Tag: blockchain

‘horse trading’ begins

Punchbowl News’ Brenden Pedersen reported on X yesterday that “Rep. Patrick McHenry (R-NC) has threatened to block the bipartisan FEND Off Fentanyl Act’s inclusion from the annual defense package if leading House crypto legislation isn’t included.” Sen. Chuck Schumer (D, NY) “flagged” McHenry’s threat in a lunch with Senate Democrats yesterday, according to Pedersen.

more tips:

“Inside Patrick McHenry’s crypto scramble – The North Carolina Republican has made crypto his top priority as chair of the HFS Committee” – Politico

what you should know: Is it the stablecoin bill? Digital asset market structure bill? Both? “Ask for a lot, get a little” may be McHenry’s negotiation strategy. Pedersen promised updates… The digital assets Anti-Money-Laundering (AML) amendment in the NDAA could enter the mix, too. Read more on X from Politico’s Eleanor Mueller.

horse trading – Treasury

Deputy Treasury Secretary Wally Adeyemo has sent a letter to leaders of the Senate Banking and House Financial Services Committees asking for more power for his agency when it comes to digital assets. Politico’s Sam Sutton reports, “The letter, along with an accompanying term sheet with legislative proposals, marks a significant development in efforts to subject digital asset firms to the same anti-money laundering rules that apply to banks, asset managers and other traditional Wall Street institutions.” Read more.

what you should know: More “horse trading” from Democratic leadership and The White House. Continue reading “Negotiations Over Digital Assets Legislation Intensify On The Hill; New HFS Subcommittee Hearing”

digital yuan win

Has capitulation to the Digital Yuan as the new digital currency of the Internet begun?  Ledger Insights reports that UK multinational Standard Chartered, which services Asia, Middle East and African markets, said that its bank in China “is amongst the first foreign banks to take part in the digital yuan business pilot. It has started providing digital RMB exchange and redemption services via City Bank Clearing.” Read it. No doubt there will be many such announcements in the days, months, years to come and with the full support of the Chinese government.

Singapore-based Temasek Holdings is believed to have a 17% stake in Standard Chartered.

what you should know: Can you say, “Threat to the global hegemony of the U.S. Dollar”? Hello, national security implications. If lawmakers need encouragement on digital assets legislation (i.e. the stablecoin bill, in particular), this is it. For some, this will renew focus on creating a U.S. Central Bank Digital Currency (CBDC), too.

spin move

With the settlement of U.S. government charges against cryptocurrency platform Binance announced last week (and the SEC’s still pending), Coinbase CEO Brian Armstrong sees light at the end of the tunnel for his industry.  Armstrong told CNBC yesterday,  “The enforcement action against Binance… that’s allowing us to kind of turn the page on that and hopefully close that chapter of history...” Read it. Armstrong was in the U.K. on Monday for the Global Investment Summit, an exclusive event which encourages foreign investment in the United Kingdom. He told CNBC that “he is ‘impressed’ with U.K. Prime Minister Rishi Sunak’s leadership when it comes to digital currencies and that Coinbase was investing more in the U.K. as a result.” Continue reading “Digital Yuan Gets Multinational Banking Partner; Spinning Out Of Binance”

grumbling about Gruenberg

The tenure of Martin Gruenberg at prudential bank regulator Federal Deposit Insurance Corporation (FDIC) remains on shaky ground as the agency’s embarrassing harassment scandal continues to envelop the Chairman, who is a Democrat. Last Wednesday, Republican members of the House Financial Services demanded he recuse himself from any internal investigation. Is Gruenberg’s resignation imminent? TradFi publication American Banker doesn’t think so – yet.  The Biden Administration reportedly won’t bail on their appointee unless things get worse.

fintech fumble at OCC

The Office of the Comptroller of the Currency (OCC) appointed a much-heralded deputy comptroller and chief financial technology officer, Prashant Kumar Bhardwaj, last April. He was to be the first person at the OCC to specifically police fintech firms and the banks that power them – except his resume was allegedly a fraud. Read more in the Information.

Sometime between June and August, a few months after being hired, Bhardwaj was quietly replaced by an OCC insider.

Will OCC’s Acting Comptroller Michael Hsu, a Democrat, feel some Congressional heat soon?

more tips:

What Happened to the OCC’s Chief Fintech Officer? (Sept. 10) – Fintech Business Weekly Continue reading “Grumbling About Gruenberg; OCC Takes A Fintech Hit”

OpenAI drama

With the news breaking late Friday that OpenAI CEO Sam Altman had been fired by his board, the media was scrambling to make sense of it: what it means for artificial intelligence, investing and the players involved.

Coinbase CEO Brian Armstrong, a Silicon Valley veteran, provided his “take” on X: “If this is really some EA (effective altruism), decel, AI safety coup at OpenAI, the board just torched $80B of value, destroyed a shining star of American capitalism, and will be sued to high heaven by investors. Every talented employee at OpenAI should quit and join Sam/Greg’s new thing (if they make one). This time, skip the woke non-profit board, eject the decels/EAs, maintain founder control, avoid nonsensical regulation, and just build. Accelerate progress. You are building something good for the world, don’t let anyone make you feel guilty for it and try to capture it for their own motives.” And that wasn’t all. Read more from Armstrong.

latest:

Sam Altman Not Returning As CEO Of OpenAI – The Wall Street Journal

Continue reading “Coinbase CEO Armstrong On OpenAI Drama; FDIC’s Gruenberg Under Pressure”

stablecoin deal

House Financial Services Ranking Member Maxine Waters (D, CA) says her side is ready to move along stablecoin legislation according to Politico. “We continue to be in a relationship on stablecoins (…) We want to get it. We’re working with them — our staffs are still working,” Waters tells Politico’s Jasper Goodman. Her suggestion is that “a deal” is possible by the end of the year.  Read it.

what you should know: Back in March, the Ranking Member was optimistic about stablecoin legislation saying, “I believe the legislation could be passed when we get back to Congress… in [the space of] a few days.” And then in April at the first stablecoin hearing of the 118th Congress, she said the stablecoin bill had “no chance….” Are things really different this time? The pre-emptive (Federal floor, etc.) vs. states right issue is the main point of contention. But even solving this may not mean Dem leadership led by the White House – not Waters – is going to want a stablecoin bill to pass. Since FTX’s implosion, Dems have appeared to believe being “anti-crypto” is a winning position for the 2024 general election.

offshore USD stablecoins

As the United States arguably falls behind in creating a digital assets regulatory framework, more countries are opening up to the issuance of – local – U.S. dollar-backed stablecoins. Continue reading “Waters Says Stablecoin Bill Deal Possible ‘This Year’; Paxos Issues Offshore USD Stablecoin”

letter – SAB 121

Staff Accounting Bulletin 121 (SAB 121) was the topic of a new letter by pro-digital assets members of Congress sent yesterday to prudential regulators (OCC, Federal Reserve, FDIC and the National Credit Union Administration). See the letter (PDF).  The letter raises the October 31 determination by the Government Accountability Office that SAB 121 was a clear overreach by the securities regulator.

So why mail the prudential regulators? Congress wants them to step up, publicly, and NOT enforce SAB 121 as the supporting press release explains, “The lawmakers are urging the regulators to clarify that SAB 121 is not enforceable considering the Government Accountability Office’s (GAO) finding that it constitutes a ‘rule’ for purposes of the Congressional Review Act (CRA).” Read the release.

The letter’s signers were bicameral and bipartisan and included House Financial Services (HFS) Chair Patrick McHenry (R, NC), Senator Cynthia Lummis (R, WY), Senator Kirsten Gillibrand (D, NY), Rep. French Hill (R, AR), Rep. Ritchie Torres (D, NY), Rep. Mike Flood (R, NE) and Rep. Wylie Nickel (D, NC). Continue reading “Congressional Letters Fly On Digital Assets; CFTC Chair Admits Regulation May Be ‘Many Years’ Away”

regulatory breakthrough

In an interview on CNBC’s Squawk Box, CEO Cathie Wood of investment management firm Ark Invest said she think it’s possible for Bitcoin to reach $500,000 by 2025 or 2026. She saw a spot Bitcoin ETF as a key catalyst. She explained, “I think this regulatory breakthrough (the ETF) is very important to bring institutions online, effectively. I think BlackRock and Coinbase’s partnership is going to be very important. The other thing that is going to be very important – way back in 2018, Cambridge Associates, which advises institutions, said, ‘You may not like it. But, you better have a point-of-view because this is a new asset class, it’s a source of diversification..’ and we would add,  it’s a hedge – if you are talking about Bitcoin, in particular – against both inflation and deflation…” See a bit more of the interview on X.

more tips:

“it’s been a ten year dress rehearsal. we’re ready for the main event.” – Michael Sonnenshein, CEO, Grayscale on X

what you should know: We may know as soon as this week on Bitcoin spot market ETF approval by the Securities and Exchange Commission. More likely is approval by January. Continue reading “Regulatory Breakthrough With Bitcoin ETF; Digital Assets Hearing On Illicit Financing Today”

digital assets tax

Yesterday’s IRS public hearing titled, “Gross Proceeds and Basis Reporting by Brokers and Determination of Amount Realized and Basis for Digital Asset Transactions,” on its proposed digital asset tax rules lasted two hours and featured 12 witnesses who each offered 10-minute presentations on their views.

The hearing was lead by counsel from the IRS and attorneys with Treasury’s Office of Tax Policy.

11 of the 12 participating witnesses were decidedly critical of the proposed digital asset rules.

The complete hearing transcript is here.

Shehan Chandrasekera, head of tax strategy at CoinTracker, was among the witnesses and distilled his views on the proposed rules on X, “If implemented as proposed, the broker regulations will likely generate a significant amount of incomplete and inaccurate data for all stakeholders in the chain. That includes brokers, the IRS, and taxpayers. And, we are very concerned about this. We have recommendations to solve this issue and enhance traditional information reporting. Read Cointracker’s comment letter.

Marisa Tashman Coppel, senior counsel at Blockchain Association, prefaced her testimony on X saying, “The Proposal exceeds Treasury’s statutory authority, is overbroad and vague, and violates the APA and the Constitution – including the 1st, 4th, and 5th Amendments.” Read her tweet thread. Also, read Blockchain Association’s 39-page comment here (PDF).

One unique area impacted by the rules are collectibles known as non-fungible tokens (NFTs).  NFT marketplace OpenSea participated in the hearing and represented not only its own interests but that of artists and collectors. On the teleconference, OpenSea general counsel Gina Moon discussed the IRS’ digital assets tax proposal and how it doesn’t work with her company’s platform. “Collectibles are not representations of value though it may have value,” she began. Read her company’s 16-page comment here. In addition to addressing the proposed rules, there’s a condensed discussion of the NFT market and how it works.

more tips:

“The IRS Should Heed This Warning – Devs are not brokers” – Bill Hughes, counsel at Consensys, on CoinDesk

what you should know: Unlike Congressional hearings, this one felt devoid of politics in spite of the fact Treasury is run by Secretary Janet Yellen, an appointee of the Biden Administration. The IRS’ tone was one of learning and appreciation for testimony. At least yesterday it was. Continue reading “Digital Assets Tax Proposal Hearing Gets Critical Feedback; Senate Banking And Prudential Regulators”