Senate Hearing Pits SEC Against CFTC; CFTC Commissioners Tapped By White House

Senate Appropriations Hearing

Senate hearing – CFTC and SEC

Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam and Securities and Exchange Commission (SEC) Chair Gary Gensler appeared simultaneously at yesterday’s Senate Appropriations Subcommittee on Financial Services and General Government hearing on their respective 2025 budgets. See the hearing page.

Sen. Chris Van Hollen (D, MD) – the Subcommittee Chair – and Sen. Bill Hagerty (R, TN) – the Ranking Member – oversaw the one-and-a-half hour hearing.

Senate hearing – prepared testimony

With 12 mentions of “digital assets” in his prepared testimony, CFTC Chair Behnam made clear he’s still angling for the spot market controls he’s long-desired for his agency over digital assets. He said in part, “The lack of legislation addressing the regulatory gap over the digital commodity asset spot market has not hindered the public’s enthusiasm for digital assets, and I continue to believe Congress must act…” Read Chair Behnam’s prepared testimony.

In his opening statement, SEC Chair Gensler focused less directly on digital assets but repeated his claim that crypto markets were “the Wild West” and represent a dearth of compliance with the law. Read the Chair’s opening remarks  – and read his prepared testimony here. Continue reading “Senate Hearing Pits SEC Against CFTC; CFTC Commissioners Tapped By White House”

Rep. Auchincloss On CBDCs, Support For Digital Assets Legislation

Rep. Jake Auchincloss on digital assets, legislation

As Members of Congress’ interest in blockchain has grown in recent years, Rep. Jake Auchincloss (D), who represents the Fourth District of Massachusetts, has not *just* been along for the ride.

As a freshman Congressman in the 117th Congress, Rep. Auchincloss was a member of the House Financial Services (HFS) Committee and was exposed to, and engaged in, the intricacies of securities matters including the emerging digital assets industry.

In the 118th Congress, though no longer on HFS, his interest in technology and blockchain has been further piqued by service on the Transportation & Infrastructure Committee and the Select Committee on Strategic Competition Between the United States and China.

Today, he remains impactful on financial matters with his “Power of the Mint Act” [H.R.3402], which is co-sponsored by Rep. French Hill (R, AR), and seeks to assert Congressional power over any decision by the Federal Reserve to roll out a Central Bank Digital Currency (CBDC).

Rep. Auchincloss also recently voted in favor of the Financial Innovation and Technology Act for the 21st Century [H.R.4763] (FIT 21) and the House resolution to rescind the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121 (SAB 121) [H.J.R.109].

Yesterday, blockchain tipsheet spoke with Rep. Auchincloss about a range of digital asset issues including:

    • Support for FIT 21 and the SAB 121 resolution
    • Blockchain use cases
    • The Democratic caucus and digital assets
    • Power of the Mint Act and CBDCs
    • Wholesale versus retail CBDC
    • Stablecoins and the US Dollar
    • Congressional staff
    • The next Congress…

(This transcript has been edited for clarity.)

blockchain tipsheet: You voted for the SAB 121 resolution as well as FIT 21. Why did you support each of these bills?

Rep. Jake Auchincloss: I voted for SAB 121 because the Government Accountability Office found – and this is a nonpartisan, independent body – that the SEC ran afoul of Administrative Law in issuing what really is a rule under the banner of guidance, and thereby circumventing rule-making.

It’s important that Congress uphold the rule of law and that we uphold Administrative Law process. To me, I am policy agnostic, but this was a process fidelity issue.

And, on FIT 21? Continue reading “Rep. Auchincloss On CBDCs, Support For Digital Assets Legislation”

Democratic Disbelief About Administration’s Stance; CFTC’s Goldsmith Romero Linked To FDIC

digital assets and The White House

Democratic anon speaks

In a New York Magazine feature article titled, “Are Democrats Pivoting on Crypto?,” the seeming transformation of Democrats – and Dem leadership, particular – is covered in depth.

An anonymous Democratic source shares frustration with NY Mag’s Jen Wieczner: “The approach that both [SEC Chair] Gary Gensler and [Senator] Elizabeth Warren (D, MA) have advocated, refusing to regulate the technology on the grounds that that will be the best way to kill the technology, no longer makes any sense – it’s a failed policy. (…) Based on our polling, there are millions of voters who are going to vote against Joe Biden on the basis of Gary Gensler’s approach on this issue. With democracy on the line, that’s just a phenomenally irresponsible approach to take.” Read more.

what you should know: Would a quick pull-back of the SEC’s SAB 121 by Chair Gensler save the day for Dems? The policy chasm that Dems must cross to get that “pro-crypto” voter may be too large. The question remains… are their enough single issue voters on crypto to tip the election?

stablecoin issuer invests

CEO Paulo Ardoino of Tether Holdings – which is the issuer of the world’s largest stablecoin (USDT) backed by the U.S. dollar – said in an interview with Bloomberg yesterday that his company expects to invest more than $1 billion over the next 12 months.

Ardoino projects funds being put to work in a range of startups focusing on “alternative financial infrastructure for emerging markets, artificial intelligence and biotech — areas where it has already spent about $2 billion over the past two years.” Read more. Continue reading “Democratic Disbelief About Administration’s Stance; CFTC’s Goldsmith Romero Linked To FDIC”

CFTC And SEC Chairs To Appear At Senate Approps Hearing Thursday; Sen. Warner’s Crypto Sanctions

Appropriations Thursday

crypto sanctions bill

Senator Mark Warner’s (D, VA) efforts to add his Terrorist Financing Prevention Act [S.3441], which includes crypto sanctions, into a Senate Intelligence must-pass is receiving more attention from industry this week.

Speaking to CoinDesk’s Jesse Hamilton by email about the crypto sanctions elements of the bill, Digital Chamber’s Cody Carbone says, “We’ve chatted with Warner staff on this, and they’re open to broader engagement here from industry. (…) I think it likely does get zapped out of the NDAA process given the immediate pushback from the industry.” Read more.

The Senate intel bill “hitches a ride” on the NDAA must-pass explained Paradigm policy executive Alexander Grieve in a tweet last week.

more tips:

    • Is Congress softening on crypto? Not really – DL News

what you should know: Sources say that Sen. Warner may have earned the ire of committee colleagues such as “pro-crypto” Senators Kirsten Gillibrand (D, NY) and Ron Wyden (D, OR) by trying to “sneak” the bill through. This likely occurred due to the closed nature of this Committee which is staffed by people with clearances – which means they can’t talk, or won’t talk, to the rest of the Senate offices.

crypto sanctions bill – trap

Taking inspiration from the Senate Intel bill, Peter Van Valkenburgh of crypto industry association Coin Center dissects the Terrorist Financing Prevention Act and warns that the bill “threatens crypto freedom with new sanctioning powers” and needs “urgent revisions.” Continue reading “CFTC And SEC Chairs To Appear At Senate Approps Hearing Thursday; Sen. Warner’s Crypto Sanctions”

Trump Calls Himself ‘The Crypto President’; MiCA Framework Failing EU Entrepreneurs

The Crypto President

crypto president

A San Francisco-based tech executive, Trevor Traina, spills some tea on the big fundraiser (led by David Sacks and Chamath Palihapitiya) last week for former President Donald Trump which raised $12 million. At the event, Trump said “he would be the crypto president,” according to Traina.

As part of the story, Reuters was able to get the first statement attributed to a White House official by name since … maybe… the Executive Order in March 2022: “The White House under [President Joe] Biden has also said that it is eager to work with Congress to develop a regulatory framework for cryptocurrencies. In a statement to Reuters, White House spokesperson Robyn Patterson said the Biden administration had supported innovation in digital assets while seeking to protect consumers from ‘risks associated with new technologies.'” Read more.

more tips:

    • Why Trump is finding new friends in Silicon Valley (June 7) – Politico
    • ‘It’s Not 2016 Anymore’: Trump Finds Friends in Silicon Valley (June 6) – The New York Times

what you should know: Patterson is maintaining the White House’s new, parallel narrative that its supportive of digital assets (as it mentioned in the veto of SAB 121 and the FIT 21 guidance). Meanwhile, proof is in the pudding. White House proxies such as Dem leadership on the House Financial Services Committee have not changed their skeptical, combative views as exhibited during last month’s FIT 21 floor debate and last week’s tokenization hearing.

Senate rumblings

Punchbowl News’ Brendan Pedersen takes an informal poll of Senate members regarding crypto legislation and finds little room on the schedule for (or interest in) a digital assets market structure bill in the current Congress. Among those polled, Senate Banking Chair Sherrod Brown (D, OH) gives his stock answer that he won’ t negotiate through the media. Continue reading “Trump Calls Himself ‘The Crypto President’; MiCA Framework Failing EU Entrepreneurs”

Robinhood Buys Overseas Crypto Exchange Bitstamp; Proselytizing To The Masses

Robinhood buys crypto exchange

bringing it to the masses

Rep. French Hill (R, AR), who is vice chair of House Financial Services Committee, appeared on Fox Business’ “Mornings with Maria” yesterday and discussed the latest digital assets legislation including CBDCs and the “Financial Innovation and Technology Act for the 21st Century Act” -or, FIT 21.

Rep. Hill told the hosts, “…the private sector should lead here. Private sector stablecoins using the dollar as the backing – which is another bill we have in Congress that’s pending – will be the gateway to a digital asset future where the Dollar continues to lead the world in tokenized transactions for payments.”

He continued, “And so a dollar-backed stablecoin bill, plus a nationwide privacy bill, plus FIT 21 create the kind of ecosystem, I think, that’s perfect for innovators here, to bring money here, bring technology here and, as I say, give consumers choice.” See a bit more of the interview.

moving/expanding overseas

U.S. financial services company Robinhood has upped the ante for its crypto strategy in spite of receiving a Wells Notice from the SEC over cryptocurrency traded on its platform just a month ago.

Yesterday, the company announced its large purchase ever: a $200 million acquisition of crypto exchange Bitstamp whose jurisdictions of interest are mainly outside the U.S. According to a company release: “This acquisition will bring Bitstamp’s globally-scaled crypto exchange to Robinhood, with retail and institutional customers across the EU, UK, US and Asia. This strategic combination better positions Robinhood to expand outside of the US and will bring a trusted and reputable institutional business to Robinhood.” Read more. Continue reading “Robinhood Buys Overseas Crypto Exchange Bitstamp; Proselytizing To The Masses”

SEC Closes Utah Office After DEBT Box Debacle; Today’s Tokenization Hearing

SEC recoils

SEC closes Utah office

With the Securities and Exchange Commission (SEC) sanctioned by U.S. District Court in Utah for its handling of the DEBT Box case, which also resulted in the SEC paying $1.75 million to DEBT Box, appears to have led to the closing of the regulator’s Utah office.

A brief SEC press release yesterday states, “The [Salt Lake Regional Office (SLRO)] has long been the SEC’s smallest regional office and recently has experienced significant attrition.” Read the release.

Three SEC lawyers and/or employees involved in the DEBT Box case resigned in April and May. Read even more in The Wall Street Journal.

what you should know: Ouch. The SEC made the argument yesterday that the agency is just consolidating due to “attrition.” Unfortunately, it was self-imposed.

House Approps + SAB 121

Former SEC Deputy Director Anne-Marie Kelly “digs up” a new SEC budget proposal from House Appropriations which says that if the SEC continues to  move forward with its Staff Accounting Bulletin 121, it will no longer receive funding for that work.

She shared a screenshot of the proposal on X and said, “The work around to a Veto? Appropriation. Prohibiting the use of appropriations for specific actions is a great check on SEC actions like SAB 121. The reduction of $144 million also coincides with the FY22 shortfall to match 31 fees and the FY22 Appropriation. To quote Pres. James Madison, “power over the purse may, in fact, be regarded as the most complete and effectual weapon”.” Read it. Continue reading “SEC Closes Utah Office After DEBT Box Debacle; Today’s Tokenization Hearing”

Crypto Framework Passage In The 118th Congress Discussed; Rep. Khanna Supports FIT 21

FIT 21

FIT 21 – Senate Ag

Noting renewed “pressure” on the Hill to get a crypto regulatory framework in place after the House’s passage of the “Financial Innovation and Technology for the 21st Century Act” (FIT 21), Politico reported yesterday on scuttlebutt shared by an anonymous Senate aide: “Senate Majority Leader Chuck Schumer (D, NY) has spoken with Senate Agriculture Chair Debbie Stabenow (D, MI) in recent weeks about her bill to overhaul how the SEC and CFTC share oversight of crypto.” Read more.

Senate Ag Chair Debbie Stabenow sponsored the Digital Commodity Consumer Protection Act (DCCPA) [S.4760] in the last Congress which – at the time – looked like it was on its way to passage. But, then the implosion of FTX and the involvement of FTX CEO Sam Bankman Fried in the legislation stopped DCCPA in its tracks.

what you should know: There appears to be scrambling by Democratic leadership. And Sen. Stabenow has now appeared on both sides of the fence: rumors of her working on new crypto legislation (yesterday and February) while at the same time voting against the CRA resolution rescinding Staff Accounting Bulletin 121. Perhaps the SAB 121 “no” was an attempt to compromise with the White House, which could have looked like this:  “I’ll vote ‘no’ and support your already-expressed veto on SAB 121 and you support me on my new crypto legislation.” Also, Sen. Stabenow’s term ends in January. This could be another race for burnishing her legacy just like House Financial Services Chair Patrick McHenry’s (R, NC) own race against time.

FIT 21 – wedge issue

Other than the extremely compressed schedule to get a new digital assets framework done in the 118th Congress – and more “cooks” in the FIT 21 “kitchen” (Lummis-Gillibrand, for example) -, could Republicans try to scuttle any legislative deal before the election in the interest of maintaining crypto as a wedge issue between the two parties much like the Congressional machinations around the border? Continue reading “Crypto Framework Passage In The 118th Congress Discussed; Rep. Khanna Supports FIT 21”