecoins, as the name implies, are intended to be less volatile than other digital assets and sufficiently stable to enable them to be used in a similar manner to currency.” See the HFS memo (PDF).

Wednesday’s agenda currently includes a state regulator among industry participants.

    • Adrienne Harris, Superintendent, New York State Department of Financial Services (NYDFS)
    • Dante Disparte, Chief Strategy Officer and Head of Global Policy, Circle
    • Austin Campbell, Adjunct Assistant Professor of Business, Columbia Business School
    • Jake Chervinsky, Chief Policy Officer, The Blockchain Association
    • “Additional Witness”

The “additional witness” would seem to ideally include a representative of U.S. Treasury (FDIC?) which has been identified by Chair McHenry in the past as a key participant in the creation of the bill.

Agenda updates, including the live stream, will be here on the HFS website.

stablecoin bill – reaction

Jeremy Allaire, CEO of USDC stablecoin issuer Circle, commented on Twitter regarding the bill, “While comprehensive, there are clearly open and challenging issues with the bill as proposed, and now is the time for our country and political leaders to really dig in and get this right. The role of the dollar in the world is at stake.”

Continue reading “Potentially Historic U.S. Stablecoin Bill Arrives; T-Shirt Requires SEC Registration”

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House Financial Services Hearings Coming This Month; UK And France See Crypto Interest Uptick

Digital Assets hearings

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hearings – stablecoins

House Financial Services’ (HFS) Digital Assets, Financial Technology and Inclusion Subcommittee will reconvene next Wednesday, April 19 at 10 a.m., with a hearing titled, “Understanding Stablecoins’ Role in Payments and the Need for Legislation.” Led by Chair Rep. French Hill (R, AR) and its Ranking Member Rep. Stephen Lynch (D, MA), no agenda is available on the HFS website, yet.

more tips

Digital Chamber’s Cody Carbone tells blockchain tipsheet there is a Markup scheduled for April 26 (Will it include a stablecoin bill?).

And, House Financial Services’ Digital Asset Subcommittee will hold a hearing titled “Identifying the Regulatory Gaps in the Digital Asset Market Structure” on April 27.

Digital Assets, Financial Technology and Inclusion Subcommittee – clerk.house.gov

hearings – Gensler and HFS

Next Tuesday’s House Financial Services oversight hearing of the Securities Exchange Commission (SEC) will give the committee’s Republican members its first chance to question SEC Chair Gary Gensler in person in the 118th Congress. The 10 a.m. hearing will undoubtedly review Chair Gensler’s Howey-Test-is-enough positioning for a digital assets regulatory framework.

HFS Chair Rep. Patrick McHenry (R, NC) and HFS Subcommittee on Oversight and Investigations Chair Rep. Bill Huizenga (R, MI) sent a February letter to Chair Gensler in regards to the curious timing of the arrest of FTX founder Sam Bankman-Fried (SBF) – just prior to his scheduled appearance in front of House Financial Services late last year.

The Congressmen received no response from Chair Gensler, so they followed with another letter (PDF) yesterday.

Continue reading “House Financial Services Hearings Coming This Month; UK And France See Crypto Interest Uptick”

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Future of U.S. Digital Assets May Be In The Courts; Blockchain Use Cases For Digital ID And Settlement

Amicus Brief

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amicus future

Increasingly, the future of U.S. digital assets appears to be playing out in the courts rather than through legislative action. Grayscale, Ripple, Wahi… and now in the case of ongoing industry concerns about the sanctioning of crypto mixer Tornado Cash by U.S. Treasury and what it represents, industry orgs DeFi Education Fund and Blockchain Association put their legal team to work on an amicus brief.

In a Twitter thread, DeFi Education Fund explains: “In the brief, we argue that OFAC’s sanctioning of Tornado Cash reflected ‘a basic misunderstanding of what Tornado Cash is and how it works,’ and that the decision ‘is both unprecedented and unlawful’ under the [Administrative Procedure Act].” Read the thread.

more tips:

Amicus Brief in support of Tornado Cash Brief of Blockchain Association and DeFi Education fund as Amici Curiae in Support of Plaintiffs’ Motion for Partial Summary Judgment (PDF) – DeFi Education Fund

What is amicus curiae? – law.cornell.edu

debating CBDCs

Rep. Warren Davidson (R, OH) and Rep. Bill Foster (D, IL), both members of the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion, explore different facets of the Central Bank Digital Currency (CBDC) opportunity/threat – depending on your point-of-view – in a 7-minute informational video on A Starting Point.

Addressing the pros and cons of CBDCs, Rep. Davidson was unsurprisingly the stronger skeptic given most Republicans anti-CBDC stance to-date, but Rep. Foster offered his own reservations as well: Continue reading “Future of U.S. Digital Assets May Be In The Courts; Blockchain Use Cases For Digital ID And Settlement”

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SEC Investor Committee Says Crypto Tokens Are Securities; New State Of Crypto Report

SEC Investor Advisory Committee

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investors advise enforcement

A letter dated April 6 from the Securities Exchange Commission’s (SEC) Investor Advisory Committee (IAC) – and now published on the SEC’s website – appears to fully support the position of Chairman Gary Gensler on what should be done about digital assets.

The letter reads, in part: “We believe that virtually all, if not all, crypto tokens are securities and that they, as well as the platforms and custodians dealing with them, are subject to regulation under the federal securities laws to protect investors. (…) The SEC should continue to be aggressive in bringing enforcement actions against companies that are violating the federal securities laws in the crypto space, including, issuers, custodians and those acting as unregistered platforms that offer trading in crypto asset investments.”

Read the letter (PDF) – SEC.gov

Among a wide range – in terms of industry – of the letter’s signers is the IAC’s Chair Christopher Mirabile, a venture investor at Boston-area Launchpad Venture Group. It was only in December that Mirabile discussed his role in the committee and was quoted on the Angel Next Door podcast as saying, “The only way crypto really thrives is if we provide it with a regulatory framework that protects investors.” Read that one. Did he change his mind?

Continue reading “SEC Investor Committee Says Crypto Tokens Are Securities; New State Of Crypto Report”