Former Senator Toomey Sees No Path Forward For Legislation In 118th Congress; On Crypto Leaving U.S.

National Security Seminar

maybe next Congress

Former Senator Pat Toomey (R, PA), Ranking Member of the Senate Banking Committee in the last Congress, appeared before an audience at a Georgetown Law Seminar titled, “National Security and Digital Assets Seminar” yesterday. Toomey said he can’t see any crypto legislation making it into the law books until 2025 at the earliest. CoinDesk’s Jessie Hamilton reports, “‘I don’t see a path forward in the Senate, regardless of how the vote goes in the House,’ [Toomey] said, though he thinks a bill on stablecoins would have the best chance.” Read more.

In the interview, Toomey sees broader implications with digital assets starting with national security. He said, “Technology drives the economy” which pays for the nation’s defense infrastructure.

Later, he explained, “From a national security point of view, I want our currency to be the most technologically sophisticated and to me it seems, right now, stablecoins are a way that provides that technological sophistication, gives our money, abilities, capabilities that it doesn’t have today.”

See video of the entire interview with Senator Toomey.

now leaving the U.S.

In an article titled, “Crypto Companies Are Looking Outside the U.S. for Growth,” The Wall Street Journal reviews whether crypto startups are really leaving the United States for friendlier jurisdictions. The WSJ cites: “Crypto venture-capital firm Ryze Labs, payments company Ripple Labs and Zodia Markets, a digital-asset trading platform backed by Standard Chartered, are all focusing outside the U.S. for growth, executives at these companies said.” Read more.

more tips:

Mike Novogratz’s Galaxy Digital targets Europe for crypto expansion – The Financial Times Continue reading “Former Senator Toomey Sees No Path Forward For Legislation In 118th Congress; On Crypto Leaving U.S.”

New Supply Chain Legislation Seeks To Incorporate Blockchain Tech; SEC Chair Hearing In HFS

blockchain hearing

Energy & Commerce

Yesterday, House Energy and Commerce’s (E&C) Innovation, Data, And Commerce Subcommittee held a hearing titled, “Mapping America’s Supply Chains: Solutions to Unleash Innovation, Boost Economic Resilience, and Beat China.” See the hearing page.

Committee Chair Cathy McMorris Rodgers (R, WA) and Innovation, Data, and Commerce Subcommittee Chair Gus Bilirakis (R, FL) said in announcing the hearing that the goal was to secure “our long-term global competitiveness in retaining manufacturing, spurring startups, and applying emerging technologies like artificial intelligence, blockchain, and ‘Internet of Things.'”

Subcommittee Chair Bilrakis and Ranking Member Jan Schakowsky (D, IL) presided over the hearing.

See the video of the two-hour hearing.

Energy & Commerce – use cases

Among the witnesses was Justin Slaughter of crypto venture firm Paradigm. In his prepared testimony, Slaughter provided blockchain technology use cases already in process.  He wrote, “…the US Air Force has a blockchain-based supply chain project called BASECAMP, which helps the Air Force ensure timely and secure manufacturing of its essential equipment, and provide a reliable supply of needed parts for maintenance, supporting the ongoing operations of our military globally.”

Download Slaughter’s testimony (PDF) –  a crisp example of the discussion around blockchain technology beyond financial applications, i.e. not crypto.

Slaughter was the only one of the witnesses who spoke to blockchain in their prepared testimony. During the hearing, Slaughter even discusses how unions (i.e. organized labor) see benefits of blockchain.

Energy & Commerce – legislation

According to the hearing’s memorandum, the E&C Subcommittee hearing also supported new, still unnamed, draft legislation related to the supply chain including one bill introduced by Rep. Larry Bucshon (R, IN) involving blockchain technology. “The bill would also establish the ‘National Blockchain Promotion and Deployment Program’ at the DOC (Department of Commerce). The bill would designate the Secretary of Commerce as the principal advisor to the President of the U.S. for policy pertaining to the deployment, use, application, and competitiveness of blockchain and other distributed ledger technologies; and authorize the Secretary to act through the program as necessary and appropriate to promote and assist the deployment, use, application, and competitiveness of blockchain and other distributed ledger technologies,” reads the memo. Continue reading “New Supply Chain Legislation Seeks To Incorporate Blockchain Tech; SEC Chair Hearing In HFS”

House Financial Services CBDC Markup Sends Emmer Bill To House Floor

CBDCs and the House Financial Services Committee

An ambitious markup of thirteen bills was on the docket for today’s markup by House Financial Services Committee led by Chair Patrick McHenry (R, NC) and Ranking Member Maxine Waters (D, CA).

The markup’s themes – led by the Republican majority but coordinated with Democrats – included protecting consumer privacy and preventing the overreach of government. There was also bipartisan legislation protecting United States’ national security interests particularly as it related to China.

Overall, most of the hearing’s tone was one of cooperation across the aisle and was reflected in unanimous passage of every bill not related to Central Bank Digital Currencies (CBDCs).

So, perhaps due to the expectation of extended debate, blockchain-related legislation containing various restrictions on a Central Bank Digital Currency (CBDC) were last on the Committee’s agenda.

With several CBDC bills to pursue, the Republican majority, led by Chair McHenry, apparently decided to solely pursue passage of H.R. 5403, the “CBDC Anti-Surveillance State Act” by Majority Whip Rep. Tom Emmer (R, MN). The bill bans the issuance of a CBDC (but the Fed can study it, as Republicans later emphasized).

See the post-hearing press release from the GOP.

tl;dr – the voting

The voting for H.R. 5403, the “CBDC Anti-Surveillance State Act” was approved along party lines with a vote of 27-20 which sends the bill to the House floor.

Ranking Member Waters and Rep. Stephen Lynch’s (D, MA) attempts to add amendments “softening” Rep. Emmer’s bill were both rejected along party lines in a votes of 27-20, as well.

Rep. Emmer announced the bills’ passage immediately after the hearing. Read it.

the CBDC markup

As the Central Bank Digital Currency (CBDC) portion of the markup arrived, it was clear that Democratic leadership wanted any digital currency associated with the U.S. Dollar in the hands of the Federal government.  The mostly-unspoken implications for private stablecoins was that Democratic leadership was opposed.

After Chair McHenry’s opening statement (read it), Ranking Member Waters made her statement which criticized the Republican anti-CBDC view.

Waters said, “Nobody fully understands the potential benefits and challenges of CBDCs or how their implementation could affect the preeminence of the US dollar and global finance more broadly. That is why the Biden administration and the Federal Reserve are researching this. However, the Republican bill before us today would stifle that research and prevent us from moving forward, even if it means that the dollar loses its status as the world’s reserve currency. And even if it means that US citizens lose out on faster, cheaper and simpler payments. I’m disappointed that Republicans have taken such a deeply anti-innovation stance.”

The “anti-innovation” accusation is an about-face to Democratic leadership’s positioning against the recent stablecoin and digital asset market structure bills which could be considered “pro-innovation.” Continue reading “House Financial Services CBDC Markup Sends Emmer Bill To House Floor”

House Financial Services Markup On CBDC Today; Giancarlo Advocates For Digital Dollar Future


pro-crypto lobby

Coinbase’s “Stand With Crypto” lobbying effort, which is now a standalone nonprofit, has been gaining momentum with a retail crypto member base of “10s of thousands of supporters” this year according to The Hill yesterday.

The Hill reports on the next steps, “The group’s new campaign targets federal lawmakers and seeks to get pro-crypto constituents across the U.S. to raise their voices with Congress. The push focuses on nine ‘swing states’: Arizona, California, Georgia, Illinois, New Hampshire, Nevada, Ohio, Pennsylvania and Wisconsin.” Next week, on the same day (September 27) Securities and Exchange Commission Chair Gary Gensler is rumored to appear in front of the House Financial Services Committee, Coinbase is also planning a “Stand with Crypto” day in D.C. Read more in The Hill.

Coinbase U.S. policy executive Kara Calvert suggests the potential implications for both parties with voters: “America’s 52 million-strong crypto constituency is engaged and want both clarity and protections as consumers and job creators.”

more tips:

Regarding “Stand With Crypto,” Politico reported yesterday morning: “Coinbase has granted a new 501c4 organization an eight-figure budget to support organizing efforts, paid media and events.” There was already an event in Ohio last week (see it) with  former Democratic Congressman Tim Ryan. Read more.

today’s markup

The House Financial Service Committee, led by Chair Patrick McHenry (R, NC) and Ranking Member Maxine Waters (D, CA), will commence a markup at 10 a.m. today.  There are 13 bills up for a vote.

See the landing page with a link to livestream.

As blockchain tipsheet discussed on Monday, three bills with anti-Central Bank Digital Currency (CBDC) positioning could present a challenge to the Democratic minority’s leadership: [H.R. 3402] Power of the Mint Act, [H.R. 5403] CBDC Anti-Surveillance State Act, [H.R. 3712] Digital Dollar Pilot Prevention Act. To vote against these bills could be perceived by voters that Dem leadership supports a CBDC which may raise voter concerns around privacy, surveillance and security. Continue reading “House Financial Services Markup On CBDC Today; Giancarlo Advocates For Digital Dollar Future”

NYDFS Proposes New Listing Regs, Reinforces Authority; Citi Embraces Tokenization

state of crypto

state leads regulation

New New York State coin listing guidance was proposed yesterday. According to the Wall Street Journal, New York Department of Financial Services (NYDFS) Superintendent Adrienne Harris said, “When we know that a coin that someone once thought was OK, when we see that new risks have emerged or the coin is being misused, we want our entities to have a way to delist the coin in a way that’s still protective of consumers and protects safety and soundness as well.” Harris noted that this is the first time “delisting” has been included in guidance. Read the article.  The comment period for the proposal ends on October 20.

In the NYDFS press release about coin listings, the Department reveals digital assets hiring momentum at the agency: “60 experts to oversee licensing and strengthen supervision, enhanced existing and established new policies and procedures, and enacted new assessment authority to support the continued growth of the virtual currency unit.” See the release.

more tips:

Back in May, Attorney General Letitia James echoed some of the themes of national Democratic leadership by challenging NYDFS authority with the introduction of state legislation that gave the State A.G. more jurisdiction in digital assets. To date, nothing has come of it and the NYDFS has appeared to maintain its grip on digital assets regulation with the backing of the state’s governor, Kathy Hochul. The turf battle is an extension of “state versus federal oversight in digital assets” being discussed today in Congress (see the July House Financial Services markup on the stablecoin bill).

about that AML bill

CoinDesk’s Jesse Hamilton reviews the new “team” of co-sponsors added to [S.2669] Digital Asset Anti-Money Laundering Act introduced by Senator Elizabeth Warren (D, MA) and sees difficulty ahead when it comes to passage. Continue reading “NYDFS Proposes New Listing Regs, Reinforces Authority; Citi Embraces Tokenization”

House Financial Services Markup Gambit? Republicans Serve Democrats CBDC Poison Pill

HFS Markup

CBDC markup Wednesday

Late on Friday, House Financial Services (HFS) Committee Chair Patrick McHenry (R, NC) announced that his committee will hold a markup “of Legislation to Strengthen American National Security, [and] Prevent the Issuance of a Central Bank Digital Currency (CBDC)” on Wednesday, September 20 at 10 a.m. ET in the Rayburn House Office Building.

Read Friday’s brief announcement.

The suddenness of this markup – there had been no inkling of it – says something about the Majority’s view. In fact, an HFS FinCEN hearing had originally been rumored to occur on Wednesday. There are bills with implications for FinCEN at the markup, though.

CBDC markup – the bills

Bills under consideration at the markup will include the bipartisan “Power of the Mint Act” [H.R. 3402] which was introduced in the Spring (see May press release) by Rep. Jake Auchincloss (D, MA) and HFS Digital Assets, Financial Technology and Inclusion Subcommittee Chair Rep. French Hill (R, AR).

“Power of the Mint” prevents the Federal Reserve from issuing a CBDC.

The HFS Majority Republicans will likely request a roll call vote in order to highlight the Democrats who also want to support the bill and send it to the House floor. Rep. Ritchie Torres (D, NY) and Rep. Wiley Nickel (D, NC) are co-sponsors as the generational divide on issues surrounding digital assets among HFS Committee Democrats sharpens. Rep. Barry Moore (R, AL) is a co-sponsor, too.

“Power of the Mint,”  Majority Whip Tom Emmer’s (R, MN) “CBDC Anti-Surveillance State Act” [H.R. 5403] and the “Digital Dollar Prevention Act” [H.R. 3712], which seeks to prevent a CBDC pilot unless authorized by Congress and was introduced by Rep. Alex Mooney (R, WV), could put HFS Democratic leadership in a tight spot. Continue reading “House Financial Services Markup Gambit? Republicans Serve Democrats CBDC Poison Pill”

CBDC Hearing Shows Diversity Of Opinion Among House Financial Services Democrats

CBDCs hearing

Today, the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion convened a hearing titled, “Digital Dollar Dilemma: The Implications of a Central Bank Digital Currency and Private Sector Alternatives.” View the hearing page.  And, see the video.

Just before the hearing began, Rep. Stephen Lynch (D, MA), who is also the Ranking Member of the HFS Digital Assets Subcommittee, drew the battle lines with Republicans beginning with an announcement about the creation of the Digital Dollar Caucus, a list of whose membership is expected within a week according to a spokesperson. The Ranking Member also reintroduced H.R. 5410, “the Electronic Currency and Secure Hardware (ECASH) Act, which would develop an electronic version of the U.S. Dollar for use by the American public.” Co-sponsors include Democrats Rep. Ayanna Pressley (MA), Rep. Rashida Tlaib (MI) and Rep. Jesus Garcia (IL) – none of whom are on the Digital Assets Subcommittee. Read the press release.

Digging into the text of the bill, the ECASH Act asks U.S. Treasury “to develop and pilot digital dollar technologies that replicate the privacy-respecting features of physical cash.” See it.

FedNow, stablecoins, ECASH, CBDCs.. the lines are blurring.

Lynch’s legislation mingled with the hearing’s other bills which were skeptical of a CBDC, at best, including: Majority Whip Rep. Tom Emmer’s [H.R. 1122] “CBDC Anti-Surveillance State Act,” the bipartisan “Power of the Mint Act” [H.R. 3402] and the “Digital Dollar Prevention Act” [H.R. 3712] with 19 Republican co-sponsors. Continue reading “CBDC Hearing Shows Diversity Of Opinion Among House Financial Services Democrats”

Two SEC Commissioners Dissent On NFT Token Settlement; Digital Asset Subcommittee Hearing Today

Stoner Cats settles with SEC

JPEG as a security

The Securities and Exchange Commission (SEC) charged a non-fungible token (NFT) creator called Stoner Cats with conducting “an unregistered offering of crypto asset securities.” Read the SEC release. The company agreed to a $1 million fine and to return funds to investors.

Reuters reports on one of the securities trip wires that Stoner Cats violated: “The NFTs provided holders with exclusive access to watch ‘Stoner Cats’ online. Investors were told the NFTs were like a ticket, and that ‘the more successful the show, the more successful your NFT’ will be.” Read more.

more tips:

What is Stoner Cats? (July 2021) – Decrypt

JPEG as a security – reaction

The two Republican SEC Commissioners – Hester Peirce and Mark Uyeda – issued a dissent to the Stoner Cats settlement seeing a threat to artists and creators. (This dissent also indicates the three Democrat SEC Commissioners voted “for” the SEC-approved settlement with Stoner Cats.)

Peirce and Uyeda wrote, “The application of the Howey investment contract analysis in this matter lacks any meaningful limiting principle.  It carries implications for creators of all kinds. Were we to apply the securities laws to physical collectibles in the same way we apply them to NFTs, artists’ creativity would wither in the shadow of legal ambiguity. Rather than arbitrarily bringing enforcement actions against NFT projects, we ought to lay out some clear guidelines for artists and other creators who want to experiment with NFTs as a way to support their creative efforts and build their fan communities.” Read it all. Continue reading “Two SEC Commissioners Dissent On NFT Token Settlement; Digital Asset Subcommittee Hearing Today”