Tag: cryptocurrency

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”

Treasury threatens crypto

Last Friday, a speech to be delivered by U.S. Deputy Treasury Secretary Wally Adeyemo at foreign-policy think tank Royal United Services Institute in London warned “cryptocurrency firms against allowing their platforms to be used to finance terrorist organizations, as scrutiny mounts of how Hamas may have used digital currency to fund its attack on Israel,” reported The Washington Post.

The Post published an excerpt from Adeyemo’s Friday speech the day before: “There are those in the digital asset space who wish to innovate without regard to consequences instead of doing so responsibly, including protecting against illicit financing. (…) Let me be clear: We will use every tool available to go after any person or platform that is facilitating the movement of resources for terrorists.” The theme speaks to an October 19 rulemaking proposal by Treasury’s FinCEN around mixers which has implications for decentralized finance (DeFi).  Read more.

what you should know: The fact the speech was shared by the Administration ahead of time with WaPo is telling. The speech feels like a new level as the speech increases the pressure on the digital assets industry while also showing clear support for legislative efforts in Congress which seek tough or draconian efforts to shut down cryptocurrency, in particular, in the United States. Adeyemo also spoke to CNN on the same day as the speech with a similar tone about crypto and illicit financing.

• • Correction: The above story has been updated to reflect that the speech happened on October 27 rather than Friday, November 3.

It’s not about one report

Chair Sherrod Brown (D, OH) and Sen. Elizabeth Warren (D, MA) of the Senate Banking Committee are not impressed with the digital assets industry’s efforts to dispute the connection between crypto and illicit financing portrayed by an October 10 article in The Wall Street Journal.

Punchbowl News Brendan Pedersen provides an overview of the latest and quotes Sen. Warren who says, “It’s not about one report… It’s about the whole structure of crypto that attracts some of the worst people around the world to move value around in a way that they cannot do through the ordinary banking system.” Fellow Banking Committee member Senator Cynthia Lummis (R, WY) chimes in and expresses concern about the damage done by the WSJ article. Read more. Continue reading “Treasury Warns Crypto Firms In Speech; SAB 121 Smacked Down By GAO”

tax comments skyrocket

The digital assets industry is keeping up the drumbeat on a request for comments by Treasury and the Internal Revenue Service regarding a tax rules for digital assets proposal. The deadline is November 13. A hearing is scheduled next week on November 7 with another, potentially, the next day according to the Federal Register. Some are already touting their appearance.

IRS’s director of digital assets Julie Foerster said just last week that the agency is expecting 8 billion “information returns” related to crypto. That’s 200 returns for each of the 40 million crypto buyers and sellers in the United States, she said. Read more.

Blockchain Association Senior Counsel Marisa Tashman Coppel tweeted on X yesterday: “Over 25,000 comments have been received by the IRS regarding their broker rulemaking proposal. Over 12,000 posted to the docket on regulations.gov. Clearly a sign something is wrong with the proposal.” See the comments.

what you should know: Another reason for so many potential forms is that ANY crypto transaction would need to be reported according to the proposed rule. There still is no di minimis exemption, for example. You buy an NFT or a cup of coffee with Bitcoin, your service provider needs to report it, potentially. Continue reading “Thousands Of Comments Pile Up For IRS; NYDFS Supports Parallel Stablecoin Regulation”