blockchain tipsheet

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bankers unite in DC

The American Bankers Association is producing its Washington Summit this week as its members glad-hand on Capitol Hill while pushing for various banking industry priorities. The agenda for today and tomorrow includes a powerful, bipartisan group of DC politicos involved in banking regulation and legislation. “Crypto” will inevitably come up even though the topic is not mentioned in the agenda.

Each day also includes its own live stream link (see below). You can register for the virtual show here, too.

Notable Speakers for Today, March 21 (All times are Eastern Time)
Livestream for Day 1 is here.

• • 10 a.m. – Secretary of the Treasury Janet Yellen – Keynote plus conversation with ABA President and CEO Rob Nichols
  • 10:30 a.m. – Sen. Steve Daines (R, MT) – Member of the Senate Banking Committee “and co-sponsor of the SAFE Banking Act”

Notable Speakers – Wednesday, March 22
Livestream for Day 2 is here.

• • 9:00 a.m.  – Sen. Sherrod Brown (D, OH), Senate Banking Ranking Member
  • 9:40 a.m. – Rep. Maxine Waters (D, CA) – House Financial Services Committee Ranking Member
  • 10:15 a.m. – Sen. Tim Scott (R, SC) – Senate Banking Ranking Member
  • 11:00 a.m – Rep. Patrick McHenry (R, NC) – House Financial Services Committee Chair

is crypto banking dead?

American Banker –  no relation to ABA – asks the reader rhetorically, “Is crypto banking dead?” in the title of an article which provides evidence of a “Choke Point“-like operation going on in the U.S. government and at the Federal Deposit Insurance Corporation (FDIC), in particular.

“Hundreds of banks that were working with NYDIG, a New York technology company, to let consumers track their bitcoin purchases and sales through their mobile banking apps, have been told by the FDIC to slow down, according to people familiar with the matter,” reports Penny Crosman of American Banker. ” Adam Shapiro of Klaros Group tells Crosman, “Banks are going to read the tea leaves, read what does appear to be some quite visceral dislike of the sector from senior regulators.” Read more. Continue reading “Bankers Unite With Lawmakers; Digital Assets Sliced Off Signature Bank Sale”

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state law, then federal

Local news outlet Cowboy State Daily reported last week that Senator Cynthia Lummis (R, WY) “will try again for a national [digital assets] regulatory framework that would make at least some of Wyoming’s framework national.” As she said at the Milken conference two weeks ago, Lummis promises an updated version of her Responsible Financial Innovation Act (RFIA) originally introduced in the 117th Congress and co-sponsored by Senator Kirsten Gillibrand (D, NY). Lummis notes, “(Wyoming’s laws) are yet another example of how states are incubators of innovation. (…) And certainly, when it comes to the world of digital assets, the Wyoming Legislature has truly been way ahead of the rest of the nation, including Congress, in its vision.” Read it.

March 29 hearing

Late Friday, House Financial Services Chair Patrick McHenry (R, NC) and Ranking Member Maxine Waters (D, CA) announced a hearing for March 29 focused on the demise of Silicon Valley Bank (SVB) and Signature Bank. Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg and
Federal Reserve Vice Chair Michael Barr are scheduled as witnesses. Read the release.

Continue reading “House Financial Services Convenes March 29; U.S. Bank Crisis May Delay Crypto Legislation”

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give up all the crypto

Majority Whip Rep. Tom Emmer (R, MN) continued to keep the focus on bank regulators yesterday after sending a letter to FDIC Chairman Martin Gruenberg, a Democrat, on Wednesday. Emmer tweeted a Reuters article and pulled the following quote: “Any buyer of Signature must agree to give up all the crypto business at the bank, the two sources added.” Read Reuters (subscription). And, read Decrypt.

Hearings seem inevitable in the House on the oft-alleged “Choke Point“-like initiative within the U.S. government. Hearings may be tempered with a bipartisan desire to successfully drive legislation (such as stablecoins) through Congress and to the President’s desk for signature.

On the other hand, Rep. Emmer tweeted later, “It’s clear the Biden administration is weaponizing market chaos to kill crypto.” See Emmer’s interview on Fox.

FedNow – this summer

“Instant” payments product FedNow developed by the Federal Reserve is expecting to roll out in July. See the announcement from Wednesday.

Axios covers the Federal Reserve’s imminent rollout of FedNow and suggests that it may go head-to-head with crypto: “Advocates of a central bank digital currency (CBDC) say adoption could, for one, facilitate faster payments. FedNow, at least domestically, may fill that gap – possibly removing a key part of the pitch for the U.S. to adopt a CBDC.” Read more. Continue reading “FedNow Versus Stablecoin Debate; Emmer Raises More FDIC-Crypto Concerns”

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probing the FDIC

House Majority Whip Rep. Tom Emmer (R, MN) announced on Twitter that he has sent a formal letter to Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg, a Democrat, “regarding reports that the FDIC is weaponizing recent instability in the banking sector to purge legal crypto activity from the U.S.”

In the letter, Rep. Emmer expresses his deep concerns about a coordinated, politically-motivated effort to undermine crypto and asks Gruenberg to answer three questions beginning with: “Has the FDIC instructed banks under its supervision to not provide crypto firms banking services?”

Read the entire 2-page letter.

This isn’t the first time Emmer has sent a critical letter to the FDIC and its Chairman, Martin Gruenberg. Last year, he accused the bank regulator of “cronyism.” See that release which was supported by a large group of Republican House members.

crypto use case

Wired looks at how Ukraine and other humanitarian efforts – such as The United Nations High Commissioner for Refugees (UNHCR) – have been aided by the use of digital assets. One such use case involves stablecoin USDC: “The system works like this: The UNHCR delivers USDC, a crypto coin locked to a $1 valuation and hosted on the Stellar network, to a digital wallet that can be accessed via smartphone. The recipient then exchanges their coins for local currency at any MoneyGram facility.” Read this one. Continue reading “Majority Whip Emmer Confronts FDIC; Plumbing The Bipartisan With Senator Tillis”

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sending a message

Former Democratic Congressman Barney Frank (D, MA) has been caught up in the latest crypto drama with his role on the board of now-failed Signature Bank which was shutdown by the New York Department of Financial Services (NYDFS) on Sunday.

Frank, who co-authored the Dodd-Frank Act coming out of the Great Financial Crisis in 2008,  saw more sinister implications than just a “bank run.” He told CNBC, “I think part of what happened was that regulators wanted to send a very strong anti-crypto message… We became the poster boy because there was no insolvency based on the fundamentals.” Read more. Sounds like more Choke Point 2.0?

NYDFS Superintendent Adrienne Harris said in a press conference yesterday, “Signature Bank had a broad depositor base. The idea it is a crypto bank is not an accurate one. They banked small business all over New York…”  See the video (at 10:15).

your money is no good here

Senator Elizabeth Warren (D, MA) signaled her strong dissatisfaction with the bank deposit coverage plan announced Sunday by bank regulators. In a New York Times editorial, she writes, “…it’s no wonder the American people are skeptical of a system that holds millions of struggling student loan borrowers in limbo but steps in overnight to ensure that billion-dollar crypto firms won’t lose a dime in deposits.” This is likely in reference to the Circle (issuers of the USDC stablecoin) deposits held by Silicon Valley Bank, which was shutdown due to a run on the bank. Read more. Continue reading “Former Congressman Frank Says U.S. Regulators Sending Anti-Crypto Message”

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historic weekend – U.S. Treasury

In an historic joint statement on Sunday afternoon led by U.S. Treasury along with The Federal Reserve and The Federal Deposit Insurance Corporation (FDIC), the bank regulators announced 100% of all deposits would be covered by the FDIC for two failed banks – Silicon Valley Bank (SVB) and Signature Bank – and any other “eligible depository institution” (i.e. a bank) that might show signs of imminent insolvency. The bank failures were the second and third largest in U.S. history.

Floating along in the financial flotsam and jetsam was Circle, issuers of the USDC stablecoin, as well as other crypto companies whose deposits were trapped at the failing institutions (more below) and could have potentially lead to catastrophic consequences for the businesses. 

The move by the bank regulators also averts a gathering storm of “bank runs” among small, regional U.S. banks this week where depositors would have fled with their funds to the safe haven of much larger banks (Citi, J.P. Morgan, etc.).

The statement:

“After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank (SVB), Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”

That last line means shareholders of failed banks get nothing unlike some banks in the 2008 financial crisis. Continue reading “U.S. Bank Regulators Say Deposits Will Be Covered For Failed Banks; Crypto Sighs With Relief”