Fed Governor Waller Supporting Stablecoins; White Hats Get Behind Security Alliance

stablecoins and the dollar

dollar-backed stablecoins

Federal Reserve Governor Christopher Waller, a Republican, spoke at a banking conference in the Bahamas last Thursday about the dominance of the U.S. dollar and saw a role for U.S. Dollar-backed stablecoins.

Noting decentralized finance’s (DeFi) inherent use of stablecoins, Waller writes, “About 99 percent of stablecoin market capitalization is linked to the U.S. dollar, meaning that crypto-assets are de facto traded in U.S. dollars. So it is likely that any expansion of trading in the DeFi world will simply strengthen the dominant role of the dollar.”

Waller makes note of Euro-backed stablecoins and the increasing use of the Chinese renminbi but concludes unequivocally, “I do not expect to see the U.S. dollar lose its status as the world’s reserve currency anytime soon, nor even see a significant decline in its primacy in trade and finance. Recent developments that some have warned could threaten that status have, if anything, strengthened it, at least so far.”

Read the speech (Feb. 15).

more tips:

    • U.S. Regulators Do Have Some Control Over Stablecoin Tether: JPMorgan (Feb. 17) – CoinDesk

what you should know: The Republican House Financial Services Committee X account tweeted in reaction to Waller on Friday, “The proliferation and adoption of well-regulated, dollar-denominated stablecoins will bolster the dollar’s status as the global reserve currency.” Waller’s statement is more fuel on the fire to support the “Clarity for Payment Stablecoins Act” [H.R.4766], which is awaiting a House floor vote. Continue reading “Fed Governor Waller Supporting Stablecoins; White Hats Get Behind Security Alliance”

Interview: Rep. Ritchie Torres Making Progressive Case For Digital Assets

Rep. Ritchie Torres

As a member of the House Financial Services (HFS) Committee and proud representative of his district in the Bronx, New York, Rep. Ritchie Torres (D, NY) has been at the front of lines of the evolution of the U.S. financial system in the 118th Congress.

And though he’s a staunch supporter of the Democratic Party, Torres has been unafraid to break with his Caucus’ leadership when he has believed it’s in the best interests of his constituency. Digital assets has been one such beneficiary of his independence.

Congressman Torres voted in support of the stablecoin and digital asset market structure bills at markup hearings last July, co-sponsored the bipartisan Keep Innovation In America Act of 2023 [H.R.1414], signed on to support numerous bipartisan Congressional letters on digital assets and consistently delivered engaged, tough questioning of U.S. government regulators at public hearings.

After the conclusion of an HFS Subcommittee for Digital Assets, Financial Technology and Inclusion hearing on illicit finance earlier today, Rep. Torres discussed his views on digital assets and Congress with blockchain tipsheet.

Topics included:

    • The progressive case for digital assets
    • Where “Big Tech” fits in
    • Stablecoin legislation
    • The SEC and crypto
    • Congressional generational divide
    • On the industry
    • SAB 121

The interview has been lightly edited for clarity. Continue reading “Interview: Rep. Ritchie Torres Making Progressive Case For Digital Assets”

Illicit Finance Gets Another Hearing From HFS Digital Assets Subcommittee

illicit finance

Following up on a hearing from last November, the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion held yesterday, “Crypto Crime in Context Part II: Examining Approaches to Combat Illicit Activity.” See the on-demand webcast.

Led by Chair French Hill (R, AR) and Ranking Member Steven Lynch (D, MA), industry witnesses included the following (click name for prepared testimony):

Of note, Ms. House was the behind-the-scenes creator of President Joseph Biden‘s Digital Assets Executive Order released in March 2022.

The Subcommittee also previewed a slew of new legislation – see it on the hearing page – including a study requiring Treasury, SEC and CFTC to look at decentralize finance (DeFi).

(Will HFS Chair Patrick McHenry (R, NC) hold another HFS markup soon?)

In his opening remarks, Chair Hill noted that crypto was not a primary source of financing for terrorists – traditioinal finance was the culprit. Hill referenced Treasury Undersecretary Brian Nelson’s testimony on the previous day in front of the HFS full committee. But, Hill admitted any use of crypto in illicit finance is too much and pointed to the digital asset market structure bill as a solution.

The bill awaits a House floor vote after passing through a markup last July.

Ranking Member Lynch spoke next and said that digital assets were “vulnerable” to illicit finance. Overall in his opening statement, Lynch’s tone was more muted on digital assets than past hearings by a key member of Democratic leadership on HFS. He said that he favored promoting responsible innovation. Continue reading “Illicit Finance Gets Another Hearing From HFS Digital Assets Subcommittee”

FinCEN Hearing Sheds Light On Its Digital Assets Strategy; Closing “The Revolving Door”

FinCEN and digital assets

FinCEN hearing

Yesterday’s House Financial Services (HFS) hearing focused on U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) included attention to digital asset matters.

Republicans expressed skepticism (see Chair Patrick McHenry’s comments) about some FinCEN processes and largely focused on the unnecessary data grab and resources required by FinCEN with programs such as those enabled by the Corporate Transparency Act (CTA). The CTA requires businesses to register their beneficial owners by the end of the year. So far, according to FinCEN witnesses Treasury Undersecretary Brian Nelson and FinCEN Director Andrea Gacki, 500,000 out of 32 million have complied thus far.

Among the digital assets highlights…

Crypto gadfly Rep. Brad Sherman (D, CA) said during his Q&A time that pro-crypto advocates were trying to “de-fang” the U.S. government with cryptocurrency.

Rep. Bill Foster (D, IL) explored the efficacy of secure digital IDs and suggested that it would have “huge benefits to the federal taxpayer” in its ability to stop fraud.

Rep. Sean Casten (D, IL) explored illicit finance and digital assets during his Q&A time. He wanted Treasury’s Nelson to highlight why “bad guys like mixers” – Nelson and Director Gacki said that mixers essentially anonymize transactions that “shield illicit finance.” Casten introduced the phrase “chain hopping” and said it was a problem with illicit finance.

Majority Whip Tom Emmer (R, MN) brought up “the erroneous Wall Street Journal report” on October 10 regarding Hamas, illicit finance and crypto. He asked Undersecretary Brian Nelson about how much crypto was actually received by Hamas. Nelson demurred and said he could share info privately which the Whip took him up on.

Continue reading “FinCEN Hearing Sheds Light On Its Digital Assets Strategy; Closing “The Revolving Door””

New Letter Responds To Warren Criticism, Bill; Porter Draws Crypto PAC Attention

ex-military respond

military letter #2

Blockchain Association’s ex-military members have sent a new letter to Congress regarding the illicit finance and crypto debate currently swirling. Yesterday’s communication doubles the signatories of the previous BA letter back in November and clearly states their opposition to legislation being floated in Congress as well as related national security concerns.

The letter states in bolded text:

“The Digital Asset Anti-Money Laundering Act (DAAMLA) risks our nation’s strategic advantage, threatens tens of thousands of U.S. jobs, and bears little effect on the illicit actors it targets.”

Read the new letter.

Back in December, Senator Elizabeth Warren (D, MA), who is the author of DAAMLA,  sent a letter in response to Blockchain Association which accused the organization of, essentially, revolving door politics and undermining “bipartisan efforts in Congress and the Biden Administration to address the role of cryptocurrency in financing Hamas and other terrorist organizations” Continue reading “New Letter Responds To Warren Criticism, Bill; Porter Draws Crypto PAC Attention”

Times Change With Laser Eyes?; NFT Case Sees Industry Amicus Brief

laser eyes

laser eyes Biden

Was President Joe Biden’s “laser-eyes” tweet on X after the Super Bowl a turning of the tide in D.C. as it relates to digital assets? See it.

The tweet has received nearly 200 million views.

For the pro-crypto army, hope can “beam” eternal. Bring on the digital assets regulatory framework!

With President Biden’s age increasingly the focus of criticism, attempting to do something “hip,” and therefore in touch with a younger demographic, makes sense.  That said, given where his Administration has been with its “anti-crypto” positioning, a switch to the emerging and speculative world of digital assets and Bitcoin seems unfathomable.

Still, drastic changes may be needed with the Biden presidential campaign coming out of last week’s less-than-satisfactory news conference where he defended his age and memory.

The Super Bowl could be where everything changed.  The next shoe to drop would be agreement on a stablecoin bill that relents on the “federal floor” requirement satisfying – at a minimum – a bipartisan group of House Financial Services Committee members. Continue reading “Times Change With Laser Eyes?; NFT Case Sees Industry Amicus Brief”

Must-Pass And Terrorism Financing Prevention Act Amendment; SEC’s Uyeda On Crypto ‘Mistakes’

must-pass amedment from Senator Mark Warner of Virginia

must-pass amendment

Sen. Mark Warner (D, VA) and his co-sponsors Sens. Mike Rounds (R, MT), Jack Reed (D, RI) and Mitt Romney (R, UT) appear to be trying to add at least a part of their “Terrorism Financing Prevention Act” (S.3441) to a “must-pass” bill [H.R.815] “RELIEVE Act” which supports the Veterans Community Care program and is sponsored by Rep. Cathy McMorris Rodgers (R, WA), Chair of the House Energy and Commerce Committee,

Warner first introduced his bill in December which aims at sanctioning any firm that is facilitating payments to “Foreign Terrorist Organizations” rather than the current limits of the law which focuses on Hezbollah. The legislation also includes a piece of Sen. Reed’s CANSEE Act which gives “FinCEN authority to restrict transactions with ‘primary money laundering concerns’ that do not involve a U.S. correspondent bank account.” Senator Warner’s December press release explains, “This provision will provide FinCEN with appropriate tools to address threats involving digital assets and non-traditional finance networks, just as they currently can where correspondent accounts are involved.”

Congress.gov notes that the amendment was submitted this past Friday and currently includes nearly all of the original text of S.3441.  Warner is trying to attach his amendment to the Senate amendment [S.Amdt.1388].

what you should know: Warner’s bill received a lukewarm reception from Secretary Yellen during a Q&A with the Senator at last week’s FSOC hearing.

Commissioner criticizes SEC

Continue reading “Must-Pass And Terrorism Financing Prevention Act Amendment; SEC’s Uyeda On Crypto ‘Mistakes’”

Senator Vance Leads Charge Against Actions Of SEC Counsel; Crypto Criticism Is Pumping

Senator Vance

Politics and the SEC

When Securities and Exchange Commission (SEC) lawyers were pressing its case against crypto company DEBT Box late last year, many were surprised when the Agency’s counsel appeared to intentionally try and mislead a Federal court judge and thereby put themselves at risk of sanctions.

Now, Republican Senators Cynthia Lummis (WY), Bill Hagerty (TN), Katie Boyd Britt (AL), Thom Tillis (NC) and JD Vance (OH) want answers from SEC Chair Gary Gensler.

Fortune’s Leo Schwartz reports, “Wednesday’s letter from the Republican senators, led by Vance, reflects the heightened stakes of the otherwise inconsequential lawsuit. The lawmakers are using the episode to advance their complaints about Gensler’s administration, which critics argue is politically motivated, especially with crypto.” Read more.

more tips:

Letter to SEC Chair Gary Gensler regarding “enforcement proceedings against Digital Licensing Inc., also known as ‘DEBT Box'” – Vance.Senate.gov 

what you should know: It’s still possible the Judge in the case could issue sanctions against the agency and its lawyers in spite of the fact the SEC has tried to have the case dismissed while it tries to wiggle out of a mess. Continue reading “Senator Vance Leads Charge Against Actions Of SEC Counsel; Crypto Criticism Is Pumping”