Tag: blockchain

new WSJ story

The Wall Street Journal reporting team added another chapter to crypto’s responsibility in terrorist financing. In a follow up to its October 10 story which had caused the publication to issue a correction, yesterday the paper revealed new sources including Israeli blockchain analytics firm BitOK and Israel’s National Bureau for Counter-Terror Financing (NBCTF).  The two organizations affirmed the $93 million in crypto used to finance terrorism in the WSJ’s original story and added still more: “Digital wallets identified by the NBCTF in two of these orders as being connected to the exchanges had received $41 million in crypto, according to research by Tel Aviv-based analytics and software firm BitOK.” Read more.

new WSJ story – reaction

Riot Platforms’ policy executive Sam Lyman, who wrote last week’s Forbes rebuttal of the WSJ findings, said on X of the new WSJ piece, “Another day, another hit piece on crypto. A reminder that these numbers more likely reflect the total volume of crypto that flowed between entities with links to Hamas—not the actual amount of money raised by the organization. Stripped of this context, you get Senators sending panicked letters to the White House with erroneous claims that Hamas had raised ‘over $130 million in crypto.'”

Fortune reporter Leo Schwartz noted a new wrinkle in yesterday’s WSJ article saying on X, “Important distinction – according to WSJ reporting, Hamas crypto usage has shifted from Bitcoin to Tether on Tron.”

what you should know: Make sure to read it. Gotta say – it’s hard to follow and it will be interesting to see if there is more access to the data used for the piece. Also, there is an anonymous quote from an “ex-NBCTF Official”: “It’s a drop in the ocean” regarding the known vs. unknown use of crypto in terrorist financing. This conflicts with the on-the-record testimony of former Chair of Israel’s AML authority Dr. Shlomit Wagman at the October 27 Senate Banking hearing who indicated crypto’s impact was limited in the financing of terrorism and urged more sanctions. But, she did not discount that crypto should be monitored.

midwestern op-ed

Editorial boards of major newspapers are steadily planting their flags on digital asset regulation (WSJ, WaPo). On Friday, the Chicago Tribune’s editorial board expressed its POV in an opinion titled, “SBF made crypto suffer. Now the industry must turn the page.”

The midwestern paper smells a rat in the criticism of crypto.

The Board writes, “We remember when East Coast critics in the 1980s were saying much the same about the financial futures entrepreneurs along LaSalle Street and Wacker Drive who were turning Chicago’s exchanges into world beaters. SBF’s brand of fraud wasn’t peculiar to cryptocurrencies, but rather was the same shameful, garden-variety fraud that could occur (and has occurred) just about anywhere in the world of finance.” Continue reading “WSJ Story Says More Terrorist Financing Via Crypto; IRS Hearing Happens Today”

bicameral CBDC legislation

On Wednesday, Sen. Rick Scott (R, FL) has thrown his “CBDC legislation” hat into the ring with the “Chinese CBDC Prohibition Act” which “prohibit the use of the Chinese Central Bank Digital Currency, also known as the Digital Yuan, by U.S. licensed money service businesses.” See the release. Rep. Blaine Luetkemeyer (R, MO), Chairman of the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions, had originally introduced the legislation in the House back in February.

Also co-sponsoring up for the bill in the Senate were Ted Cruz (R, TX) and Marsha Blackburn (R, TN). Cruz said in a statement, “The Chinese Communist Party intends to use a central bank digital currency to spy on Americans’ private financial transactions. We must eliminate the CCP’s underhanded attempts to gain access to American financial data, that threaten their privacy and undermines our national security. This bill prevents the CCP from monitoring American transactions and financial data.”

what you should know: There are many flavors of Anti-CBDC bills from Republicans in Congress, but what makes this unique is, this bill specifically targets the Chinese central bank’s CBDC.  Moreover, there are national security implications as the stature of the U.S. Dollar, the world’s reserve currency, may increasingly be threatened by China’s Digital Yuan. Continue reading “Scott, Leutkemeyer Target Chinese CBDC; AML Crossroads Approaches”

approps amendments

As negotiations continue on the Hill regarding appropriations, at least two digital asset-related amendments were introduced by Republicans in the House of Representatives yesterday. Reigning in the SEC and CBDCs was the focus.

Majority Whip Tom Emmer (R, MN) said, “[Gary Gensler] is as ineffective as he is incompetent. Fortunately, my nonpartisan appropriations amendment to reign in SEC enforcement abuses against the digital asset industry passed the House today with no opposition. Congress will hold unelected bureaucrats accountable.” Incidents involving Coinbase and Grayscale and the agency’s SAB 121 bulletin are all identified as examples of SEC overreach. See Emmer’s 5-minute statement on the House floor on X.

Rep. Warren Davidson (R, OH) took the opportunity to target CBDCs, a House Republican bugaboo, as an approps amendment.  He said, “Central Bank Digital Currencies (CBDCs) should never be designed, developed, or established. It’s like building the Death Star and saying you won’t turn it on. Today I offered an amendment to stop the creation of [CBDCs]…” On X, see Rep. Davidson’s speech on the House floor.

Emmer’s (here) and Davidson’s (here) amendments were adopted by voice vote in the House.

more tips:

You Can’t Regulate What You Don’t Understand (2.0) – Alex Grieve, Paradigm

cop on the beat

Showing Congress that it’s the “cop on the beat,” the Commodity Futures Trading Commission (CFTC) tallied up its fiscal year 2023 enforcement actions ending September 30, 2023 in a press release yesterday. It’s lead category was “digital assets” in which the regulator “brought 47 actions involving conduct related to digital asset commodities, representing more than 49% of all actions filed during that period.” Overall (digital assets plus everything else), the CFTC said it had “over $4.3 billion in penalties, restitution and disgorgement” in the fiscal year. Read the release.

CFTC Chair Rostin Behnam has long advocated that his agency is the appropriate “cop on the beat” for digital assets cash markets since pre-FTX-implosion and the consideration of the Digital Commodities Consumer Protection Act (DCCPA) in the last Congress. Continue reading “Appropriations Amendments Address SEC, CBDCs; McHenry Sees Crypto Legislative Window”

Fed on CBDCs, stablecoins

The Fed still sees a priority with stablecoin regulation, not so much on Central Bank Digital Currencies (CBDCs) according to The Federal Reserve’s Vice Chair for Supervision Michael Barr at yesterday’s DC Fintech Week event. Paraphrasing Barr, Fortune’s Leo Schwartz tweeted on X, “…the central bank has not yet made a decision on CBDCs, but wouldn’t move forward with a retail version without authorization from Congress and the White House.” Read more  on Fortune.

what you should know: The Fed has yet to publicly suggest that a CBDC is imminent. As Barr stated, Congress would need to authorize a CBDC, too.

Rep. Nickel

Rep. Wiley Nickel (D, NC), a member of the House Financial Services (HFS) Committee, represented Congress at DC FinTech Week yesterday and spoke across a range of digital asset topics. On the stablecoin bill, he remains optimistic with only one issue remaining between the opposing sides, i.e. “state right-ers and having a strong federal floor” for stablecoins. Nickel said that the views were not very far apart and all that remained was the “sausage making process” for the bill to eventually become law.

what you should know: Nickel was among five Democrats on HFS who vote for [H.R.4766] Clarity for Payment Stablecoins Act during the markup in July. Continue reading “Stablecoins and Tokenization Featured At DC FinTech Week; Coinbase Grows Lobby”

digital assets taxonomy

Yesterday’s meeting of the Commodity Futures Trading Commission’s (CFTC) Global Markets Advisory Committee (GMAC) led by Commissioner Caroline Pham revealed the current work of its new Digital Assets Market Subcommittee (DAMS).

Caroline Butler, who is the CEO of Digital Assets at BNY Mellon and heads up the subcommittee with Franklin Templeton SVP Sandy Kaul, explained at the meeting about five (5) work streams currently in motion among the 36 subcommittee members who represent traditional finance and digital asset companies. The works streams include: nomenclature and creating a taxonomy; pre-trade and post-trade requirements across digital assets; governance and risk control frameworks; NFTs and utility tokens; and, digital asset infrastructure. See a slide breaking it all down (JPEG).

what you should know: Considering its ambitious goals, DAMS’ work would appear to be a resource that Congress, CFTC and industry will covet. Meeting video is here.

AML provisions

With the stablecoin and digital asset market structure bills still waiting to reach the House Floor, Blockchain Association’s policy executive Ron Hammond provided his point-of-view on Congress and digital assets legislation momentum yesterday. Hammond said, “At this stage for any of the bills to move forward this Congress, there is a strong push for inclusion of [Anti-Money Laundering (AML)] provisions. It was something that came up multiple times when [House Financial Services (HFS) Committee] voted on the stablecoins and market structure but the Hamas narrative has escalated this.” Read the whole thread. Continue reading “CFTC Committee Sets Ambitious Digital Asset Goals; UK Moves To Stablecoin Stage”

WSJ editorial board

Inspired by the conclusion of the trial of former FTX co-founder and CEO Sam Bankman-Fried, the Wall Street Journal editorial board unleashed an Op-Ed late Friday suggesting new digital assets regulation isn’t needed from Congress when it comes to fraud. The board accuses Securities and Exchange Commission (SEC) Chair Gary Gensler of overlooking FTX and says, “Note to Chairman Gary Gensler: The [SEC] doesn’t need to regulate crypto markets to police malfeasance.” Read the whole magilla.

what you should know: Chair Gensler and his SEC agenda has been known for its overreach among critics. Here, it’s underreach. The right-leaning publication’s editorial board has been a consistent critic of Chair Gensler, a Democrat.

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quick tip – Plenty of public speaking this week in DC with FinTech Week and SIFMA‘s Annual Meeting among highlights.

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Dem lobbyist weighs in

Also in the wake of Bankman-Fried’s conviction on Thursday, Better Markets Dennis Kelleher (a member of Biden 2020 transition team along with SEC Chair Gary Gensler) tells the Associated Press, “There is no need for any special interest crypto legislation which would only legitimize an industry that is used by speculators, financial predators, and criminals.” Read more. The article argues that Congress has not been eager to regulate crypto.

what you should know: A more accurate description could be that Democratic leadership (including Kelleher and Better Markets) along with the The White House do not have interest in digital assets regulation that brings it within the umbrella of the U.S. financial system. Continue reading “WSJ Editorial Board Urges SEC To Police Fraud; Decentralization For Policymakers”

enforcement action

The Securities and Exchange Commission (SEC) has filed another enforcement action against a cryptocurrency company – this time it’s Safemoon and accused it of “perpetrating a massive fraudulent scheme through the unregistered sale of the crypto asset security, SafeMoon” and adding that the executive team “withdrew crypto assets worth more than $200 million.”   See the SEC’s press release.

SEC Crypto Assets and Cyber Unit Enforcement Chief David Hirsch projects skepticism about DeFi, in general, in the announcement, too: “Decentralized finance claims to deliver transparency and predictable outcomes, but unregistered offerings lack the disclosures and accountability that the law demands, and they attract scammers…”

In a Department of Justice press release, the DoJ announced the arrest of the CEO and CTO of SafeMoon, and said it’s still seeking Safemoon’s creator Kyle Nagy.  U.S. Attorney Breon Peace said about the fraud, “…the defendants deliberately misled investors and diverted millions of dollars to fuel their greedy scheme and enrich themselves by purchasing a custom Porsche sports car, other luxury vehicles and real estate.” Read more in CoinDesk.

what you should know: The Safemoon X account, with 1.2 million followers, gives no indication of the lawsuit. But, many commenting on the company’s Halloween tweet – it’s final tweet? – apparently did see it coming.

AML legislation momentum

Yesterday, momentum may be slowed, for now, for Anti-Money Laundering (AML) legislation on digital assets in the Senate as other priorities take over. Politico reports, “After a hearing last week ‘on crypto’s involvement, we’re looking at that — [and] we’re looking at potentially more sanctions on non-state actors, and we’re looking at Iran and Russia,’ [Senate Banking Chair Sherrod Brown (D, OH)] said when asked about legislative developments. He said he didn’t yet know when the next hearing on the topic would be.” Read it. Continue reading “SEC And DOJ Carry Out Enforcement Action Against Safemoon; Today’s Hearing”