Tag: blockchain

pro-crypto platform wins?

On Tuesday, in a Democratic primary battle for the U.S. Senate seat held by retiring Sen. Ben Cardin in Maryland, Angela Alsobrooks trounced three-term Congressman Rep. David Trone by 12 points. She’ll meet former Maryland governor Larry Hogan in November. Read more.

Did crypto have an impact on the results?

Back in March, Politico chronicled the pro-crypto inclinations of both Alsobrooks and Trone and the potential influence of the crypto lobby in the race. See more.

But, Rep. Trone took what could be described as an “anti-crypto” stance last week by following Democratic leadership and it may have cost him. He voted against the House resolution which rescinded the SEC’s SAB 121. Trone had been leading the race just a month ago according to polls.

Consequently on Tuesday night, digital asset supporters on X were quick to proclaim Alsobrooks’ triumph a victory for the pro-crypto POV.

what you should know: There is no sign of spending by crypto lobbies on the Maryland Senate race –yet. See OpenSecrets.org.

letter – saving Joe Biden

A new Congressional letter from North Carolina Democrat Rep. Wiley Nickel asks Securities and Exchange Commission (SEC) Chair Gary Gensler to withdraw the regulator’s controversial guidance Staff Accounting Bulletin 121. SAB 121 and the custody of crypto.

See the letter.

Nickel’s reasoning for the withdrawal is novel. Continue reading “Crypto Votes In Maryland Senate Race; Rep. Nickel Wants To Save Joe Biden On Digital Assets”

crypto mixer – developer convicted

Can a coder be convicted of money laundering even if all he did was the coding for a crypto mixing service?

In the Netherlands, the answer is “yes.” In the U.S., we’ll see.

Alexey Pertsev, one of the developers of Tornado Cash, a crypto mixer, was sentenced yesterday in a Netherlands’ courtroom to a prison term of five years and four months for laundering $2.2 billion in crypto assets. According to DL News, Judge Henrieke Slaar said, “Tornado Cash in its nature and functioning is a tool intended for criminals…The criminal user is fully facilitated.” Read more.

more tips: 

• • The ruling against Pertsev, in Dutch, is here.

crypto mixer – reaction

Coin Center’s Peter Van Valkenburgh commented on X, “I’m sad for Alexey and angry that the money laundering laws in the Netherlands have such a low threshold for intent, essentially mere negligence.”

Given there is a case currently pending  in U.S. courts against the developers of Tornado Cash brought by the Department of Justice, he added, “Nothing in this ruling should prejudice or carry weight in Roman Storm‘s case in the [Southern District of New York].” Read Van Valkenburgh’s tweet thread.

In early April, Coin Center, DeFi Education and Blockchain Association brought three separate briefs supporting the Tornado Cash developers.

Meanwhile, Treasury and Congress has taken note of the crypto mixer challenges.

Last October, Treasury proposed a new rulemaking “that identifies international Convertible Virtual Currency Mixing (CVC mixing) as a class of transactions of primary money laundering concern.” Read more. Continue reading “Crypto Mixer Developer Gets 5 Years In Netherlands Court; SAB 121 Vote Today In Senate”

this week – prudential hearings

Prudential regulators – the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board of Governors (Fed), the Federal Deposit Insurance Corporation (FDIC) – will be meeting with the House Financial Services (HFS) Committee on Wednesday and Senate Banking on Thursday.

There are no digital assets topics on the HFS Committee’s memo (PDF), but the prudential group has been active in the digital assets discussion with the Committee in the past.

In March 2023 (letter) and then again in November 2023 (letter), HFS Chair Patrick McHenry (R, NC), and Senator Cynthia Lummis (R, WY) spearheaded an effort to get the prudential regulators to admit that SAB 121 was a bad idea, in so many words.

The House passed a resolution last week rescinding SAB 121 – the Senate, and then the President will be next.

Scheduled to appear on Wednesday at the HFS hearing are:

• • Michael Barr, Vice Chair, Federal Reserve
  • Martin Gruenberg, Chair, FDIC
  • Michael Hsu, Acting Comptroller, OCC

what you should know: The literal “elephant in the room” for both hearings will be FDIC Chair Martin Gruenberg and his resignation which Republicans want and Dem leadership does not want (such as Senate Banking Chair Sherrod Brown (D, OH) – read) over the recent sexual harassment scandal at the FDIC. Read about it in the WSJ.

more: DOJ, money transmission

Following up on news from Punchbowl on Sunday, Senator Cynthia Lummis’ (R, WY) office published a press release yesterday about the Congressional letter penned by the Senator and Senate Finance Chair Ron Wyden (D, OR) expressing concerns to Attorney General Merrick Garland. The Senators say that the DOJ’s recent interpretation of what constitutes a money transmitter – rules originally set up by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) – are troubling. Continue reading “Prudential Regulators Join Oversight Hearings This Week; Tornado Cash Decision Today”

bills this month – FIT 21

According to a statement Friday, the digital asset market structure bill  – a.k.a. “Financial Innovation and Technology for the 21st Century Act” or FIT 21 [H.R.4763] – from House Agriculture and House Financial Services (HFS) will finally reach the House floor later this month after getting approved in separate markups last July.

HFS Chair Patrick McHenry (R, NC) said, “For far too long, the U.S. digital asset ecosystem has been plagued by regulatory uncertainty that has stifled innovation and left consumers unprotected… This comprehensive market structure legislation—the Financial Innovation and Technology for the 21st Century Act—is the culmination of years of bipartisan efforts to finally provide clarity. This includes an unprecedented joint effort by the House Financial Services and Agriculture Committees…” Read the HFS statement.

According to the Floor schedule, FIT 21 will come up the week of May 20 with amendments due this Thursday, May 16.

what you should know: Politico’s Eleanor Mueller reports on X that Majority Whip Tom Emmer’s (R, MN) Securities Clarity Act [H.R.3572] has been added to a revised version of the bill among other edits for the bill.

Like H.J.R.109, the vote for FIT 21 will be a view into the crypto “soul” of the Democrat caucus.  Already in the HFS markup last July (House Ag’s markup was a voice vote), six Democrats voiced support for FIT 21: Rep. Ritchie Torres (D, NY), Rep. Wiley Nickel (D, NC), Rep. Josh Gottheimer (D, NJ), Rep. Steven Horsford (D, NV), Brittany Pettersen (D, CO) and Rep. Jim Himes, (D, CT).  And, since the markup, Republicans have been working with various Dems to add more edits and amendments to grow support.

FWIW, Rep. Himes, Horsford and Pettersen did not support H.J.R.109.

Therefore, will even more Dems support FIT 21 than the 21 Democrats who supported rescinding the SEC’s Staff Accounting Bulletin 121?

(By the way.. 21.. crypto’s lucky number?) Continue reading “FIT 21 To Get House Floor Vote – How Many Dems Will Follow?; Blockchain Bills Heading To Floor, Too”

Senate and SAB 121

With the House passing the joint resolution to rescind the SEC’s Staff Accounting Bulletin on Wednesday – with an unexpected 21 House Democrats joining the Majority Republicans – the ball is now in the Senate’s court.

Yesterday, Senator Cynthia Lummis (R, WY), who is guiding the Senate version of the resolution – S.J.Res.59, tweeted, “I am proud the House passed the bipartisan SAB 121 CRA led by [Rep. Mike Flood (R, NE)] and [Rep. Wiley Nickel (D, NC)]. We cannot allow the administration to regulate tools for financial freedom out of existence. Time for the Senate to swiftly overturn this misguided rule.” See the tweet.

what you should know: And swiftly they must. It appears possible that the “privileged” resolution could reach the Senate floor next week. Assuming Senate Republicans will unify and vote “no” as their colleagues did in the House, the difference of opinion on digital assets among Senate Democrats will be in full view. It will only take a few to put the resolution on the President’s desk.

will Biden veto?

Does President Biden use his veto power – as he threatened on Wednesday – on something as relatively small as rescinding SAB 121 which could potentially raise crypto up as even more of an issue in the 2024 general election?

The halcyon days of the Executive Order on Digital Assets of March 2022 have been replaced at the White House (FTX and Sam Bankman-Fried didn’t help) into defensive posturing, if not hostility, when it comes to crypto. Dem leadership appears to believe being “anti-crypto” is a winning issue in November. And the veto would make Democrats very publicly “own it.” Continue reading “Trump Embraces Crypto, Taunts Gensler, Biden; Senate And SAB 121 Next Week?”

SAB 121 resolution – passage

H.J.Res 109, which rescinds the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121 – a “guidance” preventing regulated banks from providing crypto custody – was easily passed in the House yesterday by voice vote.

Given the Republican majority, the result was not surprising.

In the wake of the voice vote, House Financial Services (HFS) Chair Patrick McHenry (R, NC) asked for a roll call vote likely seeking to shed light on support across the aisle.

Minority Whip Katherine Clark (D, MA) told House Dems to vote “No” on the resolution.

But just as the roll call vote was to begin, Rep. Marjorie Taylor Greene (MTG) disrupted the floor proceedings with a motion to remove Rep. Mike Johnson (R, LA) as speaker.

After MTG‘s motion was tabled (killed), voting began on H.J.R.109 – Members had only 5 minutes in which to submit their preference.

Final vote was 228-182 to support the resolution to repeal SAB 121.

Visit the Clerk’s website for the complete tally.

21 Democrats voted for the resolution – prior to the vote, only three HFS Democratic members (Nickel/Gottheimer/Torres) had been known to support the resolution.

This was a win for Chair McHenry. (He celebrated.)

It was also a win for Reps. Flood and Nickel, the resolution’s sponsor and co-sponsor, respectively.

The other big news may have been President Joseph Biden‘s statement on the resolution which made clear where his Administration stands on digital assets. More below… Continue reading “House Votes To Rescind SEC Rule On Crypto Custody; President Biden Threatens Veto”

right on cue

Just before the SEC Enforcement hearing by the House Financial Services (HFS) Capital Markets Subcommittee yesterday, Securities and Exchange Commission (SEC) Chair Gary Gensler appeared on CNBC’s airwaves with Squawk Box host Andrew Ross Sorkin.

See the interview.

Gensler began by openly complaining that Sorkin was asking too many questions about crypto given its diminutive size in comparison to the traditional stock and bond markets.

Sorkin bulled ahead anyway as Gensler largely continued his mantra that digital assets remained a lawless wasteland.

On whether Ethereum was a security or commodity and whether there would be an Ethereum ETF, Gensler demurred (as he did to HFS Chair Patrick McHenry (R, NC) back in April 2023). He said yesterday:

“… to me, the fundamental question is, how do we ensure that the American investor is protected and right now they’re not getting the required or needed disclosures and the intermediaries in the center of this rather centralized market generally are conflicted and doing things we would never allow the New York Stock Exchange to do.”

more tips:

• • Gary Gensler Says It’s Our Fault the SEC Appears So Focused on Crypto – Decrypt

Continue reading “Two Peas In Two Pods: NYDFS Superintendent Harris And SEC Chair Gensler”