Tag: stablecoins

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Senate Banking Hearing On Illicit Finance Includes Stablecoin Focus

Deputy Treasury Secretary Wally Adeyemo

With the “script” written in the previous 24 hours by prepared testimony, a Congressional letter and a draft of new anti-money laundering (AML) legislation for crypto, the Senate Banking Committee hearing titled, “An Update from the Treasury Department: Countering Illicit Finance, Terrorism and Sanctions Evasion,” with Deputy Treasury Secretary Wally Adeyemo and chaired by Senator Sherrod Brown (D, OH) got underway at 10 a.m. today.

See:

    • The on-demand hearing broadcast here
    • Deputy Secretary Wally Adeyemo’s prepared testimony. Download.
    • Senators Thom Tillis (R, NC) and Bill Hagerty’s (R, TN) crypto illicit finance draft. Press release.
    • Monday’s Congressional letter from Senator Elizabeth Warren (D, MA) to House Financial Services Committee leaders regarding the stablecoin bill. Via Politico.

Takeaways from the hearing:

    1. This was a brisk 90-minute hearing.
    2. Not every member of Senate Banking chose to participate such as Sen. Jack Reed (D, RI) of CANSEE, Sen. Cynthia Lummis (D, WY) or Sen. Bill Hagerty (R, TN).
    3. Chair Brown did not given any inkling about whether he had his own bill addressing digital assets and illicit finance.
    4. Ranking Member Tim Scott (R, SC) gave an impassioned defense of digital assets saying that they had become a “scapegoat” of the Biden Administration especially given how traditional finance methods were far larger than crypto when it came to illicit finance.
    5. Democrats were fairly united behind Democratic leadership positioning that crypto assets need to be addressed more aggressively by Treasury.
    6. Deputy Secretary Adeyemo seemed to suggest that more “tools” for Treasury as it related to crypto assets was about taking preventative measures even though he admitted a larger illicit finance problem currently exists through traditional finance means.
    7. The tools were initially shared in a term sheet last November and were re-emphasized – at a high-level – in Adeyemo’s prepared testimony beginning with sanctions of “foreign digital asset providers.”
    8. During her Q&A time, Senator Warren chose to emphasize the House stablecoin bill versus her own anti-money laundering bill.  Her criticism of the House stablecoin effort makes sense in that it’s potential passage is more imminent than any crypto AML bill currently percolating across Congress. The stablecoin bill is seen as a potential threat to Dem leadership’s views about keeping crypto out of the U.S. financial system.
    9. At the hearing, the only Senate AML legislation focused on crypto that was discussed in any depth was by Sen. Tillis and his new bill – available as a discussion draft – co-sponsored by Sen. Hagerty.
    10. Coming out of this hearing, the next step perhaps lies with Treasury and its rulemaking capabilities. Treasury (and the Biden Administration) has “checked the box” and asked Congress for “tools” to address a crypto asset anti-money laundering threat. Now, it may do what it can with its own rulemaking which is outside of a Congress bogged down by a general election and politics.
    11. Nevertheless, Politico’s Eleanor Mueller reported on X that after the hearing, Chair Brown “says he is ‘hopeful’ he can introduce a bill soon that would give Treasury officials the new powers they asked for to prosecute illicit finance in crypto.”

Continue reading “Senate Banking Hearing On Illicit Finance Includes Stablecoin Focus”

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Majority Whip Tom Emmer Discusses The State Of Digital Assets In Congress Today

House Majority Whip Tom Emmer

With a holiday recess approaching in the U.S. House of Representatives, Majority Whip Tom Emmer (R, MN) is still making the most of the 2023 Congressional calendar while preparing for next year.

He knows the drill.

Emmer, who has been a key advocate for digital assets legislation, first joined Congress in 2015 and served as Chairman of the National Republican Congressional Committee in the 116th Congress and 117th Congress. He currently sits on the House Financial Services Committee.

Digital assets legislation he has sponsored in the current Congress includes Blockchain Regulatory Certainty Act [H.R. 1747], CBDC Anti-Surveillance State Act [H.R. 5403] and Securities Clarity Act [H.R. 3572].

Whip Emmer sat down with blockchain tipsheet at the Capitol on Tuesday to discuss the state of digital assets including:

    • 2023 digital asset highlights
    • Member education on digital assets
    • Congressional staff and legislation
    • Looking ahead
    • Crypto, AML and terrorist financing legislation
    • CBDCs
    • National security

The interview has been lightly edited for clarity.

What are your highlights for 2023 when it comes to digital assets?

Majority Whip Emmer: I had high hopes coming into the 118th Congress because of our new [House Financial Services] Chairman. Patrick McHenry (R, NC) is someone who understands the digital asset space.

Patrick and I have been close since I came to Congress -he was assigned to me as my mentor when I got here… I was excited because I know that this was a passion of his. I was also excited because even though we’ve had a fight it seems with the White House under the last Administration and now under this Administration, and with some certain Senators – and some in the House but not quite as much. Republicans and Democrats in the House are learning very quickly about the space.

So, highlights of this year are watching Republicans and Democrats on the House Financial Services Committee literally collaborate on digital assets issues. We may not see it in the actual committee votes, but it’s happening with French Hill (R, AR), with Patrick McHenry, Richie Torres (D, NY) and Josh Gottheimer (D, NJ), Jim Himes (D, CT) – Himes has been very helpful – and Greg Meeks (D, NY). You could keep going on.

We passed a CBDC bill out of committee to outlaw central bank digital currencies, which is something that I’m adamant about. We’ve gotten a lot of support for it. And then Patrick McHenry managed to set us up for market structure and, potentially, stablecoin legislation. And there could be others on the way, but that’s just this year.

For the first time since I arrived in Congress eight years ago, we have some very consequential things in the space that are moving forward. Continue reading “Majority Whip Tom Emmer Discusses The State Of Digital Assets In Congress Today”

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CFTC Chair Behnam Waiting On Congress; Senate Stablecoin Bill Bubbles

CFTC Chair Behnam

CFTC Chair on Congress

Yesterday, Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam (D) appeared on CNBC’s Squawk Box and provided an update on his agency’s views related to digital assets and legislation.

Here are some quick clips…

Chair Behnam: “It’s taken a bit longer than I would hope. (…) I think members in Congress are trying to figure out the landscape. We have a lot of regulators in the US – both on the market side and the banking side. But ultimately, I’ve said this for a while, there is a gap in regulation, and Congress is going to have to step in and really overcome this feeling of not wanting to legitimize the technology and seeing this as not something that’s tenable or sustainable. It’s here. It hasn’t gone away and we’re seeing it with the price and some of the bigger coins and there are issues around regulation in terms of customer fraud and manipulation.”

“But then some of this illicit activity and terrorist organization use, I think, should be really concerning for members of Congress and all of us as Americans… I mean, that seems like an easy bipartisan fix, but it’s just knowing how politics works. You’re probably not likely to get a clean bipartisan issue without weighing into the areas where there is a bunch of arguments back and forth.”

the three-legged stool

Chair Behnam: “I view [digital assets] as a three-legged stool: you have the AML KYC issues, which is around illicit activity and terrorist financing; you have the stablecoin issues (…); and then you have the market structure issues which is very important to me as a market regulator.”

“A lot of momentum has been around the the anti-money laundering (AML) and know your customer (KYC) [issues] … and that really goes to the heart of some of the issues that we’ve elevated at the CFTC around Binance and things that they were doing. But a lot of members are very focused on that. I’m very focused on markets. There’s a lot of focus on stablecoins.” Continue reading “CFTC Chair Behnam Waiting On Congress; Senate Stablecoin Bill Bubbles”

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House Financial Services Holds FinTech And Illicit Financing Hearings; NDAA As Vehicle

illicit financing

digital assets hearing

For Republicans – with the (successful) election of Rep. Mike Johnson (R, LA) as House Speaker looming later in the day – yesterday’s House Financial Services (HFS) Digital Assets, Financial Technology and Inclusion Subcommittee hearing was perhaps both a distraction and a welcome respite from the politicking and drama of the past three weeks.

Titled, “Modernizing Financial Services Through Innovation and Competition” (agenda and witnesses), Chair French Hill (R, AR) noted the Subcommittee’s accomplishments on digital assets legislation in his opening statement and explained that the day’s hearing would explore the broader FinTech topic.

Ranking Member Steven Lynch (D, MA) opened by skewering his Republican counterparts about whether the hearing’s timing was appropriate considering the acute need for a House Speaker.

Moving to the day’s subject matter of financial technology, Lynch echoed themes heard from Democratic Party leadership in previous hearings on digital assets: “I believe technology does have the potential to lower costs and improve accessibility for those left out of the traditional financial services service sector. However, while remaining interested in, and really believing in, the potential of FinTech and and ‘Buy Now Pay Later’ products, I want to say that some of these are simply repackaged versions of traditional finance -but packaged in a way to evade laws and regulations under the claims of innovation.”

See the video. The hearing’s duration was 1 hour and 45 minutes.

more tips:

Rep. Hill Statement on Rep. Mike Johnson (R, LA) Elected To Speaker Of The House – hill.house.gov

what you should know: Republicans wanted it to appear that it was “business as usual” in the House Financial Services Digital Assets Subcommittee hearing room. Yet, the House Speaker drama remained a heavy, gauze curtain on the proceedings and HFS Democrats didn’t let the majority forget it. With the new House Speaker finally decided today, Republicans will need to come hard out of the gates in the days to come to try and save face with the electorate by effectively legislating and moving forward impactful law. In turn, Democrats will likely have significant “asks” that they wouldn’t have had a chance to make a month ago. For example, in digital assets, a re-negotiation of the stablecoin bill could be on the table, which Chair McHenry seemed to originally declined during the bill’s July markup. That bill’s success (makes it to law) likely turns on the states rights versus Federal oversight of stablecoins. The Dem conundrum: Democratic leadership in D.C. supports the latter, even though Democratic states such as New York support states rights. Continue reading “House Financial Services Holds FinTech And Illicit Financing Hearings; NDAA As Vehicle”

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Coinbase Builds Offshore Presence For Derivatives; Wholesale CBDCs Get A Global Test

Coinbase offshore

offshore expansion

Coinbase said yesterday that it was expanding its global product mix as its Coinbase International Exchange had “received regulatory approval from the Bermuda Monetary Authority (BMA) to enable perpetual futures for eligible non-US retail customers.” Read more.

Back in May, Coinbase had announced it was setting up shop in Bermuda and looking to fill a hole in crypto derivatives market that Bahamas-based FTX had dominated until its demise last November.

Between the lines, the challenging regulatory environment in the United States which may have forced Coinbase to move beyond its home base’s borders.

cross-border CBDCs

A new test of cross-border wholesale Central Bank Digital Currencies (CBDCs) was trumpeted yesterday by the Bank of International Settlements. Read the press release from one of the partners – the Monetary Authority of Singapore.

The test known as Project Mariana was “a proof of concept [and] successfully tested the cross-border trading and settlement of hypothetical euro, Singapore dollar and Swiss franc wCBDCs between simulated financial institutions.” Read more about Project Mariana and its findings on the BIS website here.

Many countries are undertaking a CBDC “Project” these days. In the United States, “Project Hamilton” has been a U.S. project coordinated by the Federal Reserve Bank of Boston and the Massachussetts Institute of Technology.

more tips:

Wholesale CBDCs and automatic market makers could be the perfect pair, BIS finds – Blockworks Continue reading “Coinbase Builds Offshore Presence For Derivatives; Wholesale CBDCs Get A Global Test”

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Bipartisan Stablecoin Bill Update From Reps. French Hill And Jim Himes Shows Progress

Atlantic Council

In a conversation with the Atlantic Council webcast earlier today, a bipartisan update on the stablecoin bill was provided by Rep. French Hill (R, AR), Chair of House Financial Services’ (HFS) Subcommittee on Digital Assets, Financial Technology and Inclusion, and Rep. Jim Himes (D, CT), a member of the HFS Committee and also Ranking Member of the House Permanent Select Committee on Intelligence.

The discussion was led by the Atlantic Council’s Josh Lipsky and Ananya Kumar. See the interview here.

Click below (or scroll down) for several highlights from the 50-minute conversation:

The following transcript has been lightly edited for clarity.

on addressing commingling

REP. FRENCH HILL (R, AR):  “We’ve seen a lot of digital asset players that are holding themselves out as an exchange. Or, they’re creating digital assets or trying to build their digital ecosystem where they produce their own stablecoin and effectively make a market in it – where nobody knows what the value of it is, how it’s characterized, how it’s overseen.”

“And that was a big challenge in the FTX collapse. People loaned against something they didn’t even understand the value of -including a lot of sophisticated players too. So yes, it’s gonna rival the losses back in the dotcom boom when it’s all said and done. We tried to address that by defining first and foremost what is stable? How is it defined? They have to have an audit. They have monthly attestation. They have exposure of their liquidity. This is something that’s not the case in stablecoins today.” Continue reading “Bipartisan Stablecoin Bill Update From Reps. French Hill And Jim Himes Shows Progress”

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House Democrats Unify Against Current House Stablecoin Bill

Stablecoin Hearing

Stablecoins finally had their hearing as the House Financial Services (HFS) new Subcommittee on Digital Assets, Financial Technology and Inclusion gathered at the Rayburn House office building for “Understanding Stablecoins’ Role in Payments and the Need for Legislation.”

The hearing proved that, for the most part, bipartisanship on Capitol Hill has rapidly dissolved on digital assets legislation. Furthermore, it appears Democrats have unified around an anti-crypto positioning. Rep. Ritchie Torres (D, NY) and Rep. Wiley Nickel (D, NC) may be the only exceptions among those who spoke during the Subcommittee’s hearing.

The prospects for new United States digital assets regulation – other than enforcement of current securities and commodities laws – could be closed for this Congress.

the hearing

The HFS memorandum for the hearing set the stage with a definition of stablecoins: “Stablecoins are a class of digital assets designed to offer price stability by being pegged to another asset’s value.” And, a witness list of mostly pro-crypto, industry representatives provided the input on not only the stablecoin and digital asset industry, but on the new stablecoin bill (PDF) first revealed over the weekend.

witnesses:

    • Adrienne Harris, Superintendent, New York State Department of Financial Services (prepared testimony – PDF)
    • Dante Disparte, Chief Strategy Officer and Head of Global Policy, Circle (PDF)
    • Austin Campbell, Adjunct Assistant Professor of Business, Columbia Business School (PDF)
    • Jake Chervinsky, Chief Policy Officer, The Blockchain Association (PDF)
    • Delicia Reynolds Hand, Director, Financial Fairness, Consumer Reports (PDF)

opening statements

Subcommittee Chair Rep. French Hill (R, AR) started the hearing off with his own opening comment reaffirming the interest of the HFS Committee to introduce a stablecoin bill emanating from the last Congress “when the clock ran out.” Hill named the bill “Maxine McHenry” after the Ranking Member Rep. Maxine Waters (D, CA) and Chair Rep. Patrick McHenry (R, NC).

As Hill reviewed the bill, he said that it would inhibit any possibility of a “run” and urged Members to move quickly thereby encouraging innovation, protecting consumers and move toward bringing clarity for digital assets beginning with stablecoins.

Subcommitee Ranking Member Rep. Stephen Lynch (D, MA) reviewed the need for stablecoins in his opening statement and then dropped a bomb. He suggested it’s worth reviewing whether stablecoins are even needed in wake of FedNow and a Central Bank Digital Currency. And then he revealed his disapproval of the bill given it was made pre-FTX implosion and listed his significant reservations. This was surprising – this bill had been driven by Ranking Member Waters, in part.

After a brief statement by Chair McHenry, Ranking Member Waters then spoke and clarified the Democratic position saying that the bill posted was no longer relevant given events at the end of last year (FTX), needed to be renegotiated and expressed disappointment in the way the bill has been pushed by Republicans. Continue reading “House Democrats Unify Against Current House Stablecoin Bill”

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Maxine Waters Wants Stablecoin Legislation ‘As Quickly As We Possibly Can’

Maxine Waters

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stablecoins – Waters urges push

Even though the House is not in Session this week, Ranking Member Rep. Maxine Waters (D, CA) of the House Financial Services Committee was talking stablecoin legislation with Yahoo Finance.

Rep. Waters: “I believe the legislation could be passed when we get back to Congress… in [the space of] a few days. We had just about solved all of our problems. The only thing that interfered I think, with this passage (late last year) was the anticipation that the House was going to change, and it was going to be in the hands of the Republicans, and they should take charge rather than those of us on the Democratic side (…). And so I think it’s ready to go and we have resolved most of our issues, and I think we can get it done.”

On a timetable – this month, end of Spring, end of 2023?

Rep. Waters: “Well, I’m not gonna give you a timetable because there’s always uncertainty in negotiations and the way that things get done in Congress. But I want to tell you that I’m focused on it, [Chair Rep. Patrick McHenry (R, NC)] is focused on it. We have a bipartisan effort that we put on it, and we’re gonna do it as quickly as we possibly can.”

See the interview.

Tip: This is arguably the most urgency we’ve heard publicly on stablecoin legislation from anyone in the U.S. Congress – ever.
Continue reading “Maxine Waters Wants Stablecoin Legislation ‘As Quickly As We Possibly Can’”