Tag: blockchain

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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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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.

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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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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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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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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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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”

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mining – under the microscope

In a 5,000 word article, The New York Times takes a critical look at Bitcoin mining and identifies 34 Bitcoin mining operations across the United States which it says is putting “immense pressure on the power grid and most finding novel ways to profit from doing so. Their operations can create costs – including higher electricity bills and enormous carbon pollution – for everyone around them, most of whom have nothing to do with Bitcoin.” Read more.

Ben Hertz-Shargel of energy research firm Wood Mackenzie which helps aggregate data for the NYT’s piece says that bitcoin mining is a “a massive financial burden to Texans.” It was only two years ago, in April 2021, that Wood Mackenzie penned “How bitcoin mining can support the energy transition.”

The article’s critique leans more toward additional cost burdens absorbed by consumers adjacent to crypto mining operations versus criticism of mining’s environmental impact. But, both are featured.

more tips:

It would not be surprising to see Senator Elizabeth Warren (D, MA) use the substance of this article to reignite her criticism of bitcoin mining. See her July 2022 letter to the Environmental Protection Agency (EPA) and the Secretary of Energy which raised concerns about mining operations’ environmental impact. Continue reading “Mining Impacting Energy Prices, Environment Says NY Times; China’s Blockchain Platform”

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FedNow and CBDCs

The U.S. Federal Reserve slid out an “FAQ” on Friday regarding its new FedNow payment system. Among the brief series of questions and answers, the Fed tries to debunk the idea that FedNow is replacing cash or has anything to do with a Central Bank Digital Currency (CBDC). It’s an “instant payment system” launching this July.

In the FAQ, the Fed reiterates previous statements on its CBDC strategy saying, “The Federal Reserve has made no decision on issuing a [CBDC] and would not do so without clear support from Congress and the executive branch, ideally in the form of a specific authorizing law. A CBDC would not replace cash or other payment options.” Read the FAQ.

Circle’s Head of Global Policy Dante Disparte tweeted about the FAQ saying it was “a useful myth busting FAQ from the @federalreserve.” Read more.

Meanwhile, on the Unchained podcast last week, Majority Whip Rep. Tom Emmer (R, MN) remains skeptical about FedNow and CBDCs. On FedNow, Emmer said, “Let the private sector do this stuff. This  is our government once again trying to compete with the private sector. This is our government once again, I believe, controlling all finance. You control the money, you control the water -and you control the people. This is literally what defines our freedom, our financial system in our country – our ability to create an idea and then go out and solicit startup  capital. By the way, I should not need my government’s permission or oversight to go out and seek that. That’s the definition of freedom in this country.” Hear the podcast. Continue reading “FedNow Is Not A Cash Replacement Or CBDC Says The Fed”