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Keeping Tabs on Bitcoin in El Salvador

ACES Act

The “Accountability for Cryptocurrency in El Salvador Act” or “ACES Act” (S.3666) took another step forward this month as the Congressional Budget Office reported its estimation of costs to fulfill the Act.

The bi-partisan legislation is sponsored by Senator Jim Risch (R, ID) and co-sponsored by Senator Bill Cassidy (R, LA) and Robert Menendez (D, NJ) as part of their efforts on the Senate Foreign Relations committee.

As Protocol notes, the Senators position this as a study to make sure the US financial system is not impacted negatively by El Salvador’s cryptocurrency experiment. A glass-half-full opportunity of this legislation could be to understand benefits accrued to the tiny Central American nation by its adoption of bitcoin as a legal currency. But, there’s no mention of that angle.

Published on the CBO site today, the details and costs are summarized:

“In 2021, El Salvador officially adopted a cryptocurrency as legal tender. S. 3666 would require the Department of State to report to the Congress on the details and ramifications of that action. The bill also would require the department to devise, implement, and report to the Congress on a plan to mitigate any potential risk to the U.S. financial system from El Salvador’s action and similar actions by other countries.

On the basis of information about the costs to prepare similar reports, CBO estimates that satisfying that requirement would cost less than $500,000 over the 2022-2026 period. Such spending would be subject to the availability of appropriated funds.”
Continue reading “Keeping Tabs on Bitcoin in El Salvador”

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McHenry Proposes New Regulator for Digital Assets -not SEC or CFTC

Patrick McHenry

The Securities and Exchange Commission (SEC)  is not set up to handle the digital assets world said Rep. Patrick McHenry (R, NC) at a Punchbowl News event in DC today.

“I fundamentally think that the Securities Exchange Commission and the CFTC lack that capacity to well-regulate this new innovation,” McHenry told interviewer Anna Palmer. “I think you have to have a separate regulatory sphere for digital assets… that is neither the SEC nor the CFTC.”

Welcome to the Digital Assets Trading Commission (DATC)? Digital Assets Exchange Commission (DAEC)? 

As it relates to stablecoins, specifically, and regulatory infrastructure, McHenry said that existing regulators could handle it. Moreover, he seemed mildly optimistic about recent stablecoin proposals by the Biden administration as it related to his party’s emerging proposals (such as here and here).

Continue reading “McHenry Proposes New Regulator for Digital Assets -not SEC or CFTC”

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What’s in Your Crypto Wallet? McHenry and More in DC This Week

Congressman Patrick McHenry

Congress is returning to action on Capitol Hill this week and blockchain-related happenings include…

On Thursday, April 28 at 10:00 AM ET, The House Committee on Financial Services Committee will convene for a two-part hearing beginning with FinCEN: “Oversight of the Financial Crimes Enforcement Network.” And then, following in the afternoon at 2 PM ET, the committee will hear, “What’s in Your Digital Wallet? A Review of Recent Trends to Mobile Banking and Payments.” Perhaps, the nod toward a Capital One marketing slogan (“What’s in your wallet?”) was unintended, but blockchain payment rails and cryptocurrency will likely be a hot topic. Webcast available here.

Also in the U.S. House of Representatives, the Committee on Financial Services will hear “Consumers First: Semi-Annual Report of the Consumer Financial Protection Bureau” on Wednesday, April 27 at 10 am ET. Get the webcast here. The Consumer Financial Protection Bureau Director Rohit Chopra will participate in the semi-annual review of results. It’s possible that cryptocurrency could come up here as banking transparency and regulation is discussed. The day before – on Tuesday, April 26 at 10am – the Senate Committee on Banking, Housing and Urban Affairs who will also meet with Director Chopra as well as consider “the nominations of Ventris C. Gibson, of Virginia, to be Director of the Mint, and Paul M. Rosen, of California, to be Assistant Secretary for Investment Security, both of the Department of the Treasury.” It’s unlikely the Mint discussion will include NFTs – but maybe someday? See the Senate hearing webcast.

Continue reading “What’s in Your Crypto Wallet? McHenry and More in DC This Week”

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Digital Wallets and Financial Inclusion Reviewed by CRS

Digital Wallets

In a report from the non-partisan Congressional Research Service published on Monday, Congress gets a look at the digital wallet landscape as lawmakers consider the implications ranging from anti-money laundering (AML) laws to consumer privacy.

Titled “Digital Wallets and Selected Policy Issues” (PDF here), CRS analysts Paul Tierno and Andrew Scott outline the three types of cryptocurrency wallets beginning with custodial wallets which “execute digital asset transactions on the account holder’s behalf and log them on the custodian’s books (or ‘offchain’) rather than on the distributed ledger blockchain of the coin.”

What are likely of more interest to lawmakers are the other two options: non-custodial wallets and cold-storage wallets which offer more privacy and are perceived to be harder to track by authorities concerned about criminal enterprises whether by individuals, groups or nation states.

Policy considerations for Congress according to CRS: Continue reading “Digital Wallets and Financial Inclusion Reviewed by CRS”

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Bitcoin Spot ETF ‘Hot Take’: It’s Time

Axios on Crypto

In today’s Axios live webcast, Axios crypto reporter Brady Dale asked law professor J.W. Verret of George Mason University, if the long-awaited spot ETF is ready for prime time.

Brady Dale: The argument against a Bitcoin ETF for allowing people in their brokerage accounts to own Bitcoin, through publicly traded instruments has mainly been the market is too small and it’s too easy to manipulate. But, the market is now three times bigger than it was when the Winklevoss brothers first proposed an ETF in 2017.  How big do you think it needs to get before it’s big enough for a spot Bitcoin ETF?

J.W. Verret: I think it’s already big enough. And if the SEC were judging the Bitcoin spot ETF applications by the same metric they’ve used in the past for other ETF applications, they would have approved it already in the same way that Canada and Germany have and the same way I expect Australia will eventually. So I think we’re just behind other comparable nations. And it would be nice if the SEC said, ‘Look, here’s what’s required in order to obtain full approval.’ It’s also interesting to that the SEC recently approved a futures ETF application is based on the 33 Act and not the 40 act. In that way, SEC Commissioner Gary Gensler has already crossed the red line that he previously said he wouldn’t cross with respect to Bitcoin ETFs that gives a lot more wind behind the sails of folks like Grayscale and other applicants for Bitcoin ETFs. I think it’s just a matter of time.

Brady Dale: Can you explain the red line he crossed? Continue reading “Bitcoin Spot ETF ‘Hot Take’: It’s Time”

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Former SEC Chair Expounds on State of US Government Regulation in Crypto

Empire podcast with Jay Clayton

What exactly is current SEC Chair Gary Gensler dealing with in terms of crypto regulation today?

This may be “it” as outlined by former SEC Chair Jay Clayton on Blocksworks revelatory April 4 “Empire” podcast.

Subscribe to the podcast here: Apple | Spotify.

Sure, Gensler is appointed by a Democratic president while Clayton’s appointment occurred during the Trump Republican administration. But, one senses that the game remains the same across political parties. Clayton shares towards the end of the episode, “I’m very empathetic to whatever Gary has to do. Because if the million American households are invested in the markets, it’s your job to do the best you can for them. But you’re not going to make everybody happy. That’s that’s just life…” Overall, Clayton is unequivocal that the crypto industry in the financial and regulatory world has come a long way in a short time.

Blockworks Jason Yanowitz and Santiago Roel Santos ask many important questions on crypto and smartly zoom out for a wider look at the financial landscape including the Great Financial Crisis in the 45-minute discussion. They also give Clayton a wide berth for his responses and they’re rewarded as Clayton seems to get a few things off his chest.

Highlights include… (lightly edited for clarity) Continue reading “Former SEC Chair Expounds on State of US Government Regulation in Crypto”

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U.S. Partisan Politics Courts Satoshi

Peter Thiel at Bitcoin 2022

Three things are for sure given Peter Thiel’s speech last week at Bitcoin 2022 in Miami…

Thiel likes Bitcoin.

And, he likes Ethereum “if it works.”

And, he also thinks the crypto community can be galvanized into supporting the Republican Party.

Today, Politico’s Stephanie Murray reports that FTX Digital Markets co-CEO Ryan Salame has started his own political action committee (PAC) called, “American Dream Federal Action.”

Murray quotes from a statement on the PAC’s raison d’être: “forward-looking Republican candidates who want to protect America’s long-term economic and national security” and “forward-looking conservative leaders who understand the urgency of advancing smart policies that set America up for success.”

But then on the home page for the site, “conservative” and “Republican” were omitted leaving plain ol’: “forward-looking candidates who want to protect America’s long-term economic and national security.”

Beyond the editorial theater, the message is out. Crypto is going partisan. More precisely, some of its supporters, as well as opportunists, are making it partisan. Another milestone!

The question will be how much U.S. crypto holders and their proponents listen – a notoriously free-thinking, libertarian group at its core where the last thing anybody wants is to be centralized around a single human being (Satoshi excepted, and maybe Vitalik).

Thiel laid down the gauntlet last week ascribing the “woke” descriptor – i.e. Democrat – on TradFi luminaries Warren Buffett, Larry Fink and Jamie Dimon for liking on “blockchain technology,” ESG investing and hating on Bitcoin. It’s not clear that the audience was totally buying into Thiel’s argument. But, it was entertaining and oft-quoted while potentially signaling wider efforts by Thiel and other partisan interests as fall Congressional elections approach in the U.S.

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The National Treasure: Our Data

Eye of Providence

What if there was privacy, but there was still identification -of everything?

SafeGraph CEO Auren Hoffman’s new treatise entitled, “It’s Our Moral Obligation to Make Data More Accessible,” sees a world of opportunity ahead if access to data troves can be unleashed to the innovators of today. Read it here.

As Hoffman begins to make his case, the Silicon Valley entrepreneur twists the knife of “morality” into the reader’s gut:

“We have a MORAL OBLIGATION to get this data into the hands of millions of innovators. Not doing so is a true failing of society. This data can save hundreds of millions of lives and help all of humanity … which means not using it hastens the death of hundreds of millions of people.”

No doubt privacy advocates and related special interests will initially convulse at the thought of opening data stores to hoodied entrepreneurs, well-meaning or not. But after being at the front lines of the digital data revolution, Hoffman has put his reputation on the line and seems ready to fight.

It should also be noted that the treatise fits well within his current company’s mission “towards making our vision (to democratize access to data) a reality.”

Continue reading “The National Treasure: Our Data”