Tag: digital assets

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today – digital assets subcommittee

All eyes will be on Digital Assets, Financial Technology and Inclusion Subcommittee Chair French Hill (R, AR) today as he hosts his committee’s first hearing titled “Coincidence or Coordinated? The Administration’s Attack on the Digital Asset Ecosystem.” See the hearing’s event page on House Financial Services website – starts at 2 p.m. ET.

Five current digital asset bills are listed for review such as HFS Chair Patrick McHenry (R, NC) and Rep. Ritchie Torres (D, NY) “Keep Innovation in America Act” and discussion draft’s of new, 118th Congress bills from House Minority Whip Rep. Tom Emmer’s (R, MN) and Rep. Warren Davidson (R, OH).

All of today’s prepared remarks are available from the hearing’s five witnesses including:

• • Mr. Mike Belshe, CEO and Co-Founder, BitGo (remarks (PDF))
  • Ms. Tonya Evans, Professor, Penn State Dickinson Law (remarks)
  • Mr. Jonathan Gould, Partner, Jones Day (remarks)
  • Mr. Paul Grewal, Chief Legal Officer, Coinbase (remarks)
  • Mr. Lee Reiners, Policy Director, Duke University (remarks)

Snippet from the testimony: Law professor Tonya Evans makes numerous suggestions on the way forward for digital assets regulation including: “Request the SEC to appear before Congressional oversight committees to explain how its aggressive piecemeal approach to regulation of crypto assets comports with efficient and effective regulation and in line with its legislative mandate to protect investors, to maintain fair, orderly, and efficient markets, and to facilitate capital formation.” Continue reading “Digital Assets Subcommittee Hits The Ground Running Today; House Ag Convenes, Too”

At last week’s “Future of Digital Assets” conference produced by the Milken Institute, Rep. French Hill (R, AR), chair of the House Financial Services’ Digital Assets, Financial Technology and Inclusion Subcommittee, spoke at length regarding digital assets legislation prospects in the 118th Congress.

Nicole Valentine, FinTech Director at Milken Institute moderated the discussion.

(Transcript edited for clarity)

On key priorities for the House Digital Assets Subcommittee…

REP. FRENCH HILL: The Digital Assets Subcommittee is a priority for the House Republicans and the House Financial Services Committee because back in 2019, we had two task forces: a task force on artificial intelligence and we had a task force on FinTech, financial technology. Those were bipartisan. It was agreed to and set up by then-Chairwoman Rep.Maxine Waters (D, CA) and then-Ranking Member Rep. Patrick McHenry (R, NC).

And digital assets and financial technology have been a priority for the committee for many years to help solve many of the challenges that the existing financial structure has and lay a framework for innovation for the future. And so it was a “natural” that when Patrick [McHenry] became the chairman of the committee that he would want to have a subcommittee on digital assets. That’s the background – it has the full jurisdictional aspects of all things FinTech, inclusion and the broader picture of digital assets.

In the House and in the Senate, you don’t have clean jurisdiction in some of these key areas. The House Agriculture committee and the Senate Agriculture Committee play a role here as well because under market regulation conditions they might be involved in the futures market or certain aspects of the currency oversight of an exchange.

Our goal is to create a regulatory framework for digital assets. And there’s no doubt in my mind that this country needs that – we’ve seen that through the willy-nilly formation, so far, with no guidance – just pure innovation out there. We’ve seen it in the malfeasance in the industry that we witnessed last year culminating in the collapse of FTX. And we see it in the competition across the globe where other jurisdictions are establishing a legal framework and regulatory framework for digital assets, whether it’s in Europe or Asia. And so that is a critical element to take into account.

And finally, the United States has been at the forefront of financial innovation in the capital markets for certainly the 20th century and into the 21st century. We want to see that continue in a digital format. This is a big agenda for this subcommittee and I look forward to leading it as its initial pioneering chairman, and it’s gonna be a fun ride this year. Continue reading “Rep. French Hill Discusses Digital Assets Legislation Prospects at Milken Institute”

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states – Montana mines

The Montana state legislature has passed the [Senate #178] ‘Right to Mine’ Bitcoin bill which will prevent local governments from “unfairly” using industrial zoning laws to stop crypto mining among other measures.  CoinTelegraph points out that the state’s House and Governor still need to sign off. The bill was sponsored by State Senator Daniel Zolnikov (R) who speaks about the bill from the Senate floor in this video and says, “Hey come to Montana. This is a safe place to invest in. And [the bill] insures that it’s a safe place to invest in.”

Tip: Montana’s (red state) momentum is the opposite of what is happening in New York (blue state).

compliance – sanctions evasion

A new report from blockchain analytics firm Inca Digital says that sanctioned Russian banks are still being allowed to access the services of many cryptocurrency exchange platforms such as Seychelles-based Huobi and KuCoin as well as Binance in spite of sanctions that should shut down such use. Read more from Bloomberg (on Inca’s site).

Inca Digital Chief Executive Officer Adam Zarazinski said this company plans to release their findings more widely “soon” and that “The report [includes] other troubling observations about the 62 crypto exchanges it analyzed, including that some of them do not require Russians to pass KYC checks.” Continue reading “Montana Passing Bitcoin Legislation; Blockchain Analytics Show Sanctions Evasion”

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due date – SBF comms

Due no later than 5 p.m. today, the Securities and Exchange Commission has been asked to deliver all of its communications about Sam Bankman’ Fried (SBF) from November 2, 2022 to February 9, 2023. The request was made by letter two weeks ago by House Financial Services Chair Rep. Patrick McHenry (R, NC) and Subcommittee on Oversight and Investigations Chair Rep. Bill Huizenga (R, MI).

Republicans are hoping to unlock manipulative malfeasance at the SEC run by its Democratic Chair Gary Gensler. Specifically, why SBF was arrested the day before he was scheduled to appear in front of the House Financial Services Committee then chaired by Rep. Maxine Waters (D, CA).

Tip: Read yesterday’s “Can Gary Gensler Survive Crypto Winter? D.C.’s top financial cop on Bankman-Fried blowback” from New York Magazine

due date – will it happen

Will the SEC deliver as partisanship gets amplified in the crypto capital? It seems unlikely given the partisanship involved here, but this will be yet another sticking point to be addressed when SEC Chair Gary Gensler finally visits the Hill again… in September? … sooner?

Congress is back in session next week (see calendar) – there will be more tweets at a minimum.

bank regulators – crypto risks

Continue reading “House Financial Services Due Date Arrives for SEC’s Communications About SBF”

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CBDC Anti-Surveillance State Act

Majority Whip Rep. Tom Emmer (R, MN) will introduce new legislation which seeks to limit the U.S. Federal Reserve’s ability to roll out a Central Bank Digital Currency (CBDC). Titled “CBDC Anti-Surveillance State Act,” Punchbowl News’ Brenden Pedersen reports there is broad support among Republicans – especially on the House Financial Services Committee. But he adds, “even with slim odds of passing in a Democratic Senate for now, we think it would be a mistake to wave this off as a simple messaging bill from House Republicans.” Among concerns for Republicans with CBDCs is giving government the ability to see consumer transaction data, i.e. no privacy. See a copy of the bill (PDF).

Rep. Emmer summarized the bill’s key points on Twitter:

1. 1. “Prohibits the Fed from issuing a CBDC directly to anyone.”
   2. “Bars the Fed from using a CBDC to implement monetary policy and control the economy.”
   3. “Requires the Fed’s CBDC projects to be transparent to Congress and the American people.”

Punchbowl’s Pedersen tweeted later, “Some folks like to imagine the GOP could come around to a US digital dollar for [National Security] reasons. We’re not there yet!”

The tug of war between private stablecoins and CBDCs is taking another step as US Dollar dominance as the World’s reserve currency hangs in the balance.

CBDCs “yes,” stablecoins “no”

Speaking in Singapore, Bank for International Settlements  (BIS) General Manager Agustín Carstens said, “Many crypto proponents argue that stablecoins should be the future of money. But what this view forgets is that what sustains fiat money is not the application of novel technologies but all the institutional arrangements and social conventions behind it. And it is precisely these arrangements and conventions that make money reliable for the public.” Carsten argues that the power of the ledger for CBDCs is very compelling. Read the speech.

Tip: What is BIS? (Wikipedia) Continue reading “CBDC Anti-Surveillance State Act; Stablecoins and Securities”

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regulation is global – EU trip

Politico reports a bipartisan delegation including staffers from the offices of congressional committee leaders Rep. Patrick McHenry (R, NC), Sen. John Boozman (R, AR) and Sen. Sherrod Brown’s (D, OH) will be heading to Brussels and Paris for digital asset regulation consultations with European Commission “bigwigs and industry representatives.” Read more (subscription).

Understanding how the EU put together its recent digital assets legislation such as MiCA will likely be on the list. Unspoken is the tension of the US maintaining the Dollar as the world’s reserve currency while the EU is moving ahead with digital asset benefits that hopefully accrue to the Euro.

Politico’s Bjarke Smith-Meyer tweets that European Union’s ambassador in DC “helped organize the trip, as they have done before, which usually focuses on specific policy issues. This time it’s all about [crypto] (and a crash course in how the [EU] legislative machine works)”.

Tip: Bipartisanship is back? Having representatives of House Financial Services Chair McHenry (R) and Senate Banking Chair Brown (D) together on the same trip is a step in the direction of bicameral possibilities.

enforcement is global – Terraform Labs

In spite of the fact the company controlling the algorithmic stablecoin TerraUSD was based outside of the United States, yesterday the Securities and Exchange Commission (SEC) charged Singapore-based Terraform Labs PTE Ltd and its founder Do Kwon with “orchestrating a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.” Read the release.

The TerraUSD stablecoin once had a market cap of over $18 billion and then imploded in May 2022 sending rippling effects throughout the digital asset ecosystem. Terra Forma had been rumored to be under investigation by the SEC since at least last June.

SEC Chair Gary Gensler breaks down the charges in two parts in the release:

• • “Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for LUNA and Terra USD,”
  • “They committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.”

Continue reading “Congressional Staff To Research EU Digital Asset Regs; Terraform Labs Charged”