Tag: cryptocurrency

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stablecoin hearing

Two differing themes emerged from lawmakers at yesterday’s House Financial Services (HFS) Digital Assets Subcommittee stablecoin hearing at the Rayburn House Office Building. On the Republican side, states rights were a legislative focus whereas Democrats see the need for the involvement of the Federal Reserve. From a tone point-of-view, the Republicans led by Subcommittee Chair Rep. French Hill (R, AR) continue to position with an air of bipartisanship (read his opening remarks) while Democrats led by HFS Ranking Member Rep. Maxine Waters (D, CA) are generally more combative and remain dissatisfied with the majority’s views.

Digital Assets Subcommittee Ranking Member Steven Lynch put it bluntly saying state regulation for stablecoins feeds into crypto companies propensity for seeking out the least restrictive jurisdictions – “a race to the bottom,”  he said. Read more in The Block.

See the hearing video.

CoinDesk’s Jesse Hamilton notes the bright side in all this: “…this and other committees are showing that the stablecoin topic – and crypto more broadly – is important enough to have already warranted several congressional hearings in recent weeks. Most members in both the House and Senate seem to be advocating action, and if they can agree on a stablecoin compromise, it would be a major first step toward U.S. oversight of the industry.” Read more on CoinDesk.

Fox Business Eleanor Terrett commented on Twitter about her view of the hearing, “Seemed to be an overwhelming consensus that stablecoins are not securities and should not be regulated by the SEC, but possibly regulated at the state level.” Continue reading “Stablecoin Legislation Discussion Takes Step Forward; Emmer And Soto Want Clarity”

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stable Bitcoin

The issuers of the stablecoin Tether (Tether International Limited) announced a change in the way the company will manage their reserves going forward. Yesterday, the company elaborated on the Tether blog, “Starting this month, Tether will regularly allocate up to 15% of its net realized operating profits towards purchasing Bitcoin (BTC).” Read the post.

The company said it would self-custody all of its Bitcoin as a reflection of their belief in “not your keys, not your coins.”  Unspoken may be the potential for government censorship of the company and its stablecoin -hence the move  to Bitcoin and self-custody.

Does this mean Tether is moving away from other reserve types such as short-term U.S. Treasuries?

more tips:

Tether’s Latest Q1 2023 Assurance Report Shows Reserves Surplus At All-Time High of $2.44B, up $1.48B in Net Profit; New Categories for Additional Transparency Reveals Bitcoin and Gold Allocations – Tether, May 10

today’s hearing

Putting the ‘Stable’ in ‘Stablecoins:’ How Legislation Will Help Stablecoins Achieve Their Promise
9:00 AM in 2128 Rayburn House Office Building
House Financial Services’ Subcommittee on Digital Assets, Financial Technology and Inclusion
Committee Memo | Live Webcast Continue reading “Tether Stablecoin Seeking Bitcoin Reserves Not Treasuries; Today’s Stablecoin Hearing”

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EU – MiCA regulation

In a vote of 27-0, the European Union’s Economic and Financial Affairs Council, which is comprised of the member states’ finance ministers, unanimously approved the continent’s ground-breaking Markets in Crypto-Assets legislation.

A statement fro the Council reads: “The new rules cover issuers of utility tokens, asset referenced tokens and so-called ‘stablecoins’. It also covers service providers such as trading venues and the wallets where crypto-assets are held. This regulatory framework aims to protect investors, preserve financial stability, while allowing innovation and fostering the attractiveness of the crypto-asset sector.” Read it all.

It’s hard to imagine the United States this far along.

The next and final step is for the bill to be published in the Official Journal of the European Union. Thereafter, MiCA will take effect in the middle of next year. Read more on the bill’s implications from Cointelegraph.

more tips:

Landmark crypto rules make exchanges liable for customer losses in EU – Ars Technica

EU – crypto taxes

Building on the MiCA legislation, the finance ministers also approved new legislation aimed at transparency in taxation of crypto assets beginning in 2026. “The Directive will improve Member States’ ability to detect and counter tax fraud, tax evasion and tax avoidance, by requiring all crypto-asset providers based in the EU – irrespective of their size – to report transactions of clients residing in the EU. Moreover, the updated Directive has been extended in scope to include reporting obligations of financial institutions regarding e-money and central bank digital currencies and the automatic exchange of information on advance cross-border rulings used by natural persons,” says a statement on the European Commission’s website. Read it.

Politico notes the other side of the crypto tax law – the EU wants to identify crypto users: “The new disclosure framework will help regulators understand where and whose money is circulating throughout the crypto market, as well as make it harder for Europeans to hide tax assets in said market.” Read more.

Continue reading “EU Powers Ahead With MiCA Regulation Approval; Congress Toils With Stablecoins”

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bank failure hearing

Today’s Senate Banking Hearing at 10 a.m., “Examining the Failures of Silicon Valley Bank and Signature Bank,” will include top executives from both banks and among the questions to be explored: “Did crypto cause the bank failures?” – a narrative pursued by some Congressional Democrats including House Financial Services (HFS) Ranking Member Rep. Maxine Waters (D, CA) at last month’s stablecoin hearing with New York Department of Financial Services Superintendent Adrienne Harris.

At today’s hearing, former CEO of Silicon Valley Bank (SVB) Gregory Becker (see prepared testimony),  former Chairman And Co-Founder of Signature Bank Scott Shay (see it) and Former President Signature Bank Eric Howell (see it) are schedule to appear. See the hearing page.

SVB’s Becker is the only bank executive to make explicit reference to crypto in his prepared testimony and he’s emphatic about crypto not being the cause of his bank’s demise. He writes, “SVB and Silvergate were very different banks, as Silvergate was a nearly 100 percent crypto focused bank while SVB only had around 3 percent of its deposits from crypto clients.” Silvergate was a U.S. bank holding company which provided crypto/fiat rails to crypto companies and which decided to “wind down” operations in early March after a bank run of its own.

The flip side to the “crypto causing bank failures” coin is Choke Point 2.0, where many Republicans – such as Senate Banking Committee member Senator Bill Hagerty (TN) – would argue that government has overreached and unfairly targeted crypto including federally-chartered banks facilitating crypto business.

mandamus shrugged

The Securities and Exchange Commission (SEC) responded late yesterday to Coinbase’s “petition for a writ of mandamus — asking the court to require the SEC to respond just yes or no to whether it will undertake rulemaking for our industry,” tweeted the company’s Chief Legal Officer Paul Grewal, who termed it a “maybe.” Read his thread. Grewal added Coinbase will deliver a formal response next week. Continue reading “Narratives Meet At Senate Banking Hearing: Choke Point 2.0 Versus Crypto-Causes-Bank-Failures”

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stablecoin hearing

Chair French Hill’s (R, AR) Subcommittee on Digital Assets, Financial Technology and Inclusion reconvenes on Thursday with a hearing titled, “Putting the ‘Stable’ in ‘Stablecoins:’ How Legislation Will Help Stablecoins Achieve Their Promise.” See the hearing page – it’s a 9 a.m. start. Bring your coffee and pastry with you!

This Thursday’s gathering will be a follow-up to last month’s hearing and judging from the hearing’s title, it would seem Chair Hill is focusing on making a clear case for stablecoin legislation with Democrats and whomever else will listen.

stablecoin hearing – Democrats

Putting Democrats in a position of “Why wouldn’t you?” could be difficult, though, considering the Dems nearly united unwillingness at the April hearing to consider a bill they had nearly blessed in the last Congress – let alone House Financial Services (HFS) Ranking Member Rep. Maxine Waters (D, CA) had expressed support of the bill in March. Continue reading “Another Stablecoin Hearing Coming Thursday; Toomey, Maloney Join Coinbase Council”

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regulator rift – state

The jockeying for position among regulators in crypto isn’t just between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) – it’s happening at the state level, too.

So says a comprehensive new article in Fortune by Leo Schwartz which looks at the growing brouhaha in New York State: The Office of the Attorney General and A.G. Letitia James (D) versus the New York Department of Financial Services (NYDFS) and its Superintendent Adrienne Harris (D), who supervises the pre-eminent state crypto regulation – the New York BitLicense. Read the article.

You could see this battle coming in the press release last week for the A.G.’s new crypto bill (a.k.a CRPTO). Nowhere was the NYDFS –  a seemingly key partner for the Attorney General –  mentioned as a willing participant in the new legislation. Only a former NYDFS Superintendent under former Governor Andrew Cuomo provided a glowing quote among the two dozen Democrats and organizations who backed introduction of the legislation in the release.

One Congressional Democrat is taking note. Rep. Ritchie Torres (D, NY), a member of the Congressional Blockchain Caucus in the last Congress, tells Fortune about his fears of a growing turf war in his state and its impact on effective regulation: “DFS is the most effective and exacting regulator of crypto not only in the country, but in the world. (…) As the old saying goes, why fix what ain’t broken?”

Will U.S. Senator Kirsten Gillibrand (D, NY), an ally of New York Governor Kathy Hochul (D), potentially weigh-in next?

regulator rift – national

The “anti-crypto” plan implemented by Democratic party leadership, which it apparently sees as winning strategy for the 2024 general election, could be seeping into New York State with A.G. James (who almost ran against Governor Hochul in 2022, but then pulled back) getting an opportunity to burnish her Democratic credentials.

In the meantime, NYDFS Superintendent Adrienne Harris (a Democrat, Hochul appointee and former Obama-era appointee to the U.S. Treasury) may be left in the lurch. Continue reading “Democrats Battling Over Crypto In New York State; On Bitcoin 2023 In Miami”

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SEC funding questioned

Yesterday, House Financial Services (HFS) Chair Rep. Patrick McHenry sent a letter to House Appropriations Committee Chairwoman Kay Granger (R, TX) and Ranking Member Rosa DeLauro (D, CT). Focused on spending and the unspoken shadow of Congress’ debt ceiling debacle, the letter touches on several digital assets “hot button issues” involving the Securities and Exchange Commission (SEC) and its Chair Gary Gensler, a Democrat and Biden appointee.

See the letter (PDF). And, read the HFS press release.

“The Committee should prevent a budget increase for the SEC Enforcement Division. The SEC has already brought 130 enforcement actions against crypto assets using its existing budget. It does not need an additional 50 staff to add further uncertainty to this nascent industry,” wrote McHenry.

He also asks that Staff Accounting Bullletin (SAB) 121 “not be funded” which effectively cut off the regulated banking system from offering digital asset custody. The same “no funding” recommendation was made for the digital asset custody proposal whose comment period ended on Monday.

Given the Republican majority in the House, perhaps these recommendations make it through to the Senate and then collide with its Democratic majority. Or, the requests become part of a wider negotiation – say debt ceiling negotiations – where the Democratic majority in the Senate may be more willing to acquiesce?

Presidential tweet

President Joseph Biden may have publicly solidified his administration’s anti-crypto stance with a tweet from the @potus account yesterday.  It read, “We don’t have to guess what MAGA House Republicans value. They’re telling us.”

And the attached graphic reads, “MAGA REPUBLICANS THINK CONGRESS SHOULD CUT [arrow] Tax Loopholes That Help Wealthy Crypto Investors. ($18 billion)” See it. Continue reading “Debt Ceiling Colliding With Digital Assets?; NYSE Joins Dual Committee Hearing”

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Coinbase saber-rattling

Cryptocurrency platform Coinbase CEO Brian Armstrong took part in the Dubai Fintech Summit yesterday and provided some back-handed criticism for U.S. regulators on social media tweeting, “The [United Arab Emirates (UAE)] deserves a lot of credit for being forward thinking on crypto. First dedicated crypto regulator in the world, a clear rule book published (!), business friendly plus strong customer protections. Really enjoying my visit so far.” On stage, Armstrong was quoted as saying that his company is considering making Dubai an “international hub.”

Armstrong continues to poke Congress and regulators with the veiled threat that if they don’t do something about crypto regulation in the United States, he will take (most of) Coinbase’s business elsewhere. In an interview with CNBC in Dubai, Armstrong said, “Coinbase is not going to relocate overseas… We’re always going to have a U.S. presence … But the U.S. is a little bit behind right now.” Still, it was just last week that the company announced a new international derivatives exchange in Bermuda.

The UAE trip by Armstrong and the Coinbase executive team was announced in a Coinbase blog post on Sunday that said, “[It] is no secret that Coinbase is also working with Abu Dhabi Global Market (ADGM) regulators to further expand the licensing and availability for Coinbase International Exchange. We have also been engaging with Dubai’s Virtual Assets Regulatory Authority (VARA)… Continue reading “Coinbase Continues Saber-Rattling; New House Resolution On Digital Assets”